Reshuffling Deck, Yeltsin Again Fires Premier, Cabinet

Amid the throes of a financial crisis, Russian President Boris N. Yeltsin fired his government Sunday and invited back to power Viktor S. Chernomyrdin, the prime minister he ousted in March.

The report of the firing of Prime Minister Sergei V. Kiriyenko was read at the end of the 7 p.m. television news, after the sports report, by a baffled presenter. What it might mean for Russia’s financial plight remained unclear, although it appears Yeltsin has hopes of turning back the clock to five years of relative stability under Chernomyrdin, a smooth ex-Soviet energy boss.

Kiriyenko, a 36-year-old newcomer to the corridors of power, had spent his four months in office trying to find ways out of Russia’s worsening economic situation. Last Monday, he let the ruble out of the artificial scaffolding put on it in the Chernomyrdin era, saying it could fall from 6 to the dollar to more than 9 to the dollar before the end of the year. On the streets of Russia on Sunday, the devalued ruble was trading at 8 to the dollar.

The panic in political and international banking circles that followed last week’s move, provoked partly by an accompanying government moratorium on short-term repayments of ruble-denominated debt, proved Kiriyenko’s undoing.

Whether Yeltsin’s decision to switch horses in midstream and reappoint Kiriyenko’s predecessor--who governed from the end of 1992 until his ouster in March--will comfort markets and Western governments, which liked Kiriyenko, remains to be seen.

“In short, this means that Yeltsin has capitulated; that is, he admitted committing a grave mistake by staking too much on Kiriyenko and his government,” said Andrei Kortunov, president of the Russian Science Foundation. “By appointing Chernomyrdin, he takes the situation back to square one; that is, he tries to take the country back . . . months and start again with the very same people who had been building up the economic problems that have now become so acute.

“It is an act of desperation on the president’s part,” Kortunov said.

Meanwhile, the White House said that President Clinton plans to go forward with a two-day summit with Yeltsin scheduled to take place in Moscow at the start of September.

“This is an internal matter within the Russian government,” White House spokesman P. J. Crowley said by telephone to reporters accompanying Clinton on his vacation on Martha’s Vineyard in Massachusetts. “We will obviously be watching the situation carefully and will continue to work with the Russian government to advance its reform agenda.”

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U.S. and Russian analysts were equally surprised by the return of Chernomyrdin.

“That there was a change doesn’t surprise me, since Yeltsin always finds somebody to take responsibility for difficult passages,” said Helmut Sonnenfeldt, guest scholar at the Brookings Institution in Washington and a former career officer at the State Department. “That he would go back to Chernomyrdin does surprise me.”

“It is the act of a man who no longer trusts anyone, can’t find a proper candidate and is shuffling his old and thin stack of cards again and again. The president acted more in response to strong emotion than to common sense,” said Kortunov. “He expected miracles from Kiriyenko, just as he expected miracles from Chernomyrdin in the past. The only way he knows to run the country is through reshuffles. But his options are so narrow now that he has to ask Chernomyrdin to come back, facing the obvious implication that Chernomyrdin’s former loyalty to the president may have corroded after his sacking last spring.”

“There are ample grounds for pessimism,” he added.

Sunday was the second time this year that Yeltsin, 67, who has a taste for the unexpected, has fired his entire government.

He removed the 60-year-old Chernomyrdin and his Cabinet on March 23, saying the prime minister was incapable of reform. Pundits then speculated that the real reason for Chernomyrdin’s ouster was that the quiet premier had at last begun to shine at international events, making the competitive Yeltsin fear him as a possible presidential successor.

Since Chernomyrdin left the government, Russia’s already troubled finances have fallen into even greater disarray. Investors’ confidence has evaporated as a result of what is widely seen as both a devaluation and a debt default, in the aftermath of Asian market instability since last fall that has affected all emerging markets. A $22.6-billion bailout agreed to by the International Monetary Fund in July has done little to improve the situation.

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Today, when Chernomyrdin reports to work as acting prime minister, Russian government officials are due to detail how they will restructure the short-term debt whose payments were suspended a week ago. Before news of his ouster broke, Kiriyenko had spent Sunday negotiating with banks.

Under the debt swap plan, an estimated $40 billion of short-term paper is to be converted into longer-term debt. The benefit for the Russian government would be cheaper repayment terms; the downside would probably be a massive slide in Western investor confidence if bond holders are forced to accept massive losses on their securities.

Chernomyrdin is widely viewed among ordinary Russians as the figurehead of an era of stability, and it is possible his return could trigger a return to confidence inRussia’s future among voters here.

But ordinary Russians--who mostly do not have housing loans and whose personal finances do not depend on outside interest rates--are the people least affected by this crisis. Up to now, they have been oddly calm as the political and financial elites have panicked.

Whether the reappointment of Chernomyrdin, who is perceived by the elite as an old-style Soviet boss, can reassure more anxious bankers and financiers is a far trickier question.

