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Russia: Chubais Regarded As Possible Panacea -- Possible Scapegoat

Moscow, 18 June 1998 (RFE/RL) -- Reaction in Moscow to the appointment of Anatoly Chubais as a special presidential envoy to international financial institutions highlight three main points.

First, financial analysts and investors say the government and the Kremlin have acknowledged the grave crisis that threatens a collapse of Russia's economy.

Second, according to some observers, Chubais' appointment indicates the government, under pressure from influential domestic business leaders and international investors, is trying to produce both short- and long-term measures to overcome the crisis. And, that these clearly include emergency Western loans, as a way to gain time for the implementation of a yet-to-be-announced, anti-crisis program.

And third, noting Prime Minister Sergei Kiriyenko has said his government will need "all its courage and political will" to implement the anti-crisis program (to be announced Tue, Jun 23), because "some of the program's provisions will be unpopular," most Russian observers agree Chubais is re-assuming his role as a possible panacea -- or a possible scapegoat for Russia's financial troubles.

Chubais was appointed to the new post, following Kiriyenko's talks Tuesday night with powerful Russian businessmen, who had met President Boris Yeltsin on June 2. The group included almost all of the ten so-called "oligarchs." Media-Most head Vladimir Gusinsky did not attend as he was abroad. Reports say CIS Executive Secretary and billionaire businessman Boris Berezovsky, who was not present at the meeting with Yeltsin, was invited to the Tuesday meeting but it is not clear whether he attended. However, Interfax news agency quoted Berezovsky as saying, before the Chubais announcement, that he, Berezovsky, was "one of the initiators" of the proposal.

Berezovsky also said that meetings between business leaders and the government are "the only really constructive way out of the crisis" that has hit the government, as well as businesses. Such meetings, he said, indicate a "new consolidation of forces."

According to Berezovsky, who claims to be a Kremlin insider, government officials and observers "should not play the hypocrite, because the current authorities do not have real support" in the country" -- apart from the controversial business leadership. He said Russia's top businessmen should not be regarded as the "shadow government." But Berezovsky said that businessmen, initiating meetings with Russian authorities, have the main goal of "formalizing, finally, the relationship between business and power."

Andrei Piontkovsky, director of the Center for Strategic Studies, notes in an interview with RFE/RL correspondents that some of the participants at the meetings had been among Chubais' most resolute foes, following privatization sales last year that had antagonized the businessmen and the so-called reformers in government. Piontkovsky said some had previously "tried to destroy Chubais."

Now, said Piontkovsky, the seriousness and the depth of the financial crisis appear to have brought, once again, the government and the business circles together to discuss a way out of the crisis, and, that Chubais "will likely once again be responsible for the social cost of the government program."

Chubais is expected to become the chief anti-crisis coordinator. But, the presidential decree said he would not join the Cabinet again. He is expected to hold a rank equal to a deputy prime minister.

Chubais lost his last government job as first deputy prime minister March 23 when President Yeltsin sacked Prime Minister Viktor Chernomyrdin and the entire cabinet. However, Yeltsin is reported to regard Chubais as a competent administrator able to fulfill difficult tasks. Chubais is expected to retain his post as Chief Executive of the state energy monopoly, Unified Energy System.

The appointment also further clarifies Chubais' status. Last month, Chubais -- no longer a member of government -- traveled to Washington for talks with U.S. officials and representatives of the International Monetary Fund and the World Bank. Chubais is regarded by many Western investors as a 'guarantor of reform.' And, responding to a swirl of rumors his Washington visit set off, Chubais said the officials he had met in Washington were "simply very good, personal friends."

Chubais is a man most Russians 'love to hate.' He is also anathema to opposition deputies in the State Duma. They accuse him of corruption and of selling-off state assets at far below value under pressure from Western financial circles.

Before Chubais' appointment was officially announced, Duma Chairman Gennady Seleznev, a prominent Communist, said the nomination "had been initiated by foreign financial structures," and that the reaction among Duma deputies would be "naturally negative." Besides Seleznev, Duma members from almost all parliamentary factions had expressed their negative reaction to Chubais' likely appointment. First Deputy Duma Chairman and a member of the pro-government Our Home Is Russia faction, Vladimir Ryzhkov, said the relationship between the Duma and the government is difficult enough, and Chubais' appointment would likely make things worse. Ryzhkov, also on good terms with Prime Minister Kiriyenko, said the Chubais appointment comes at a moment when the government needs to cooperate with parliament in order to pass much-needed fiscal legislation.

And a the deputy head of the pro-reform "Yabloko" faction, Sergei Ivanenko, said Chubais' appointment shows that "the government is not going to change old habits" of cultivating what he called crony capitalism practices.

In his new role, Chubais will likely be the chief negotiator at talks with a IMF officials, due to arrive in Moscow Monday.

The IMF representative in Moscow, Martin Gilman said this week that the Fund is sending a delegation to Russia for an "extensive dialogue" on possible aid and measures to stabilize the situation on Russian financial markets. Gilman said Russian officials have not formally requested aid beyond the current $10 billion Extended Fund Facility that the IMF has been disbursing to Russia in installments since 1996. However, following Chubais' appointment, speculation is rising on the possibility that the IMF, dealing with an official it knows and respects, would be willing to consider a new loan.

But, here again, some Russian observers are skeptical. Analysts say the conditions of an eventual loan would probably be strictly connected with fiscal and other measures that the government, as in the past, would be unlikely to fulfill on schedule.

This week, Finance Minister Mikhail Zadornov refused to confirm reports that Russia has secretly borrowed at least $200 million from Western banks in recent weeks. In June and December 1997 -- when Chubais was still a strong influence on economic and financial policy -- Russia borrowed hundreds-of-millions of dollars from American billionaire George Soros and from foreign banks. News of those short-term loans only emerged months after the fact.

Andrei Nechaev, president of Russia's Financial Corporation and a former economics minister, tells RFE/RL that Chubais "may have some chances to obtain financial help from the West. However, the critical situation cannot be changed only with Chubais coming as the fire-brigade," says Nechaev.

And, Center for Strategic Studies Director Piontkovsky adds that the appointment shows that the government, once again, "is very far from having a real solution to the economic crisis."