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. Last Updated: 07/27/2016

Fyodorov Urges Economic Pact

Deputy Prime Minister Boris Fyodorov on Wednesday urged Russia's leaders to draw up a "national pact" on Russia's economy to protect it from political power struggles.


Fyodorov, responsible for the cabinet's economic policies, said that last year's sharp drop in living standards, industrial output and foreign trade revenues was in part due to the political quarreling between the government, the legislature and the Central Bank.


"We need an economic policy for the whole Russian state", Fyodorov told a roundtable. "We cannot have schisms between the government and the legislature, or between the government and the Central Bank, where each side follows its own policies".


The roundtable brought together representatives of a broad spectrum of political parties, leading economists, leaders of the cabinet and parliament, regional leaders and Moscow Mayor Yury Luzhkov.


The spirit of reconciliation was evident in a statement circulated to the participants and signed by Fyodorov, a market-minded reformer, and Yury Voronin, the conservative first deputy speaker of parliament.


"The main goal of the pact is to put an end to political confrontation on economic questions where there is no objective reason for dispute", the statement said. Some roundtable participants embraced the idea.


"Economics has to stop being a hostage to politics", said Yevgeny Yasin, who is an economic adviser to both President Boris Yeltsin and the industrialist union of Arkady Volsky.


But having agreed to be conciliatory, the participants had trouble finding concrete agreement on solving economic problems.


Fyodorov repeated the major tenets of the government's 1993 economic program, in which the cabinet wants to bring down inflation from its current annual rate of 2, 600 to 300 percent per year. The program includes plans to limit state credits to enterprises, allowing ineffective state enterprises to go bankrupt, and raise interest rates to correspond more closely to the rate of inflation.


Fyodorov chided the Central Bank for issuing easy credits to support industry in 1992, urging its leaders to work more closely with the government.


But Central Bank chairman Viktor Gerashchenko replied that the government had given up its levers of control over state-owned firms too quickly, leaving the economy "largely unmanageable".


Anatoly Medvedev, a leader of the hardline Motherland faction of parliament, criticized Fyodorov's suggestion of raising interest rates, saying that this would lead to "spiralling inflation".


Finally, Medvedev said that Fyodorov's proposals were insupportable because they lacked "concrete steps", but did not add any "concrete steps" of his own.


This illustrated one of the difficulties in Fyodorov's proposal for a national pact. The fractious legislature, where Russia's tiny political parties have the most influence, is unpredictable. Alliances constantly change, and compromises concluded at separate negotiations rarely hold up on the floor of parliament.