Monopolizing Yeltsin's ear Financial kingpins may be behind ousters

August 25, 1998|By Kathy Lally | Kathy Lally,SUN FOREIGN STAFF

MOSCOW -- His words slow and deliberate, his face almost wooden, President Boris N. Yeltsin offered Russians an oddly unsatisfying explanation yesterday for his sudden decision to fire his government and bring the once-ousted Viktor S. Chernomyrdin back as prime minister.

He described Chernomyrdin as "honest" and "sturdy" when many citizens, fearful of today's dangerous financial crisis, might have been hoping to hear of attributes such as "economic vision" or "ability to pay debts" or even "full of ideas."

Yeltsin's tone was distant, detached, even when he sounded as if he were anointing Chernomyrdin to succeed him as president in 2000. The usually passionate president was so unemotional that he sounded almost as if he could have been speaking for someone else.

Some Russians suspect he was, that in resurrecting Chernomyrdin, Yeltsin was listening to voices from the shadowy world of the country's financial oligarchs, who have become millionaires and billionaires as they acquired banks, media, oil, metals and timber, while millions of Russians are living in poverty.

Their vast interests were threatened when Prime Minister Sergei Kiriyenko's government considered forcing insolvent banks to close instead of bailing them out.

Kiriyenko's government had also threatened the oligarchs by stepping up collections of taxes. In the end, the oligarchs were too formidable for the reformers.

The first voice mentioned usually belongs to Boris A. Berezovsky, a banker who reportedly holds big stakes in the Russian airline Aeroflot, the auto industry, television and newspapers. Then come other oligarchs such as Vladimir Gusinsky, Vladimir Potanin, Aleksandr Smolensky and Mikhail Khodorkovsky.

Boris Y. Nemtsov, one of the reformers most loved in the West, had a note of defeat in his voice as he discussed the oligarchs -- and his own departure from government -- yesterday.

Nemtsov, a 38-year-old deputy prime minister who once was one of Yeltsin's most-favored proteges, said that it had been very difficult to reform an economy "where there is much arbitrariness and monopolies are rampaging."

He was leaving office, he said, expecting that the economy will only grow worse.

"All the serious problems -- first of all bringing order to the economy, normalizing the situation with financial-industrial or so-called oligarchs' groups -- all these issues are unlikely to find a solution from the Chernomyrdin government," Nemtsov said on Russian television.

He avoided criticizing Yeltsin, however, when asked what he thought of the government's dismissal. "Acts of the president are either correct or not discussed," he said.

Something of an oligarch

Chernomyrdin is considered something of an oligarch himself. Before becoming prime minister the first time five years ago, he ran Gazprom, the huge government gas monopoly.

Yesterday, Gazprom stock rose on news of his nomination as prime minister. Apparently, some investors expect Chernomyrdin to restore some protections that Kiriyenko had been stripping away.

Kiriyenko's government had launched an attack on Gazprom to force it to pay its delinquent taxes.

"Chernomyrdin is the symbol of the criminal-financial oligarchy,"

said Viktor Gitin, a State Duma deputy who belongs to the liberal Yabloko faction. "The role of the financial oligarchs was great in Chernomyrdin's nomination. They were afraid their monopoly of power was under threat."

Berezovsky has had close ties to Yeltsin's family, and Yeltsin recently appointed him secretary of the Commonwealth of Independent States, the organization that coordinates relations among some of the former Soviet republics.

Admiring article

He is suspected of having an active role in restoring Chernomyrdin to power. On Friday, the newspaper Nezavisimaya Gazeta published an admiring article about Chernomyrdin. Berezovsky owns the paper.

The article predicted Chernomyrdin's return, on a day when most analysts would have found the idea absurd.

"According to the information obtained by a Nezavisimaya Gazeta source, Chernomyrdin's inner circle, in confidential talks with well-known politicians, discuss the possibility of creating a 'government of the parliamentary majority,' " the article said.

"Chernomyrdin, a veteran economic executive, believes that the main reasons behind the present crisis are the mistakes and incompetence of the young prime minister, and he is prepared to personally rectify other people's mistakes," the article said.

The article failed to mention that Chernomyrdin had presided over the policies that put Russia deeply into debt and helped create the current financial crisis in the first place. The country began borrowing heavily in the early 1990s, and never managed to produce enough to support itself. When world oil prices began to fall, Russia had more and more trouble paying its debts.

The article also failed to mention that Yeltsin dismissed Chernomyrdin in March for failing to pursue economic reform with sufficient vigor.

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