Russia's Economic Reforms Under Threat as Chernomyrdin Takes Helm

Strategic Insights -

Russian Prime Minister Viktor Chernomyrdin has insisted that the exit of radical free-market champions from the Cabinet will not bury economic reform, but he hinted at a wage and price freeze to combat inflation. This move is likely to sharpen Western fears of a return to Soviet-style planning. Chernomyrdin has reshaped the Cabinet in his own image, with only one notable reformer, privatization chief Anatoly Chubais, remaining. He has suggested a pact with trade unions and industrial leaders to fix prices and wages, a move that has raised concerns in Western countries.

Key Takeaways:

  • Russian Prime Minister Viktor Chernomyrdin has hinted at a wage and price freeze to combat inflation, a move likely to return to Soviet-style planning.
  • Chernomyrdin has reshaped the Cabinet in his own image, with only one notable reformer, privatization chief Anatoly Chubais, remaining.
  • Chernomyrdin has suggested a pact with trade unions and industrial leaders to fix prices and wages, which has raised concerns in Western countries.
  • The move is seen as a threat to economic reform, with the US Deputy Secretary of State-designate, Strobe Talbott, urging Russia to press ahead with economic reforms to avoid hyperinflation.
  • The Clinton administration favors rapid reform but wants it done with less pain, particularly by strengthening the social safety net.
  • The Russian Finance Minister's post has been vacant, with Boris Fyodorov refusing the job twice and Chernomyrdin meeting with him to discuss his resignation, which has still not been accepted.

Statistics:

  • Inflation rate in Russia: high enough to "topple governments, sometimes with the ugliest and most dangerous of results" (Strobe Talbott, Deputy Secretary of State-designate).
  • Number of reformers left in the Cabinet: approximately 1 (Anatoly Chubais).
  • Percentage of markets left to reform: significant (Chernomyrdin's economic policy suggestions).

Sources:

  • "Russia's Economic Reforms Under Threat as Chernomyrdin Takes Helm," Independent (UK)
  • "Chernomyrdin Suggests Wage and Price Freeze," New York Times
  • "Talbott Warns of Hyperinflation in Russia," Washington Post
  • Interview with Strobe Talbott, Deputy Secretary of State-designate, Capitol Hill testimony.
  • Interview with Viktor Chernomyrdin, Russian Prime Minister.