Russian Marketeers Come in From Cold

In need of Western aid, Yeltsin appoints two reformists as key officials

JUST when it appeared that Russian President Boris Yeltsin had turned his back on economic reform, yesterday he suddenly opened the Kremlin door again to free marketeers.

In recent days, Mr. Yeltsin had cleansed the Kremlin of the last champions of Western-style economic reform in response to the first-place finish of Communists and the poor showing of democratic reformers in December parliamentary elections.

He has made the West jittery enough to draw concern over the future of reform from the US. And - more urgently for Russians - the International Monetary Fund began to hedge this week over a $9 billion loan to Russia that was considered safely settled, calling for more negotiation.

But Yeltsin's apparent antireform moves may have been just tactical, while his appointment of two free marketeers may signal a commitment to a market economy.

He chose Vladimir Kadannikov, the chief executive of Russia's giant Russian carmaker, AvtoVAZ, as the new first deputy prime minister for economic policy, replacing Anatoly Chubais, a reformer who was ousted last week

Tellingly, Mr. Kadannikov, a leading industrialist, was heavily promoted by former Prime Minister Yegor Gaidar, the original leader of radical reform in Russia. So he is allied to the true-blue free marketeers of the early post-Soviet years.

But Kadannikov has the political advantage over reformers like Mr. Gaidar in that he is a practical businessman and not a theoretical economist.

May be well received

This is likely to make his appointment more attractive to the masses of Russians whose living standards have plummeted under post-Soviet reforms, as well as to the Communists and their allies who now dominate the Russian Duma, or lower house of parliament.

''He was one of the practical leaders who started reform even before it started politically,'' says Gennady Kulik, deputy chairman of the Duma Budget Committee and a member of the leftist Agrarian Party, closely allied with the Communists.

''He is on the one hand a reformer and on the other hand not alienated from economic reality.'' He understands the real-life consequences of economic policy, says Mr. Kulik.

Yeltsin also appointed a new chairman of the Russian State Property Committee. While it may sound like a bureaucracy in charge of warehouses, this committee runs the privatization of Russian industry.

Privatization is one of the key political questions in Russia today. Communists and nationalists charge that Yeltsin has overseen the selling off of state assets too cheaply and often in corrupt, insider deals.

Reformers worry that the rising tide of statism will slow down privatization and perhaps even renationalize some industries.

The new chairman, Alexander Kazakov, was a deputy chairman in 1993 and 1994 and worked as Yeltsin's liaison with Russia's regional governments in the meantime. His appointment to this post, vacated when the former chairman was elected to the Duma, was supported by Mr. Chubais, who was the last prominent reformer on Yeltsin's team until forced out last week.

In the free-market camp, these appointments are viewed with relief. ''Much better than expected,'' says Vladimir Mau, an economist who runs a think tank headed by Mr. Gaidar.

The Communists and their allies are less enthusiastic, but Agrarian deputy Kulik says that Kadannikov will be accepted as a great improvement over Chubais, who had become a symbol of the social pain of reform.

The most immediately important response to the new appointments will be that of negotiators for the International Monetary Fund, whose officials are in Moscow to settle the $9 billion loan to Russia, the second largest in the IMF's history, due to end by Jan. 31.

The loan is contingent on Russia's long-term commitment to economic reforms.

The money is important because Russia's budget deficit is so tight that state workers are often not paid for weeks and even months on end.

A week ago, delays in the paying of wages even hit workers in the Kremlin itself. The Russian economy is so starved for investment that effective annual interest rates are now around 80 percent.

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