Yeltsin Dumps Gaidar; Russian Reform in Peril

The young, radical reformers leading Russia’s year-old transition from communism to a market economy fell from power Monday as Russian President Boris N. Yeltsin, yielding to a hostile legislature, withdrew his support for Acting Prime Minister Yegor T. Gaidar.

The Congress of People’s Deputies then ended a stormy two-week session by electing as the new prime minister Viktor S. Chernomyrdin, a conservative industrialist who managed the oil and gas industry for both Yeltsin and his Communist predecessors.

Chernomyrdin, 54, immediately signaled a slowdown of Gaidar’s reform program of selling off state property, freeing prices and integrating Russia into the world economy.

The reforms have won $24 billion in promised aid from the West but have been accompanied here by high inflation, a deep recession and growing unemployment--ills unheard of in the predictable old days of the Soviet Union.

“I am for reform,” the white-haired new prime minister told deputies in the Grand Kremlin Palace. “But not through the impoverishment of our people.” His remark filled the three-story hall with thunderous applause.

Yeltsin’s surprise decision to abandon Gaidar and allow the Congress to choose a successor raised alarm among Western donor nations and put further aid in doubt. It could also lead to a more nationalistic tilt in Russian foreign policy.

In Washington, Bush Administration officials were visibly taken aback by Gaidar’s fall, which they glumly noted was only the latest of several setbacks for the reformist camp. They said they will try to work with the new government and encourage it to continue economic and political reforms.

“It’s really incumbent on us to give this government a chance,” one official said. “This doesn’t mean that reform has stopped. And the most important thing is that Yeltsin is still president. . . . But the reform forces are clearly on the defensive.

“We have built a strong partnership with Yeltsin,” the official added, “but the whole relationship is built on the reforms. If that commitment fades, the whole relationship will be affected.”

American officials considered Gaidar the most serious reformer in Yeltsin’s government, the key economic thinker who was turning Yeltsin’s general commitment to change into specific policies. Gaidar became a Washington favorite after he dazzled a room filled with White House, State Department and Treasury officials last February with his plans for privatization and market reforms.

But in Moscow, many politicians said that Yeltsin, whose popularity at home has slipped badly as the pain of reform sets in, could no longer afford to stand behind his top aide. Under Chernomyrdin (pronounced Chair-no-MIR-din) , they noted, the Congress that ratified him must now share responsibility for Russia’s gloomy economic outlook.

Gaidar, a 36-year-old economist, launched his reforms last January and has been de facto Cabinet chief since June. On Wednesday, he fell 54 votes short of confirmation in his post by the 1,041-member Congress, which was elected before the breakup of the Soviet Union and is dominated by an alliance of industrialists and unrepentant Communists.

The president first reacted furiously, threatening Thursday to stage a nationwide referendum aimed at forcing the Congress to face reelection. Then just as suddenly, he backed down, agreeing Saturday to a compromise. It allowed him to name a prime minister from any of the three top vote getters in new voting by lawmakers on a field of candidates.

As late as Sunday, Yeltsin told the young think-tank economists around Gaidar that he would stick by his man. Yeltsin assured them that Gaidar would continue in his unofficial status until April, if he finished among the top three; but he again fell short of a majority.

Political factions in the huge legislature submitted 17 candidates to Yeltsin. Under terms of the weekend accord, the president chose five of them to be subjected to separate votes. Deputies could vote for as many candidates as they liked. Gaidar finished a poor third, behind Security Council Secretary Yuri Skokov, with 637 votes, and Chernomyrdin, who got 621. Gaidar’s 400 votes were far fewer than he got last week and just one more than auto executive Vladimir Kadannikov.

Yeltsin then huddled with his top aide and rose, somber-faced, in the marble-columned chamber. “I cannot hide from you that I am still committed to Yegor Timurovich Gaidar,” he said, his voice wavering and breaking on the live radio broadcast. “His candidacy would be the most suitable at this stage, in terms of continuity. In the course of our talk, he did not directly remove his candidacy, but with his consent, I proposed another candidate.”

Chernomyrdin then won swift confirmation, by a vote of 721 to 172, to become prime minister and form a new Cabinet.

Since joining the Gaidar Cabinet as a deputy prime minister last May, Chernomyrdin has voiced general support for reforms while criticizing the pace of the policy he was supposed to carry out--a gradual liberalization of oil and gas prices.

He presided over his first Cabinet meeting Monday night but offered no details of his program or the composition of his government team. But, in an interview with the Itar-Tass news agency, he hinted at stronger protection for long-pampered industries that cannot yet survive free competition with imports.

But some economists warned that the new minister could do little to broaden the selected state subsidies that Gaidar had reluctantly accepted in recent months as necessary to revive the energy, food production and transport sectors and to help arms factories convert to civilian production.

“If Chernomyrdin tries to bail out the whole economy, he is doomed to fail,” said Andranik Migranian, an adviser to Parliament’s Committee on Foreign Affairs and International Economic Relations. “There’s simply not enough money.”

Gaidar’s demise might also mean the dismissal of Russian Foreign Minister Andrei V. Kozyrev, whom the Congress lambasted as too friendly to the West; Administration officials in Washington on Monday expressed concern about his political survival. Under a measure approved by the Congress, Chernomyrdin’s choice for that post must be approved by the smaller standing legislature, the Supreme Soviet.

Ruslan I. Khasbulatov, the abrasive Speaker of Parliament who has become Yeltsin’s nemesis, declared in closing the session that Congress had “established itself as the supreme organ of state power.”

Yeltsin’s most radical supporters in the legislature revolted against his retreat from Gaidar, saying they might go into opposition.

Father Gleb Yakunin, a Russian Orthodox priest and pro-reform deputy, predicted: “There will be an attempt to return to the planned distribution economy. This will make the inflation rate higher and stop Western aid. It will be a slow strangulation of all reform and a sliding back to the Communist past.”

Yeltsin spokesman Vyacheslav Kostikov played down the new prime minister’s differences with Gaidar, calling Chernomyrdin “a sober-minded politician . . . of neutral, moderate and balanced opinions.”

Times staff writer Doyle McManus in Washington and Andrei Ostroukh of the Times Moscow Bureau contributed to this report.