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. Last Updated: 07/27/2016

Putin Dresses Down Kasyanov on Budget

President Vladimir Putin sent a warning signal to Prime Minister Mikhail Kasyanov on Monday, telling him "not to repeat mistakes of the past" and to put together a realistic budget for 2002.

Although Kasyanov works hard on the budget every day, "there are no results," Putin said at a Kremlin meeting with members of the Cabinet. "There is no light at the end of the tunnel."

Putin's criticism came two days after Kasyanov asked the president for "another week or two" to put forward his proposal for Cabinet reform.

But Kasyanov's survival skills have never failed him in the past and he is likely to survive the upcoming Cabinet shuffle, analysts said Monday.

"Kasyanov has begun to feel much more confident in recent weeks," said Andrei Ryabov of the Moscow Carnegie Center. "Putin wanted to show Kasyanov his place."

In recent weeks, Kasyanov has found himself in the epicenter of decision-making and has had the final say on a number of issues.

But he reportedly went beyond what was considered his legitimate playground. According to media reports, Kasyanov has been lobbying for specific appointments to key positions in his Cabinet, perhaps stepping on Putin's toes in the process.

One of the rumors has Kasyanov pushing for the head of the White House administration, Igor Shuvalov, to be promoted to be his deputy, but the proposal displeased either Putin or one of his advisers.

"Today's remarks remind me of [former President Boris] Yeltsin's relationship with [former Prime Ministers] Viktor Chernomyrdin and Yevgeny Primakov at the time when both had enough political weight of their own," said Ryabov.

Yeltsin was unable to tolerate any challenge to his authority. Putin, however, is showing more tolerance and more willingness to keep his prime minister in place despite some failures.

Last year, a harsh warning to Kasyanov came as new tax legislation was submitted to the State Duma. Unsure about the outcome of the tax revolution, Putin made sure that Kasyanov would be made the scapegoat in case of a failure.

But the government's fiscal performance beat all records that year, giving Kasyanov additional credibility and some room for maneuver.

However, just as the effects of the tax reform were beginning to be felt, Kasyanov floundered helplessly in talks with the Paris Club.

"It was an embarrassing experience for Putin," said Tom Adshead, political analyst with Troika Dialog. "This year's budget was drafted on an assumption that Kasyanov would get a restructuring with the Paris Club, but that plan never materialized."

At a meeting with German Chancellor Gerhard Schr?der in January, Putin had to humble himself and agree to honor all debts inherited from the Soviet Union. The budget was then amended accordingly.

All along, Putin's economic adviser Andrei Illarionov had been saying that the nation should repay its debts, and his position prevailed.

The budget plans discussed Monday clearly reflected Illarionov's position, Adshead said.

Recently, Illarionov has been pushing for a stabilization fund to accumulate extra tax take resulting from higher oil prices. But while he has suggested to set a cut-off rate at $10 per barrel, the budget architects in the Cabinet have proposed a level of $17 per barrel.

So far, Putin more often has sided with his economic adviser than with the White House policy-makers.

In addition to the Paris Club fiasco, Kasyanov's 2001 budget failed to accurately account for inflation. While the budget is based on annual inflation of 12 percent to 14 percent, the government has recently set a new target of up to 16 percent and Illarionov has said the government will have to struggle to keep it below 18 percent to 20 percent.

Putin told Kasyanov on Monday that the 2002 budget has to be realistic, saying it is better to tell the population honestly and directly what is possible and what is not. "Everything included in the 2002 draft budget must be able to be fulfilled," Russian news wires quoted the president as saying.