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. Last Updated: 07/27/2016

Chernomyrdin: Siding With the Reactionaries?

Deputy Prime Minister Boris Fyodorov wrote a letter officially accusing the leadership of the Central Bank of unprofessionalism and a lack of principles. Viktor Gerashchenko, in turn, also officially, and also in a letter to Prime Minister Viktor Chernomyrdin, accused the deputy prime minister of the absence of a realistic approach and of an attempt to substitute fictional regulations for strict monetary policy.

It is quite possible that victory in this conflict will be won by Prime Minister Viktor Chernomyrdin, who, unexpectedly, took a position close to that of Gerashchenko. At the end of last week the prime minister shocked many with a speech delivered in St. Petersburg.

Chernomyrdin said for the first time that the collapse of the economy dated from the mid-1980s, that is, from the beginning of perestroika. We destroyed the state planning and supply organizations, Gosplan and Gossnab, in a rage, but they turned out to be necessary, although in a new, different form, he added. By this Chernomyrdin in effect took the position of the most reactionary critics of reform, who are convinced that all troubles began with Mikhail Gorbachev, and who demand the recreation of those "tried and true" instruments of the centralized economy -- Gosplan, the state planning committee, and Gossnab, the state acquisition agency.

Chernomyrdin advocated a "bicameral economy", one part of which would be run by the state, and the other by the market. The prime minister even specified what should be regulated: fuel and energy, food, military conversion, science and social services. The rest, added the prime minister, can be adapted to the market.

In principle Chernomyrdin and even Yeltsin have repeatedly called for corrections in economic policy. But this time Chernomyrdin spelled it out: more than anything else, he was displeased with the laws on enterprises and privatization. and Anatoly Chubais, the deputy prime minister in charge of privatization, was unsatisfactory.

But if you take half of the economy away from the market, if you revise the basic principles of privatization, then what is left of the reforms?

Friday, in circles close to the government, the question of Fyodorov or Chubais resigning was being discussed. If they were to resign, should it be immediately or after the referendum?

A crisis could be caused by the dismissal of Chubais alone. Fyodorov, say those close to him, would not remain in the government if Chubais or Alexander Shokhin were removed.

The only hope is that Chernomyrdin's Petersburg speech does not represent his final position. Otherwise, Yeltsin may have to pay too high a price for political support from the government -- reform itself.