Gaidar's Resignation Signals Russian Shift To Slower Reform


THE resignation of economic reform architect Yegor Gaidar from the Russian government was a surprise only in its timing.

The exit of Mr. Gaidar and some of his band of young reformers from the government has been on the agenda ever since the Dec. 12 parliament elections, when his reformist Russia's Choice party was trounced by Communists and extreme nationalists. The vote was widely read, both at home and abroad, as a rejection of radical economic reform and the deterioration of living conditions that has accompanied them.

Russian President Boris Yeltsin quickly ended speculation he would press Gaidar to remain, issuing a statement yesterday accepting the resignation. ``I would like to stress the irreversibility of the course of reform,'' he said.

While Mr. Yeltsin had previously asked Gaidar to remain in the government, the Russia leader is also probably relieved to now have considerably wider political manuevering room.

``Gaidar's resignation creates good options for Yeltsin himself,'' argues his adviser Andranik Migranian. ``It would be a tragedy for Yeltsin to identify himself with Gaidar and his faction.... People are fed up with those faces. They identify them with a decline in their living standards.''

For Gaidar a similar political logic is at work. In interviews Sunday night, he forecast that the government was going to pursue an economic policy that could only result in growing inflation, which would deepen budget problems and likely trigger an attempt to resort to Soviet-era command methods. Unable to control policy in what is, and has been, a de facto coalition government and yet likely to take the blame for what comes, the young reformer prefers to retreat to the role of a ``constructive opposition'' in the new parliament.

The Gaidar move, coming a day after the departure of visiting US President Clinton, is sure to spark renewed concerns among foreign governments and investors of a retreat from market reform in Russia. Since the start of reform in January 1992, the rotund young economist has personified an unyielding commitment to both privatization and to tough financial stabilization.

``Gaidar is not the symbol of reform - Yeltsin is,'' retorts Mr. Migranian, the presidential adviser. ``He is the guarantor of continuity.''

Some reformers, most prominantly Anatoly Chubais, the head of Russia's widely praised privatization program, have already said they will stay on. But the withdrawal of Gaidar, and possibly also Finance Minister Boris Fyodorov, will further strengthen Prime Minister Viktor Chernomyrdin, whose power has grown visibly in recent months.

Pushing slower reform

Mr. Chernomyrdin, a former executive of the Soviet gas industry, is an advocate of gradual reform and a critic of the tight-money policies advocated by Gaidar. Instead he is more willing to funnel credits to state-run industry, arguing that the country can better afford higher inflation than the social and economic consequences of the collapse of these factories. His views are close to those of Central Bank chairman Viktor Gerashchenko, a bete noir of the reformers, who accuse him of pumping money uncontrollably into the economy.

Chernomyrdin became premier after the old parliament ousted Gaidar in December 1992. Gaidar left the government, only to return last fall. For the last year the government has been a de facto coalition of the two camps, but even during that time, policy had already shifted toward a less-than-radical approach to reform.

``This was a government named after Gaidar but not Gaidar's government,'' reform economist and rival Grigory Yavlinsky told reporters yesterday at the parliament. ``That was his problem.''

Mr. Yavlinsky strongly denied any interest in taking Gaidar's place, disdaining the government for not having a clear reform policy. ``I am not going to fill in any niches,'' he said. ``I am ready to carry out reform and be responsible for it.''

In his resignation letter, Gaidar gave two examples of the kind of inflationary decisions that symbolize the policies he opposes. He referred to the decision to build a $500 million new parliament building, a sum exceeding that spent on defense conversion last year, or five times the spending on culture and art.

A more serious issue is the pending agreement to unify the monetary systems of Russia and the former Soviet republic of Belarus. That move would give the Belarus central bank the right to issue ruble credits to its industry, almost all of which, unlike in Russia, remains under state control. Chernomyrdin and Gerashchenko have been strong advocates of such a ``ruble zone,'' arguing that such integration is necessary because of the vertically integrated Soviet industrial structure.

But critics of the policy argue that financial controls are being sacrificed for the sake of a political goal of re-establishing a Soviet-type union. The Belarus decision was not well-thought out, agrees advisor Migranian, ``but this is an important political decision ... Belarus and Russia are becoming practically a united state.''

Migranian argues that the vote for extreme nationalist Vladimir Zhirinovsky shows widespread support for the ``reintegration'' of the former Soviet Union. ``If not Yeltsin, some other politician will do that, and not by peaceful, legitimate means.''

Russian empire

Such thoughts of expansion of Russia's role may have been on Gaidar's mind when he offered his resignation. He told a Russian television reporter Sunday night that he will focus his work in the new parliament on ``preventing the involvement of Russia into new military adventures.''

Leaders of the major factions in the State Duma, as the lower house of parliament is called, agreed yesterday on the allocation of committee chairmanships. Reformers got control of the defense, budget, and foreign affairs committees, while the Communists got leadership of the security committee. Zhirinovsky was denied the foreign affairs post he wanted, but compensated with control of a committee on ``geo-political questions'' created solely for him.

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