Yeltsin Tries to End Struggle Over Who Will Direct Russian Economy

Future of market reforms depends on whether finance minister stays

THE Russian government is scrambling to contain the political damage wrought both at home and abroad by the resignation of the two top reformers from its ranks.

Since Vice Premier Yegor Gaidar and Finance Minister Boris Fyodorov announced their resignations recently, the Russian government has met a hail of criticism that it is abandoning the course of market reforms. Prime Minister Viktor Chernomyrdin is widely accused of seeking to re-establish Soviet-style controls over the economy.

Mr. Fyodorov's departure, announced Jan. 20, has had the greatest impact because the young economist is seen as the last bulwark of a faltering anti-inflation policy. Without him, many Western and Russian economists fear the government will trigger a wave of hyperinflation through massive subsidies of state-run industry and agriculture.

For that reason at least, since Jan. 22 President Boris Yeltsin has sought to negotiate a formula for the finance minister to remain in the government. The government has announced that his resignation is not accepted and that Prime Minister Chernomyrdin was continuing to consult with Fyodorov.

``Fyodorov has still not formally tendered his resignation,'' the president's spokesman, Anatoly Krasikov, said on Jan. 25. ``As far as the president is concerned, Fyodorov is still finance minister.''

Fyodorov, however, has set conditions for remaining that neither Chernomyrdin nor the president seemed prepared to fulfill. Basically, he insists on full control over financial policy, with a status of vice premier (which he had previously), and most importantly, he demands the removal of his arch-foe, Central Bank chairman Viktor Gerashchenko.

Premier Chernomyrdin is not prepared to offer the vice premiership, Russian news media report. And Mr. Gerashchenko is a close ally of the premier, as evidenced by the fact that he accompanied Chernomyrdin on a Jan. 24 visit to central Russia.

``If Fyodorov remains in the government, even though not one of his conditions for doing so has been met, he can kiss his political career goodbye,'' commented Mikhail Berger, analyst for the pro-reform daily Izvestia, on Jan. 25.

There is some indication that the president is ready to admit defeat in his effort to retain Fyodorov in the Cabinet. After two days of a rumored meeting between the two men that did not come off, the official Itar-Tass news agency reported on Jan. 25, citing ``well-informed sources in the presidential administration,'' that they would meet early Jan. 26. At that time, the report continues, ``Fyodorov may be offered to become the economic adviser of the president.'' But since taking that post would require the finance minister to give up his parliament seat, ``It is also possible that Yeltsin would prefer to keep Fyodorov in the State Duma [the lower house of parliament] where the reformer can work on anti-inflation decisions.''

The apparent split between Yeltsin and Chernomyrdin over the composition of the government has been the subject of much speculation and comment in the Russian media. The two men met on Jan. 24 before the premier's departure, supposedly to discuss the finalization of the budget to be presented to the parliament, but also, it is widely believed, to talk about Fyodorov.

Chernomyrdin, who was otherwise trying to counter the accusations that he was changing economic policy gears, was quick to try to dampen such speculation of a division. ``I have no disagreements with the president,'' he told reporters on Jan. 24 after the meeting.

There are some who share this view, who believe that the president was happy to see the reformers go until he saw the reaction.

``Yeltsin and Chernomyrdin had no idea that these two most visible resignations would be interpreted by the Russian and foreign press as the end of reforms,'' Berger writes. ``But having seen what effect the reformers' departure had on public opinion, Yeltsin, it seems, began to waver. The president also began to realize that with a homogenous government, Chernomyrdin's influence would continue to grow.''

The prime minister has slightly adapted to these concerns, issuing reassuring statements in recent days to the effect that basic policy is not going to change. But there is ample evidence that the premier, a former boss of the Soviet gas industry, is ready to pursue a policy of subsidizing stalled factories and collective farms in the name of boosting production and averting massive unemployment.

Chernomyrdin has called for using ``non-monetarist'' methods of controlling inflation, for example, by which he seems to mainly mean an agreement on wage and price controls with management and labor unions. But reformers predict failure, and a wave of hyperinflation that will bury the government within months.

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