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. Last Updated: 07/27/2016

Problems For the New Top Minister

Accepting Viktor Chernomyrdin's pledge to continue reform and the Western energy industry assessment that he is a "very professional manager", there are some management problems being left behind by the new prime minister's young predecessor.


For instance, during the summer, there was a huge argument in the Supreme Soviet over whether or not Russia's Central Bank should raise the rates payable on its loans to commercial banks. At the time, scores of deputies argued against this. Ruslan Khasbulatov, the parliament speaker, backed the critics. A few months later, in an interview in Moscow News, Khasbulatov acknowledged that raising the Central Bank rate to something closer to the inflation rate had been the only sensible option.


With the Congres's overwhelming endorsement so fresh and with Khasbulatov's obvious glee in the result so obvious, Chernomyrdin has a unique opportunity to "manage" some sensible policies into place -- like setting some appropriate monetary guidelines and then sticking to them.


Another example: As an industrialist, especially one from the energy sector, Chernomyrdin must know that when the cost of production exceeds the value of the product, something must be wrong. It has been estimated that well over half of Russian industry is now deducting instead of adding value. If this were true of a natural gas well, Chernomyrdin the manager would most likely order its closure.


So, too, he must now take the tough decision to allow a significant portion of Russian industry to close. Naturally, he must keep his promise to pursue reform but with less social pain. There is, of course, some suspicion that he will want to prevent pain amongst his immediate peers, within the industrial elite. But the place to deal with the pain is where it is felt, by putting in place an appropriate and practical social safety net, to help the workers adjust to their new circumstances.


Yet another example: As a manager, Chernomyrdin will know that the best way to ensure that things get done properly is to appoint competent subordinates and to endow them with sufficient authority to fully pursue their responsibilities. In this, it looks as though he is going to inherit most of Gaidar's ministers. This should be seen as very good news, indeed. Clearly, Chernomyrdin cannot be expected to be an instant expert in all things.


This should ensure continuity from the Gaidar cabinet to the new one. and whereas Gaidar became a lightning rod for all the antipathy toward reform, his successor could deflect criticism and let his more competent ministers carry on.