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. Last Updated: 07/27/2016

Yeltsin Must Pick Strong Finance Boss

At the end of January, a Boris Yeltsin still reeling from the Communists' victory in the parliamentary elections shunted economic policy-making to the bottom of his in-basket. Out went reform architect Anatoly Chubais, in came Vladimir Kadannikov, boss of ailing carmaker AvtoVAZ, as first deputy prime minister in charge of the economy.


The political calculus behind the personnel shuffle was clear. Chubais was the widely unpopular mastermind of privatization, but a skilled administrator who glided into a behind-the-scenes role guiding Yeltsin's re-election campaign. Kadannikov was seen as a forward-looking but one-of-the-boys industrial manager who could help swing Russia's big enterprises behind the president. Yet wags were quick to note that if Kadannikov could run the once-thriving AvtoVAZ into the ground, he could surely do the same for the country as a whole.


Six months later, the political dividend has been returned: Yeltsin has comfortably won his second term. The economic cost of the pre-election period, however, has been high. Tax collection has slowed to a trickle, investment has all but dried up, and gross domestic product has continued its slide.


Kadannikov can hardly be blamed for all these ills. Yeltsin's free-spending campaign ways were no help to the economy. Most businesses and individuals would have deferred major spending decisions until after the election no matter what.


Nevertheless, his tenure in the economics post can best be described as ineffectual. He showed only a shaky grasp of macroeconomic policy, rarely appeared before the press, public or parliament, and failed to initiate any serious reforms or wring industrial enterprises for their overdue tax arrears.


All indications now are that Kadannikov is a lame duck. Since the election, the administration has been openly canvassing candidates for his job, with Uneximbank chairman Vladimir Potanin, Duma deputy Alexander Shokhin, presidential adviser Alexander Livshits and Yabloko leader Grigory Yavlinsky the names commonly mentioned.


Any of the above would be capable candidates. What is vital is that the president put economic sense above politics in making the choice. Encouragingly, he already has done so in tapping as his chief of staff Chubais, who in turn is likely to put his own imprimatur on the deputy premier appointment.


Of course, there is no substitute for Yeltsin's firm hand at the wheel as well. For more than a month since the election, the economy and government have continued to drift as the president has recuperated at Barvikha. Heading off a feared economic crisis in the fall will require more active policy than has been seen to date.