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Russia: Who's In Charge Of Finances?

Prague, 28 May 1999 (RFE/RL) -- Russian Prime Minister Sergei Stepashin promised yesterday that his full cabinet team would be ready next week. But hardly has the ink had time to dry on the decrees appointing his key cabinet ministers, than bickering over rank and responsibilities has broken out among senior ministers, casting doubt on the new prime ministers ability to impose his authority on the Russian government.

Particularly troubling is the unseemly jostling for power in the key cabinet positions responsible for the economic management of the country. Newly-appointed first deputy prime minister Mikhail Zadornov was reported earlier in the week to have asked to keep the post of finance minister to balance the power of his fellow first deputy prime minister, Nikolai Aksyonenko, who has insisted that he is in charge of the economy.

But within hours of Zadornov saying it would be "logical" for him to hold both posts, President Boris Yeltsin signed a decree stripping him of the Finance Ministry job, handing it to his number, Mikhail Kasyanov, Russia's chief foreign debt negotiator.

Such is the state of disarray that Stepashin felt obliged to remind the country, and no doubt his cabinet colleagues, at a press conference yesterday that he alone is in charge of the cabinet and that he bears full responsibility for the actions of his government.

The issue of who takes care of what in the economy is particularly pressing as Russia continues to negotiate with international loan agencies and creditors on crucial loan resumptions and debt restructuring.

During an address to Duma deputies earlier this month, Stepashin highlighted greater progress on the economic front as the major plank in his future government's platform. But he acknowledged it wont be easy.

"Our mission is to create a principally new economic context, and to take correct decisions capable of guaranteeing better living conditions and renewing the greatness of such a powerful country as Russia. It is no secret that we find ourselves in an extended economic crisis. . . . You know as well as I do how difficult our situation is with domestic and foreign debt, and how difficult it is after the August financial crisis to resurrect our finances and banks, how hard it is to pay current wages and pensions. More than one government team has tried to solve these problems."

Zadornov, speaking at a press conference yesterday, said that Russia intends to honor all existing agreements with the International Monetary Fund (IMF) and the World Bank on economic policy.

Zadornov said the cabinet, at a meeting on Saturday, will review the agreements reached between the IMF and the previous Russian government of Yevgeny Primakov. He said the intention is to submit the necessary legislation to the State Duma for approval as soon as possible. Zadornov noted that the Duma breaks for summer recess on June 20 and it was imperative that deputies approve the legislation before that date.

The new prime minister has said that he will submit himself to a vote of no-confidence if the Duma fails to approve the necessary legislation on economic restructuring. The IMF has said it will only release the crucial $4.5 billion tranche if the government enacts a series of structural reform programs.

In his cabinet meeting speech yesterday, Stepashin also instructed the government apparatus to work out the concept and composition of an economic council in the course of one week.

He said the economic council should become an informal organization to unite the followers of different economic schools and representatives of Russian regions. Stepashin emphasized that the economic council will discuss and carry out a preliminary analysis of all the economic decisions to be passed by the government.

Stepashin, in his Duma speech, also signaled his intent to sort out alleged misuse of funds appropriated from the IMF and other international lenders: "That's why from the very first day of work in the capacity of acting prime minister, I ordered a thorough analysis of the issue of how foreign loans have been used. I will immediately establish an intergovernmental economic commission chaired by myself."

But as the new government issued a flurry of announcements on economic policy and new economic policy making bodies, Stepashin himself added more confusion to the question of who is in charge of the economy. He announced yesterday that his reported first choice as economic supremo -- Alexander Zhukov -- will take part in the budget talks tomorrow. Zhukov, the Duma's budget committee chairman, was also reportedly considered for the post of finance minister which went to Kasyanov. To add further confusion to an already muddled picture Kasaynov himself -- in London to renegotiate Russia's huge foreign debt-- has reportedly not confirmed that he is willing to accept the post of finance minister.