Yeltsin Names Reformer to Oversee Ailing Economy

After four days of bargaining with Russia’s new prime minister, President Boris N. Yeltsin appointed a young, Western-schooled reformer Wednesday to oversee the country’s troubled transition from communism to a market economy.

Boris G. Fyodorov, 34, an admirer of British economic policy under former Prime Minister Margaret Thatcher, became deputy prime minister in a reshuffled Cabinet in which like-minded reformers favored by Yeltsin retained control of the most important economic ministries.

The shape of the 31-member Cabinet, announced in a decree read on evening television, restored some of Yeltsin’s battered prestige after the most tumultuous month in Russian politics since the breakup of the Soviet Union last year.

But economists warned that the new government looks unstable because of sharp differences between the reformers and Prime Minister Viktor S. Chernomyrdin, who resists their plans to free prices, sell off state enterprises and withdraw subsidies from failing industries.

“I think this Cabinet is temporary, for a period of a couple of months, but at least the reforms have a chance to continue,” said Mikhail Berger, economics editor of the Moscow newspaper Izvestia. “Fyodorov has a strong character. It will be hard for him to get along with Chernomyrdin, who will demand bailouts for industry. Fyodorov will be against it.”

Chernomyrdin, 54, a former Soviet industrial manager, got his job Dec. 14 when Yeltsin lost a bruising two-week battle with the rebellious, conservative Congress of People’s Deputies and sacrificed the youthful architect of his year-old reform program, acting Prime Minister Yegor T. Gaidar. Since then, Gaidar and Yeltsin had waged a fierce--and ultimately successful--battle to keep the core of Gaidar’s team of economists in the Cabinet.

Anatoly B. Chubais, who is managing the planned privatization of 5,000 industries, and Alexander N. Shokhin, who oversees foreign economic relations, retained their posts as deputy prime ministers. So did Economics Minister Andrei A. Nechayev and Finance Minister Vasily V. Barchuk. All four men are Gaidar loyalists.

Four officials were dropped from the Cabinet. But the only Gaidar aide among them was Pyotr Aven, chief negotiator in talks with the West on restructuring Russia’s $80-billion foreign debt.

Shokhin, respected in Western financial circles, is expected to assume his role.

The president also dismissed Valery A. Makharadze, his liaison with local officials, and added Yuri F. Yarov, a close ally of Parliament Speaker Ruslan I. Khasbulatov, to the roster of deputy prime ministers. The latter appointment was a sign that the president wants peace with lawmakers.

Moving closer to a Western-style division of powers, the Congress, in its December session, voted itself the right to veto Yeltsin’s appointments to head the Foreign Affairs, Defense, Interior and Security ministries.

Yeltsin reappointed all four ministers, despite the near-certainty that Foreign Minister Andrei V. Kozyrev will be rejected by Russia’s standing legislature, the Supreme Soviet. Kozyrev is repeatedly criticized there for being too agreeable to the West.

Last week, Yeltsin rebuked Kozyrev for making a mock Cold War speech to an international conference in Stockholm in an attempt to show what might happen if conservatives got control of Russian foreign policy. He told reporters that Kozyrev had failed to clear the speech with him and got carried away by the political tensions at home.

But Yeltsin was evidently determined to keep Kozyrev long enough to try to complete negotiations with the United States on the START II treaty, limiting strategic nuclear weapons, before President Bush leaves office next month.

“If the hard-liners want to remove Kozyrev before then, Yeltsin can blame them for interfering” with the START negotiations, said Andranik Migranian, a senior adviser of the Supreme Soviet’s committee on foreign affairs.

For now, Yeltsin has the main battle won by getting Chernomyrdin to accept the economic reformers. By law, the prime minister names the members of the Cabinet, which he heads, and passes the list to the president for formal appointment. The president can veto but not initiate nominations.

In actuality, Yeltsin negotiated the Cabinet makeup with Chernomyrdin, the first independent prime minister he has had to contend with since being elected president in 1990.

Yeltsin did it in dramatic fashion, cutting short a state visit to China on Saturday to jump into the political fray after hearing that Chernomyrdin was listening to advice from Yeltsin’s conservative foes. Presidential spokesmen said that Yeltsin conducted meetings all week, despite suffering a cold.

Berger, the Izvestia editor, said that he believed Gaidar proposed Fyodorov to oversee the economy. He knows both men and said they are close friends who see eye to eye on most issues.

Economists and politicians here said Chernomyrdin apparently agreed to the choice because he has neither an overall grasp of the economy nor his own coherent team of advisers. Russia’s Itar-Tass news agency quoted him as calling the new Cabinet “a competent, professional government.”

Fyodorov served six months as finance minister in the first year of Yeltsin’s presidency and quickly established credentials as a radical reformer while Russia was still subordinate to the Soviet Union.

That year he co-wrote a plan to shift Russia from a command economy to the free market within 500 days. He resigned in frustration less than two months after the plan was announced when the legislature balked at lifting price controls and allowing private ownership. Since then, he has worked as an executive at the European Bank for Reconstruction and Development in London.

Fyodorov, a firm advocate of tight fiscal policy, now faces new battles not only with the free-spending legislature but also with the prime minister and other members of the government.

In his first policy move, Chernomyrdin got lawmakers to approve $480 million in easy-term credits last week to state energy companies--a major bailout.

Profile: Boris Grigoryevich Fyodorov

Title: Deputy prime minister for financial, economic policy

Age: 34

Career highlights: Received a doctorate in economics at Moscow State University for thesis on “Financial Futures and Options Trading,” a foreign concept in Soviet Russia . . . did postdoctoral work in 1989 as visiting researcher at Glasgow University and was part of a Russian delegation at meetings of World Bank and International Monetary Fund in 1990 . . . worked for huge Soviet economic planning agency, Gosplan, and prestigious Institute for Economics and International Relations . . . in June, 1990, after Boris N. Yeltsin became Russian president, was named finance minister and helped draft a 500-day plan to convert Russia from central planning to a free market . . . . after plan ran into opposition from Kremlin and Communist-dominated Russian legislature, he resigned in frustration in December, 1990.