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. Last Updated: 07/27/2016

Shokhin: Last Hope of Reform

With the leading radical reformers shuffled out of the cabinet, Western officials say they now see Economics Minister Alexander Shokhin and several other remaining reformist deputy ministers as the last hope for tight Russian monetary policy.


Despite advocating what he calls slower reforms, Shokhin, by default, has emerged as the most liberal in the cabinet after radical reformers Boris Fyodorov and Yegor Gaidar left the government last month.


"Shokhin is on the side of economic reforms and markets," said one Western economist. "The question is, how effective he will be."


The question has taken on added urgency as the government completes its plans for a 1994 budget. Contradictory statements from the acting finance minister and the prime minister indicate that Russia could either adopt a tight budget or one with a highly inflationary budget deficit.


It is the continued presence of Shokhin, acting Finance Minister Sergei Dubinin and several deputies of both ministers that give Western officials reason to believe the issue is at least not yet settled.


"At the moment, the departures are the senior political figures," said the Western economist. "The second level of the reform team is still around."


That Shokhin has emerged as a leading reformer is rich in irony.


His Economics Ministry is the successor to the central planning agency, Gosplan, and Fyodorov and Gaidar had continually called for its dissolution.


After having broken ranks with the radical reformers in the December elections, forming a separate party advocating slower reforms, Shokhin was widely considered to be on his way out of government.


But the victory by the radical reformers never materialized, and Shokhin has very publicly been maneuvering to take a central role in charting Russia's new post-radical reform policies.


Even though he was demoted in last month's cabinet reshuffle -- from a deputy prime minister to economics minister -- Shokhin has been positioning himself as a bridge between the conservatives in the industrial sector and the radical reformers in the Duma and in the West.


Fluent in English, Shokhin has had extensive contacts with the West as the Russian governor to the International Monetary Fund and chief negotiator for Russia on rescheduling the former Soviet Union's debt.


While he appears to have lost the latter post to Dubinin, he gained a significant victory this week when Chernomyrdin named him to the inner cabinet, of which only deputy prime ministers and other powerful ministers are a part.


With his thick-lensed glasses and unemotional demeanor, Shokhin, 42, looks more like a bookish economist than an ambitious politician. But the disarming image belies a bureaucrat who often plays tough for turf.


"Shokhin is building himself up," said one Western diplomat. There is much going against him. He was thought to have been kept in the government largely as window dressing for the West and lacks solid backing from either Chernomyrdin or President Boris Yeltsin.


But from his weaknesses Shokhin is drawing strength. He has nothing to lose, observers said, so he might as well play for high stakes.


With the lower-profile Dubinin in the post of acting finance minister, Shokhin is filling a vacuum left by the departure of Fyodorov.


Shokhin has been preaching a politically palatable gospel of slower reforms combined with tight monetary policy and some limited increased control by the state over prices.


Amid calls for a return to more central planning, Shokhin has taken a middle ground, rejecting proposals for wage and price freezes and a fixed exchange rate for the ruble, but agreeing to greater state control over natural monopolies.


Shokhin, who entered government with the monetarist Gaidar in 1991, now embraces the idea of increased credits to industry but only after a carefully examining an enterprise's finances.


He has assembled a team of reformist deputies that seem to confirm his free-market leanings. One deputy, Sergei Vasilyev, the director of the liberal government think-tank, the Center for Economic Reforms, was appointed last week as a deputy economics minister by Prime Minister Viktor Chernomyrdin.


Yakov Urinov, the first deputy economics minister who is thought to be a solid reformer, also remains.


The same pattern has held true, so far, at the Finance Ministry. Fyodorov's deputy, Dubinin, has been promoted to minister and no change is seen in the immediate future.


Among the outstanding questions is whether the remaining reformers in the government, Dubinin and Shokhin, will work together or fight for responsibilities the way reformers did in the previous government.