Genrikh Borovik, a board member of the Foreign Policy Assn. of Russia, is among the pessimistic.

“The sacking of Kiriyenko and his government was not exactly unexpected,” he said. “What is really unexpected is the appointment of Chernomyrdin, who himself contributed significantly to the accumulation of the problems the Kiriyenko government failed to resolve. This measure looks bordering on desperation and leaves us with little hope that the situation will improve in the near term.”

Kiriyenko, liked in the West for his youth and fervently pro-market views, has no power base in Russia apart from Yeltsin’s support. Some analysts said Chernomyrdin’s appointment--he is a leading light in the Russian oil-and-natural gas market and a former boss of the giant firm Gazprom--could end instability.

But, they added, the current crisis was at least partly caused by policy failures during Chernomyrdin’s previous stint as premier, when the ruble was propped up at unrealistically high exchange rates.

“In my opinion, Yeltsin is the problem. He is not the solution, and he has not been the solution for a long time,” said James Millar, a professor at George Washington University.

Yeltsin, who has been on vacation and out of Moscow for weeks, was thought to be at a country house just outside the capital Sunday and was to return to the Kremlin today. He had heart surgery in 1996, and his health remains a factor adding to the uncertainty in Russian politics.

He has two weeks to nominate a permanent prime minister, who then will have to be appointed by the Communist-dominated lower chamber of parliament, the Duma.

Russia’s Interfax news agency said Sunday that Chernomyrdin was already holding consultations on forming a new government. He met secretly with several leading politicians last week.

Times staff writer Ralph Vartabedian in Washington contributed to this report.

* ASIA STOCKS TUMBLE: Asian markets opened lower as turmoil in Russia coupled with U.S. dips rippled globally. D1

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Turning Back the Clock

In a surprise move, Russian president Boris N. Yeltsin fired his government Sunday for the second time this year. He replaced his young prime minister, Sergei V. Kiriyenko, with Viktor S. Chernomyrdin, the Soviet-style leader he’d fired just five months ago.

Previous Government Shake-Ups

Russian President Boris Yeltsin has a pattern of periodically firing top aides. A chronology of his government shake-ups:

Nov. 6, 1991: Five months after election, Yeltsin fires Ivan Silayev, prime minister since June 1990. Yeltsin serves as acting prime minister until June 1992.

Dec. 14, 1992: Seven months after Yegor Gaidar is named prime minister, he is fired along with several top deputies. Viktor Chernomyrdin appointed new prime minister.

Jan. 16, 1996: Anatoly Chubais resigns as first deputy prime minister, citing pressure from hard-liners and Yeltsin’s dissatisfaction with his work.

March 17, 1997: Yeltsin reorganizes government, eliminating several ministries and firing more than a dozen ministers. He promotes reformers Chubais and Boris Nemtsov, to be Chernomyrdin’s top deputies.

Aug. 13, 1997: Yeltsin fires privatization chief Alfred Kokh.

Nov. 15, 1997: New privatization chief Maxim Boiko fired.

March 2, 1998: Yeltsin fires ministers of nuclear energy, transportation and education.

March 23, 1998: After sparing him for years, Yeltsin fires Chernomyrdin, along with the rest of the executive branch. Names little-known Oil and Energy Minister Sergei Kiriyenko acting prime minister.

Aug. 23, 1998: Six days after admitting economic defeat and devaluing the ruble, Yeltsin fires Kiriyenko and reinstates Chernomyrdin as acting prime minister.

Associated Press

Sergei V. Kiriyenko

Post: Former prime minister

Age: 36

Education: Degree from the Gorky Institute of Water Transport Engineering; two-year course in finance and banking at the Moscow Academy of Economics.

Career: Served in military; joined Communist Party, 1980; began work at the Krasnoye Sormovo shipyard in Gorky, now known as Nizhny Novgorod, 1986; served as first secretary of Gorky’s regional committee of the Young Communist League, the Komsomol, and was a deputy in the local legislature; became co-founder and director of commercial bank Garantia in Nizhny Novgorod, 1994; named president of the Norsi oil company, 1996; appointed first deputy minister for Russian fuel and energy, May 1997; appointed minister for Russian fuel and energy, November 1997; appointed acting prime minister, March 1998; confirmed as Russian prime minister, April 1998; fired as Russian prime minister, August 1998.

Hobbies: Martial arts.

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Viktor S. Chernomyrdin

Post: Prime Minister

Age: 60

Education: Degrees from Polytechnic Institute in Kuibyshev, now known as Samara.

Career: Served in military; began work as mechanic in oil refinery, 1960; joined Communist Party, 1961, and later served on party committees; named director of Orenburg natural gas plant, 1973; appointed deputy minister of Soviet natural gas industry, 1982; appointed minister of Soviet natural gas industry, 1985; named chairman of natural gas monopoly Gazprom, 1989; appointed Russian prime minister, 1992; fired as Russian prime minister, March 1998; appointed Russian acting prime minister, August 1998.

Hobbies: Theater, reading, hunting.