With little fanfare this spring, workers climbed atop the ornate Grand Kremlin Palace inside the famed red brick fortress and scraped the Soviet state seal and the huge "U.S.S.R." from the facade of the 19th-century building.

On Red Square, once a shrine to the communist state, 13 commercial kiosks are about to open - following hundreds of others across Moscow that sell everything from imported cigarettes and liquor to sex magazines, sneakers and salami.The face of Moscow has changed in the year since a failed coup hastened the death of the Soviet Union and the Communist Party after seven decades of totalitarian rule.

But below the surface, what is really different?

Hard-liners in the Communist Party and the military launched the coup against Mikhail Gorbachev in a bid to staunch the hemorrhage of their power. When they were defeated by Russian President Boris Yeltsin and other so-called "democrats," there was hope a new era had begun.

But one year later, economic and political progress in Russia is being stifled - by people's reluctance to let go of the past, by the chaos that followed the demise of the state, by the ethnic tensions that are part of the burdensome legacy of the Soviet era.

Yeltsin installed his men at the top of the national government and in the provinces, yet legions of communist-era bureaucrats remain in power at lower levels. While not openly fighting his reforms, this nomenklatura has been reluctant to carry them out completely.

Attempts to shift Russia to a free-market system after decades of central control have also been slowed by the threat of social unrest. Yeltsin has vowed to put domestic needs ahead of those of the International Monetary Fund, which demands austerity measures before freeing up billions of dollars in loans.

To cope with a cash shortage, the government has issued a new 5,000-ruble note - the first high denomination note without a portrait of Soviet founder Vladimir Lenin. His mummified body, however, still lies in a mausoleum on Red Square.

Although the cost of living is soaring more than 1,000 percent per year and the ruble is weakening, the government has had to abandon some of its harsh monetary policies to pay workers and bail out inefficient industries. It has been slow to privatize factories and land, with only "a drop in the bucket" accomplished so far, says Harvard University economist Jeffrey Sachs.

To cope with prices and supplement their salaries and pensions, thousands of people take to the streets daily to hawk clothing or resell milk, vodka and food.

Critics of Yeltsin's economic reforms say that instead of creating a free market in Russia, he has created a flea market.

The struggle for survival has all but smothered the euphoria that followed the crushing of the coup.

At a special election last month in the Moscow region for a vacant seat to the Russian Parliament, fewer than 30 percent of eligible voters participated in what was billed as a rehearsal for multiparty balloting.

"The people are tired," the newspaper Izvestia wrote. "No party programs and declarations inspire anyone."

Dmitry Olshansky, a scholar of social psychology, told the weekly Moscow News that before the Soviet Union collapsed, "300 million people were held together by confidence in the existence of a common interest, by faith that `We' is always more important than `I.'

"When the pyramid was reversed and the small, oppressed `I' found itself on the top, very few people knew what to do about it," he said. "The collective consciousness, deprived of what held it together, is disintegrating."

Also disintegrating is respect for authority, leading to an increase in crime. In the first half of 1992, 1.3 million crimes were committed compared to 1 million in the same period last year, according to Russia's Interior Ministry.

Yeltsin remains firmly in power, although his popularity has slipped. A poll of 1,500 people conducted July 18-22 and published July 29 by the newspaper Nezavisimaya Gazeta said only 24 percent of respondents fully trusted Yeltsin; 28 percent said they fully trusted his vice president, Alexander Rutskoi, a hero of the Afghanistan war who has espoused nationalist tendencies and the rights of Russians in ethnic trouble spots such as Moldova and Georgia. The poll listed a margin of error of 3.5 percent to 4 percent.

Yeltsin has become a target of criticism from both reformers and conservatives.

Viktor Alksnis, one of the hard-line "Black Colonels" who led the opposition to democratic reforms under Gorbachev, said Yeltsin is unable to reverse the economic slide and a national state of emergency is inevitable.

"These people (Yeltsin and his government) will go," Alksnis said in an interview with The Associated Press. "Once on the brink of the precipice, the people will come to realize that it is time for the opposition to take over."

Reformer Yuri Afanasyev, in a forward to a collection of essays by democratic intellectuals, said the Yeltsin government has had a "disappointing" year.

"It is the main and prevailing objective of Boris Yeltsin's administration, like that of his Communist Party predecessor, to preserve power at any cost, to strengthen it if possible, and to translate it into tangible material benefits" for the ruling elite, Afanasyev wrote.

Intellectuals such as Afanasyev say with alarm that new appointees to Yeltsin's powerful Security Council represent the interests of the military-industrial complex, while reformers such as Yegor Gaidar and Gennady Burbulis have lost influence over the president.

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Other political figures, such as former KGB Gen. Oleg Kalugin, argue that although the secret police agency has been broken up, it remains a powerful force. Reforms in the KGB's successor, the Russian Security Ministry, have been suspended since the beginning of the year," Kalugin told the weekly Literaturnaya Gazeta.

Despite the setbacks, U.S. Ambassador Bob Strauss remains one of Yeltsin's staunchest supporters, saying it is "simply incredible how much has been accomplished" in the past year - especially the freeing of prices after seven decades of Kremlin control.

What Yeltsin and his team need, Strauss said recently, is "a breathing spell." He advised the West to be patient.

"Things are going to work on their clock, on their time schedule, and in the Russian manner, not in the American manner," Strauss said.

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