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. Last Updated: 07/27/2016

Cabinet Shifts: Reformers Lose Clout at Top

In the last working days of the old year more definite signs of reorganization in the higher echelons of the government were noted. It seems that out of nine deputy prime ministers only four will remain: two first deputy prime ministers and two ordinary ones. The "first of the firsts" will be Oleg Soskovets, and the "second first" will be Yegor Gaidar.


If this version of the reshuffle is carried out, it would seem to satisfy the reformist wing in the government. Gaidar, the group's leader, will remain Viktor Chernomyrdin's first deputy, and Anatoly Chubais and Boris Fyodorov, the most active market reformers, will stay in the government, although with a lower status: Instead of deputy prime ministers they will just be ministers.


In reality, this plan will significantly weaken the reformers' position in the cabinet.


Even Gaidar's position, which will formally remain unchanged, is no longer a guarantee that the old course will be maintained. The Economics Ministry that he heads has figured very little in reforms over the past few months.


Chubais will not be able to actively influence privatization any more, since he will no longer be a member of the government's inner circle.


It must be noted that position of lobbyists from the state sector has strengthened noticeably in the past few weeks. The directors of the largest and, usually, the most unprofitable enterprises have begun dealing directly with the president, individually and in small groups, to obtain special privileges for their enterprises.


In the last days of December one such group visited Yeltsin, including the director of Rostselmash, the maker of the most expensive and least efficient combines; the director of Metrovagonmash, a major military machine building plant in Mytishchi, near Moscow, which makes metro cars; the director of ZiL; the director of VAZ.


The details of their conversation with the president are not known, but on the day after the meeting Yeltsin issued a decree giving previously unheard-of privileges to the All-Russian Automobile Alliance, the new automobile giant that VAZ is planning to build. Excise taxes on ZiL autos were cut precipitously -- from 35 to 10 percent.


Inspired by their success, the directors of the state giants are not likely to be satisfied with privileges for their enterprises. They will attempt to influence economic policy as a whole. The president already has a letter from ZiL asking that import tariffs be raised on trucks. And if this idea is approved, the outmoded, ZiL trucks will have no competitors on the Russian market.


These same directors, in private discussions, do not hide their desire to get rid of several important members of the government, such as Finance Minister Boris Fyodorov. If we take into account the fact that the chairman of the Central Bank, Viktor Gerashchenko, will probably keep his position, then Fyodorov, who has on several occasions stated that he cannot work with Gerashchenko, may make it easy for the directors.


If this proposed plan for the reorganization of the government is carried out, and the role of state-sector lobbyists continues to grow, Gaidar and his small team could be transformed into a "Potyomkin Village" of reform. The question is, who out of the members of his team (including Gaidar himself) will agree to this role?