Fyodorov: Reform Process in Jeopardy

Former Finance Minister Boris Fyodorov said Wednesday that he is "scared" that the reform process has been buried underneath a mountain of decrees, legislation and bureaucratic meandering.


Fyodorov, chairman of the State Duma Banking and Finance Committee, in a wide-ranging speech to the American Chamber of Commerce in Russia, also criticized the number of people in government, tax policy and government subsidies.


"I am scared that the last 10 months have been dire for the reform process," he said in a speech that sounded like he was campaigning to become prime minister. "There have been dozens of decrees, dozens of pieces of legislation, but no real policy."


He said his top priority would be reducing the size of the Kremlin's staff. "Russia is smaller than the United States by 100 million people," he said. "But we have many more people in government. If it worked on the same proportion, the White House would have a staff of 10,000."


He said another high priority was tax reform, citing the need to remove special tax holidays for some areas, such as Tula in Central Russia.


He also called for an end to the rebellion in Chechnya and bringing the breakaway republic back into the federation. He implied that Russia should use military force if necessary.


Soviet-style social spending and agriculture are also two of Russia's worst problems, he said. In the social sector, people are still living in communal apartments. In agriculture, production is low. Meanwhile, the state continues to fund both. "There is no point in the subsidies," he said. "Let's help people. Not the dead bodies."


Fyodorov, 36, said he believes that reforms have to be quick or the same maverick "28-year-olds driving Rolls-Royces" will gain control of the economy and the government.


"Reforms are about efficiency," he said. "Reforms aren't a quest to adopt more decrees. When there are real reforms a country gets richer, better and the people are happier."


Fyodorov's message played well with the Western businessmen he was addressing. "His candor was terrific," said Gerald Jay Laba, president of the Arussco Group, an American consulting company setting up shop in Russia. "He said the things I want to hear. I would vote for him." Fyodorov has often won praise from the West. He acknowledged, however, that he is not as popular with Russian workers as he is with foreign businessmen and economists.