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

. Last Updated: 07/27/2016

Paramonova: A Hostage to Venal Politics

The State Duma's rejection of Tatyana Paramonova as chairwoman of the Central Bank is, sadly, clear evidence that Russia's lower house is still far from responsible.

Paramonova's candidature failed -- even though more deputies voted for her than voted against -- because the 167 votes she mustered fell well short of the 226 required. Over 180 deputies -- well over a third of the Duma -- had ducked out of a decision on one of the nation's key appointments.

That Paramonova has not been confirmed in her post means Russia must now wait at least until the State Duma reconvenes after its summer recess in October to settle the question. Such uncertainty over Central Bank policy is hardly likely to encourage confidence in the economy.

A professional banker, who long served as a deputy to her predecessor Viktor Gerashchenko, Paramonova appears to have had no particular political ax to grind. Yet since her appointment as the bank's acting head by President Boris Yeltsin last November, she has been targeted by opposition deputies as a presidential stooge.

Deputies have also come under fierce pressure from the commercial banking lobby, which objects to reserve requirements Paramonova introduced earlier this year. Many commercial banks -- which have made fortunes on currency trading over the past four years -- also have little to gain from a stable ruble and low inflation.

That the powerful commercial banks can exert so much influence over selection of the head of the body that is supposed to regulate them is a disturbing development.

Add to this that the appointment of the country's central banker -- a position requiring independence, stability and professionalism -- has become so politicized, and it becomes fair to suggest the Duma is not the best body to take this decision.

True, in the United States the chairman of the Federal Reserve is approved by Congress, but there too the incessant wrangles over confirmation of senior state appointees indicate that it may not be the best system for the national bank chief.

Instead, look at Germany where the Bundesbank chairman -- with a tremendous reputation for independence -- is appointed directly by the government. The head of the Bank of England is chosen by the Queen -- for which read prime minister.

Until the legislature learns to approach these matters responsibly, it would be preferable if in Russia, too, the chairman of the Central Bank were chosen by the government in conjunction with the bank's board of directors.

In the meantime, voters should note which of their representatives have copped out of taking a tough decision.