Yeltsin Outmaneuvered By Russian Congress

Change in premier seen as shift from market economy toward controls

YEGOR GAIDAR, the singular architect of Russia's reforms, once described himself as a "kamikaze," referring to Japanese pilots who flew suicide attacks during World War II.

From his first entry into the government, more than a year ago, Mr. Gaidar understood that the reforms necessary to build a market economy in Russia would be painful and unpopular. His aim, Gaidar explained, was to make reforms irreversible before the political reaction inevitably forced him from the scene.

But when that time came on Dec. 14, it was clearly far earlier than either Acting Premier Gaidar or President Boris Yeltsin expected. Up until the end, they had wheeled and dealed to preserve Gaidar. But finally the reform economist lost his battle for confirmation as prime minister in the Congress of Peoples' Deputies, and conservative Energy Minister Viktor Chernomyrdin took his place.

This turn of events raises an immediate question about the future of Russian reforms.

"It means the period of attempt to make a market economy has ended and the period of trying to reconstruct a version of the old economy has begun," says one Western economic adviser.

Mr. Chernomyrdin is cut from a different cloth than Gaidar. His biography reads like a classic account of the rise of a Soviet bureaucrat, from a beginning as a mechanic in the Orsk oil refinery, re-training as an engineer, promotion to director of the Orenburg Gas Processing Plant, and then on to the Soviet Communist Party Central Committee and a succession of jobs in the Soviet government, ending as head of state gas company, Gazprom. In May, Chernomyrdin was brought into the Russian Cabinet as a conce ssion to an earlier wave of attacks on Gaidar's reform policies.

"I know of no reformist inclinations in Chernomyrdin," says Mikhail Berger, an analyst for the daily Izvestia. "He is a typical `Red Director,' " the label popularly used to to describe the managers of the huge state-run industrial enterprises that still make up the bulk of the economy.

Chernomyrdin has the reputation of being a good manager, keeping up gas production levels when every other branch of industry has collapsed. But in his first remarks, the veteran bureaucrat made it clear he favors slower reforms, preserving the industrial giants and easing the austerity policies that Gaidar pursued with the backing of the International Monetary Fund and other Western agencies. At a news conference Dec. 15, Chernomyrdin said he favors a return to selected price controls, especially on oil

products, to prevent a collapse in industrial production.

"No reform will work if we destroy industry completely," Chernomyrdin told the official Itar-Tass news agency. He said he favors a "market-oriented economy, [and] reforms rather than chaos." "Reforms should now acquire a somewhat different character.... We will rely on basic, key industries.... Our country with its mighty infrastructure and a wealth of resources should not be turned into a country of petty shopkeepers."

Gaidar has already distanced himself from what will follow, opting out of any role in the new government, a path likely to be followed by the handful of key young ministers who were part of his team. He carefully expressed his "respect" for Chernomyrdin, while suggesting their ideas of reform are not the same.

Gaidar's hope is that his brief tenure was enough. "Reforms have a rather great inertia of their own," he told Itar-Tass. "It is very difficult to reverse them."

This view is shared by Boris Nemtsov, the reformist governor of Nizhni-Novgorod, a showcase of privatization efforts. Radical measures, such as restoring state-set prices or the system of vertical commands, are impossible now "without a dictatorship," he says. Not only consumers but factory directors "have experienced the taste of freedom."

But what is not yet firmly set is privatization. There is still an opportunity for the new government to pursue a form of privatization which will create huge holding companies and chains of enterprises, the Western adviser predicts, "anything to prevent outside takeovers, whether by foreigners or domestically."

Chernomyrdin has already demonstrated this approach in the energy industry where he was behind a decision to award a massive gas development project to a Russian consortium of defense and energy firms over their Western competitors. Yeltsin, too, has backed this policy.

Chernomyrdin received backing in the Congress from the Civic Union, a centrist alliance whose base includes the powerful Union of Industrialists and Entrepreneurs. Chernomyrdin is close to these circles, and his Cabinet is likely to include their members.

Nor are the changes likely to be confined to economic policies. A new government is almost certain not to include liberal Foreign Minister Andrei Kozyrev, a frequent target of attack by both Civic Union and former Communist hard-liners for being overly pro-Western.

What is particularly galling for many reform backers is Yeltsin's failure, in the end, to defend Gaidar and his decision to propose Chernomyrdin.

"Yeltsin had the political means to keep Gaidar," retorts Mr. Berger. "Yeltsin betrayed not only Gaidar and his team. He betrayed all of us."