• ACI Russia

08/23/1998 20:33:21 Kiriyenko a failed experiment for Yeltsin

By Oleg Shchedrov

MOSCOW, Aug 23 (Reuters) - Sergei Kiriyenko, sacked as

Russia's prime minister on Sunday after just four months in

office, is likely to go down as a short-lived, failed experiment

by President Boris Yeltsin.

The neat, scholarly-looking 36-year-old former banker

oversaw Russia's plunge into a deep financial crisis which went

all the way to a de facto devaluation of the rouble and what

amounted to a debt default.

Parliament blamed him and Yeltsin for the crisis on Friday.

But Kiriyenko portrayed himself as a victim of years of

failed economic policy by his predecessors, global economic

problems and parliament's refusal to pass all his proposed

anti-crisis measures.

"It is not disputes over resignations that are important now

but getting down to work on ending the crisis," he said.

When Yeltsin unexpectedly sacked veteran prime minister

Viktor Chernomyrdin on March 23 and plucked Kiriyenko from

relative obscurity, editors had to struggle to find anything in

their files about the former energy minister.

Kiriyenko, who had been in government for less than a year

after a career as a banker and oil company manager in the Volga

city of Nizhny Novgorod, said his appointment was a complete

surprise for him. He was told to accelerate reforms.

His appointment also shocked the public, but was typical of

Yeltsin who wants to nurture a new generation of politicians.

Before Kiriyenko, Yeltsin promoted Nizhny Novgorod governor

Boris Nemtsov, now 38, to be a first deputy prime minister. By

the time Kiriyenko was appointed a year later, Nemtsov seemed to

have lost much of his power and much of his credit with Yeltsin.

It took Yeltsin a whole month and a threat to dissolve

parliament to get the Communist-led State Duma (lower house) to

approve Kiriyenko. Deputies said he was inexperienced and too

young for the job.

In contrast to the down-to-earth Chernomyrdin, Kiriyenko did

not flirt with the Duma. He bluntly warned deputies that the

Russian economy was in an alarming state and said tough measures

were needed to improve matters.

But it soon became clear the lightweight Kiriyenko needed

more support to keep things running. He has no political party

behind him and no backing beyond Yeltsin's.

Yeltsin brought back Anatoly Chubais, a former finance

minister and first deputy premier, to negotiate with

international financial institutions.

Yeltsin also named his old ally Boris Fyodorov as head of

the tax service to try to make Russians pay their taxes.

Chubais arranged a $22 billion credit from the International

Monetary Fund and tax collection showed signs of improving.

But shares plummeted, banks ran into severe problems and

unpaid miners blocked railways. The country slid deep into


The Duma rejected much of Kiriyenko's anti-crisis programme,

prompting the government to take tough and unpopular steps, but

failed to restore investors' confidence.

The government effectively devalued the rouble on August 17

and in effect defaulted on debt payments, sparking more panic on

the markets and rocketing dollar rates.

"The biggest problem was that we failed to win confidence,"

Chubais said, explaining the move.

Kiriyenko and central bank chairman Sergei Dubinin were

reported by Russian news agencies to have offered their

resignations but Yeltsin has kept them on.

Kiriyenko's sacking appears to have been no less a surprise

to him than his appointment. His press office said on Sunday

that he had been holding meetings all weekend to prepare urgent

measures to tackle the effects of crisis.

"He is not responsible for what is actually happening,

because he hasn't had time to do anything real," Yeltsin's

liberal opponent Grigory Yavlinsky said last week. "But he is

responsible for assuming a job he did not measure up to."


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