Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Reform Seesaw: Balance Tilts Toward Market

Last week it was learned that Deputy Prime Minister Anatoly Chubais sent President Boris Yeltsin a letter in which he expressed concern over the future of reform.

People familiar with the contents of the letter say it states that if the course of reform is abandoned, proponents of market reform will declare the government to be a coalition one de facto, and will begin an internal discussion on the question of economic strategy. Of course such polemics are not in the interests either of Boris Yeltsin or the reformers themselves.

On May 11 Yeltsin and Chubais met. Details of the discussion have not been released.

It must be said that internal discussion in the government between representatives of two opposing schools has been going on for some time. But until now the struggle between proponents of radical market reform and their opponents had not come to the surface.

Lately the reformist-macroeconomists have begun to be squeezed out by those in favor of more traditional methods of directing the economy using planning, central distribution of resources and other familiar instruments of a centralized economy. It was obvious that privatization was almost defunct on the eve of the referendum, not only because of the parliament's position, but also thanks to the efforts of some members of the Cabinet.

Less obvious, but no less vital events were taking place within the government. The idea arose in the Council of Ministers of Russia of liquidating the Working Center for Economic Reform, headed by the radical "Gaidarite" Sergei Vasilyev. This center, which prepared the drafts of most of the strategic macroeconomic decisions of the government, would have had nothing to do.

The new economics Minister Oleg Lobov has not only exhibited a fervent desire to bring many functions back under the control of his ministry, including the former power of Gosplan, he has also advanced several revolutionary ideas for changes in the structure of the government. In his estimation, the Foreign Trade Ministry should be a subdivision of the economics Ministry. The State Committee for Industrial Policy would have a similar fate. It is not likely that these dreams will be realized, since the office of prime minister would then become superfluous.

There are several oblique signs that Chubai's position within the government itself has become stronger in the past few days. No one is talking any longer about closing the Working Center for Reform, and the deputy head of the center, Andrei Illarionov, has been appointed an economic counselor to the prime minister. The situation once again has tipped in favor of the reformers. The only question is, will this situation last?