Russia's old hand at the helm

RUSSIA'S LAZARUS Prime Minister, Viktor Chernomyrdin, started out as the man Boris Yeltsin did not want as head of government, and has ended up in control of the destiny of the President - or put more cruelly, of the pace and manner of his political demise.

President Clinton, who spent much of last week being told by his advisers that Mr Yeltsin was likely to be out of office by the time he arrived in Moscow for today's summit, now finds that his opposite number in Moscow has pulled off the most extraordinary of his many survival acts to date. A deal between the Communist-dominated parliament and Chernomyrdin is intended to shore up the President until the Kremlin elections planned for the year 2000.

But it is Chernomyrdin who is pulling the President's strings, and to him that the US will appeal to save Russia's battered reforms, just five months after a panicked Yeltsin sacked him, only to re-appoint him last week after the sudden rouble devaluation brought on an even greater panic. Chernomyrdin's eclipse of Yeltsin is the latest step in a tortuous and ambiguous relationship between the two men which began in 1992, when the former head of Gazprom, the natural gas industry, was imposed on Yeltsin in his first defeat by the Congress of People's Deputies, the legislative hangover from the Communist era, and an early power base for the enemies of reform.

He replaced Yegor Gaidar, the young monetarist beloved of the West, as Prime Minister. Yeltsin was unable to hide the pain of the moment, standing with bowed head at the podium after he had given in, and announcing through his spokesman that he and Gaidar had been "one heart and one soul". If the lurid account of the President's ousted bodyguard, Alexander Korzakov, is to be believed, Yeltsin's drink problem began - or rather resurfaced - at this time.

Chernomyrdin arrived in office as the incarnation of all that the Yeltsin team stood against. He wanted to go slow where the reformers sought to move fast, favoured the role of the state where they elevated the market, and called for the loosening of monetary policy while they saw resulting inflation as the greatest threat to prosperity.

The West has become far more jaundiced about the chances of reforms making rapid headway in Russia than it was then. As a Moscow correspondent when Chernomyrdin arrived in office, I still remember our dismay at the first public glimpse of the new premier, still dazed after his leap from deciding the fate of oil subsidies one minute to heading the government the next. Chancellor Kohl, arriving that day to deliver one of his periodic pep- talks and encourage German investment, was only told as he was flying over the Baltic States that he was to be met by Chernomyrdin, not Gaidar.

Instead of the podgy young reformer with eager, eccentric English, and a fascination for the free market, there stood on the tarmac a sombre figure in a navy-blue raincoat - the traditional outdoors uniform of the nomenklatura. The new PM looked like a cross between Mikhail Gorbachev and Helmut Kohl. But his style was pure Homo sovieticus, and there was something strangely familiar about his habit of delivering promising starts to sentences, only for their reformism to evaporate in the second. "I am for the market, but not for the bazaar" was his first soundbite. His first act was to try and re-impose price controls, a move defeated by Yeltsin's reformist economic adviser Boris Fyodorov.

Chernomyrdin was - and still is - a representative of the pragmatic if limited mentality of the "red managers" who really kept the Soviet Union running in its terminal phase. A recent interview with the Financial Times exhibits his continuing pride in this era: "I transformed the government industry into a company and I myself... was the first to do this in the [Soviet] Union. I understood even then that we had reached a dead end." Hauling Gazprom out of the claws of the dying Soviet state created one of the world's largest companies. Chernomyrdin clearly believes that he is skilled at market economics. But running a monopoly in an essential commodity, whose gargantuan size guarantees it a major international standing, hardly counts as experience of the cut and thrust of capitalism.

Indeed, his attachment to his former contacts (radical reformers nickname him the minister for Gazprom) linked him to several of the business and banking oligarchs who are a more powerful force in Russia than the politicians. Their empires flourished under his premiership. For a man who believed in the market, not the bazaar, he presided over the greatest national cut-price asset sale of the century - with profits flooding into western bank accounts, not back into the impoverished Russian tax system.

It is hardly surprising then, that many pro-free market Western analysts are concluding that the revival of Chernomyrdin is a disaster, since he was responsible for many of the problems to start with. But they are unable to suggest a politically valid alternative. Chernomyrdin is no fool. He is keenly aware that he can only prevent a worse decline in Russia - and bolster his own chance of replacing Yeltsin in the Kremlin in two years' time - if he manages to collect some tax revenue from the country's powerful companies, and clamp down on their habit of salting away profits in banks outside the country. In other words, he needs to pick a fight with the very people who are supporting him now.

Watching Boris Berzovsky, the most prominent of the business tsars, telling Newsnight that Chernomyrdin would be good for the country - and proceeding to mix up the words "country" and "company" several times - did not inspire confidence.

But my hunch is that Chernomyrdin has learned more in the last six years than his detractors give him credit for. He has appointed as deputy prime minister Boris Fyodorov, the same man who defeated him over price controls in 1993. He also knows that Russian business has little interest in a fully-fledged Communist revival, let alone a Communist in the Kremlin. The red managers who rose to political, as well as economic, prominence under Mikhail Gorbachev's perestroika are scathing about ideological diehards, like the present Communist leader, Gennady Zyuganov, who have substituted nationalist chauvinism for Marxist-Leninism. Zyuganov tried to scupper the peace deal that brought an end to the pointless, degrading and expensive war in Chechnya, after Chernomyrdin had helped broker an armistice.

"They destroyed everything; they destroyed the best people; they destroyed the peasants," Chernomyrdin has said of the Communists, a rather cynical outcry for someone whose entire career before 1991 was bound up with the Communist Party of the Soviet Union. But it does mean that, like Boris Yeltsin, his priority is to keep Zyuganov and his ally, the unhinged Vladimir Zhirinovsky, out of power by outwitting them in his de facto running of the country. If he is not the best thing that could happen to Russia, he is far from the worst.

Neither, unlike his extremist challengers, is he economically illiterate. He knows that he must find some way to pay back-wages owed to workers (and a cause taken up by the Communists), while avoiding a slide into hyper-inflation and a slump in growth. It is the most difficult quandary any politician in Russia can have, however game his insistence that this mess is, as he insists "absolutely manageable".

Boris Nemtsov, the young reformer who left the Kremlin in despair last week, summarises the gamble thus: "Chernomyrdin has some chance of winning presidential elections, if the economic and social situations improves drastically. But then, who believes that? Only Chernomyrdin."