[IWAR] RUSSIA reformers wary on economy

From: 7Pillars Partners (partnersat_private)
Date: Tue Jan 20 1998 - 10:27:35 PST

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    Tuesday January 20 8:16 AM EST 
    Humbled Russian Reformers Wary on Economy
       By Philippa Fletcher
       MOSCOW (Reuters) - Russia's young reformers, scolded by President Boris
       Yeltsin on his return to work this week, sounded uncertain Tuesday about
       the prospects for their government and the economy in 1998.
       First deputy prime ministers Boris Nemtsov and Anatoly Chubais, who lead
       the reform team installed by Yeltsin last March, struck downbeat notes
       in separate newspaper interviews published a day after they were ticked
       off by the Kremlin leader.
       Nemtsov said he thought the leadership realized a big cabinet reshuffle
       would not make sense, but added that the fate of his colleague Chubais
       hung very much in the balance.
       "I think Chubais can do a lot of good. Talking specifically about his
       resignation, then my opinion on that score swings violently from day to
       day," he told the Izvestia daily.
       Chubais, humiliated by a scandal over a book contract last year, made no
       reference to his own future in remarks published by Kommersant Daily.
       But he did not see big improvements for the economy in 1998 and feared
       disaster if Asian market turmoil was not contained.
       "The biggest threat to Russia this year is financial crisis in Southeast
       Asia and in the world as a whole," he said, referring to nervousness
       about emerging markets which officials say has meant the withdrawal of
       $8 billion from Russia already.
       If the crisis did not materialize, he said he was "highly optimistic"
       about 1998 and beyond, but promised few significant achievements this
       Chubais and Nemtsov got their fingers burned by Yeltsin's ambitious
       pledge to pay off a huge backlog of wages owed to public sector workers
       by the end of last year, despite a severe cash crunch caused by huge
       problems with tax collection.
       "Last year was a failure as far as our obligations are concerned,"
       Yeltsin rebuked the cabinet in comments broadcast on television Monday.
       His reproach was addressed to all the ministers, although Prime Minister
       Viktor Chernomyrdin has been strengthened by recent changes in the
       cabinet at Chubais' and Nemtsov's expense.
       Chernomyrdin, who won control over the fuel and energy sector in the
       reorganization, presided Monday over a merger between two Russian oil
       majors which formed what they said was the the biggest oil company in
       the world in terms of reserves.
       Both deputy prime ministers lost second ministerial portfolios in
       November, a demotion confirmed in a new list of cabinet responsibilities
       unveiled last week. But Nemtsov said he was confident Yeltsin would give
       him another year in government.
       The 66-year-old president, back in the Kremlin after a month away --
       first recovering from a viral infection, and then on holiday -- grilled
       another minister Tuesday.
       He told Valery Serov, a deputy prime minister in charge of relations
       with the Commonwealth of Independent States, that he feared some of its
       members may leave.
       "If we sum up 1997, we have to say it -- we've let the CIS issue slip
       away," Yeltsin said. "Some have even made up their mind to quit the
       He called for new efforts to lure back disaffected states to the CIS, a
       loose body formed after the collapse of the Soviet Union which groups
       all its former republics except the Baltics.
       Yeltsin gave his Defense Council an easier time when it met later in the
       day, saying efforts to reform the vast and outmoded military machine
       inherited from Soviet times were beginning to bear fruit.
       "In the last few months we have managed to overcome opposition to
       military reform, from the military themselves and also from politicians,
       even the opposition," he said, in comments quoted by Interfax news
       agency. ^REUTERS

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