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. Last Updated: 07/27/2016

Yeltsin team signals it will stay the course

President Boris Yeltsin and his top associates, facing down domestic pressure to ease the pain of reform, indicated Thursday that they would not back away from the transition to a market economy.


Following top-level government changes that fueled fears of a swing to the right, a spokesman for Yeltsin made it clear that the administration was not abandoning its economic aus terity program.


But the Yeltsin team suffered a series of setbacks Thursday even as it sought to defend its strategy.


In a thrust at the government's reform plan, the chief of the Russian Central Bank, Georgy Matyukhin, proposed a freeze on prices and wages to stabilize the economy. Matyukhin, who announced his resignation Monday, was reinstated Thursday after a vote of confidence from the Russian parliament.


In the Russian coal mining region of Shakhtinsk, miners announced Thursday that they had gone on strike to protest having not been paid, Russian television reported. Oil workers have also threatened to strike.


'And in a further stab at the government, hardline legislators called for a vote of impeachment of Yeltsin on Thursday for the second time in two days.


Earlier, in a clear effort by the Yeltsin team to cut short the speculation of the last few days, Alexei Ulyukayev told reporters that the government was changing the tactics but not the strategy of its free-market reforms.


Speaking at a pressconference after a Cabinet meeting on economic policy, Ulyukayev acknowledged that soaring prices, rising unemployment and strike threats had created "social tensions" and predicted that discontent would increase this autumn.


"But that is no reason for changing course", he said. "It is a reason for compromise, for flexibility in tactical changes, but not in the course as a whole".


His comments appeared aimed in part at reassuring Western governments, which have promised $24 billion in aid for Russia to make the transition from central planning to free enterprise.


In recent days, Yeltsin has appointed several veteran economic planners to his Cabinet, fulfilling a promise he made in April to hardliners in the Russian parliament.


Ulyukayev said Thursday that the appointments of Viktor Chernomykin and Georgy Khizha as deputy prime ministers and Vladimir Shumeiko as first deputy prime minister represented a "tactical adjustment to new realities". The men will serve together with First Deputy Prime Minister Yegor Gaidar, Yeltsin's top economic official.


The key new figure is Shumeiko, 47, a former defense industry factory director and currently a deputy speak er of the Russian parliament. Shumeiko's duties will include directing industry and representing the government in Parliament. His moderate record on criticism of the government makes him an appropriate candidate for the latter position. But as director of industry in the new Cabinet, Shumeiko, who favors keeping heavy industry state-owned until production increases, could clash with reformers over privatization.


The appointment of Chernomyrdin, 54, appears to be a concession to the powerful oil industry. A former Soviet energy minster, Chernomyrdin replaces Vladimir Lopukhin, a key Gaidar ally and a staunch supporter of freeing energy prices.


Another new deputy prime minister is the head of the State Property Committee, Anatoly Chubais, the one key player on Gaidar's team who has come out of the reshuffle with his status improved. But Chubais's appointment as deputy prime minister appears to be less an attempt to neutralize the effect of the other, moreconservative appointees, and more a point of law.


A fifth official was named to the top echelons of government on Thursday. The economist Boris Saltykov, who has been serving as minister for science and technology, becomes a deputy prime minister.


Faced with a severe cash shortage which has prompted strike threats from various sectors of industry, the Yeltsin government has recently appeared to cut back the pace of reform. A plan to issue an extra 140 billion rubles tops a list of inflationary measures which contradict the Gaidar reform plan, a blueprint approved by the International Monetary Fund.


The government changes follow a rise in organized opposition to the Yeltsin team. Addressing a press conference Thursday, Sergei Baburin, the spokesman of a hardline faction in Parliament, described the economic situation as "catastrophic" and said that industrial production in vast belts of Russia had come to a complete standstill. Official figures indicate only a 20 percent slump.


Hemmed in by narrowing political and economic options, Yeltsin reacted bitterly through a spokesman earlier this week to criticism of the government's performance by former Soviet President Mikhail Gorbachev, who was told to temper his tongue or face restraining action.


That statement sparked an outcry among progressives, who pointedly reminded Yeltsin that any program for democracy must include freedom of speech.