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Russia: New Government Takes Shape

Moscow, 5 May 1998 (RFE/RL) -- Russia's President Boris Yeltsin has announced that the composition of the new government will be finalized today -- and that the government staff will be reduced by half.

Before a meeting today with Prime Minister Sergei Kiriyenko, Yeltsin said there will be "serious changes" in the government structure. He said that, whereas previously, there was a Prime Minister, Deputy Prime Ministers and Departments, from now on, "everything will be based on ministries."

Yeltsin said reducing the government staff by half would result in a greater workload for ministers, but, on the other hand, he said, there will be less red tape. And, he also said, "a serious restructuring, an unprecedented one, lies ahead."

April 30, just hours before the nomination of the first key ministers in the new government, Communist Party leader Gennady Zyuganov said Kiriyenko's cabinet would look a lot like the old one, and continue to pursue the policies of former deputy prime minister Anatoly Chubais. At the time, Zyuganov described the government as "the third edition" of the government of former acting Prime Minister Yegor Gaidar, "with the teeth of Chubais," suggesting Kiriyenko would implement policies mandated by the International Monetary Fund.

But, contrary to some analysts, who said the new government would differ little from the previous one, Yeltsin appears to be sticking to what he said March 23. That day he fired Viktor Chernomyrdin, as prime minister and the whole government, and announced he wanted to revive reforms with a team of young technocrats, not linked to battling Moscow financial and business clans.

Thus far, top new ministers come mostly from Federation regions, and are viewed as fairly independent from the capital's financial and business clans. However, lacking a real power base, they will depend mainly on Yeltsin's goodwill to carry out their tasks.

There will be no more 'first' deputy prime ministers. But, Boris Nemtsov, who held that rank in the last government, appears set to consolidate his power base as Kiriyenko's Deputy Prime Minister. Nemtsov will supervise energy policy and so-called natural monopolies in the energy and transportation sector.

Little known former Deputy Finance Minister Viktor Khristenko, was also named a Deputy Prime Minister. Khristenko will supervise budget revenues and spending, placing special emphasis on budget relations between the federal and regional governments. Federal officials have repeatedly said regional authorities will have to comply with a number of tough measures, including plans to reduce subsidies for housing and utilities, in order to receive disbursements from the federal budget.

Khristenko managed Yeltsin's re-election campaign in the Chelyabinsk region in 1996, and then served as the region's presidential representative.

The third Deputy Prime Minister's post went to Oleg Sysuev, who will be in charge of social policies.

Observers note that, thus far, only one of the newly appointed ministers, Fuel and Energy Minister Sergei Generalov, has clear ties to Moscow financial circles. Generalov comes from the top leadership of bank Menatep and oil company Yukos, led by Mikhail Khodorkovsky. Khodorkovsky has been viewed as an ally of billionaire Boris Berezovsky, who, last week, was named Executive Secretary of the Commonwealth of Independent States (CIS).

Western analysts have said that the new government might be too weak to carry out meaningful reform ahead of the 2000 presidential elections, suggesting Kiriyenko "is not a political heavyweight." And, they say, the lack of open support from Russia's influential financial and business circles weakens the new cabinet, making it too dependent on Yeltsin, who has been routinely ill, and unpredictable.

Two recent events might signal a new direction for the new cabinet.

The Board of Directors of Russia's energy monopoly, Unified Energy System (UES) appointed Chubais the company's chief executive. On word of the appointment, UES stocks led a rally on Moscow Stock Exchange last Thursday, with the market rising two percent, overall.

UES generates 75 percent of Russia's electricity, and is the second-largest company in the country.

Opposition politicians and some influential businessmen, including Berezovsky, had spoken out against putting Chubais in charge of UES, which owns controlling stakes in most Russian regional utilities, and is at the center of a huge non-payment crisis.

Critics say Chubais has no experience with problems in the energy sector. But, supporters say Chubais is an experienced manager, and, if he can resolve UES' problems, the positive influence on Russia's economy would be enormous.

The appointment of Chubais at UES and Nemtsov in a leading government position is likely to please foreign investors, who see them as contributing a degree of stability. Their appointments to top positions took place as Berezovsky, one of their main opponents, also obtained a government post, but one that appears to be far less significant.

Sergei Markov, director of the Moscow Center for Political Studies, said the Berezovsky appointment "means political exile from Russia's policy for Berezovsky."

The CIS Executive Secretariat is based in Minsk, Belarus.