Cabinet rift threatens reforms in Russia

A DEEP rift sliced Russia's fragile government yesterday as President Boris Yeltsin accepted the resignation of his free-market lieutenant, the economist Yegor Gaidar, and reformers scattered in disarray before an exultant alliance of Communists and nationalists.

The dramatic exit of Mr Gaidar, 37, along with that of the Social Security Minister, Ella Pamfilova, on Sunday, suggested a significant retreat from policies that have brought Russia back from the brink of hyperinflation but alienated a majority of voters in last month's parliamentary poll.

In a statement issued by the Kremlin, however, Mr Yeltsin tried to calm talk of an about-turn, which sent the rouble tumbling to a record low of 1,402 to the dollar. While consenting to Mr Gaidar's departure as first deputy prime minister, Mr Yeltsin stressed his own 'unchangeable' commitment to 'deep and democratic reform of Russian society, its economy and political institutions'. Further convulsions seem likely. Another leading reformer, Boris Fyodorov, the Finance Minister, said he too would quit unless stiff conditions were met. He demanded the dismissal of the Central Bank chief, Viktor Gerashchenko, and the conservative Deputy Prime Minister, Alexander Zaveryukha.

There is little political muscle to back such demands. Russia's Choice, the main reformist bloc, has only 75 seats in a 450-member State Duma, the lower house of the new parliament that opened last week. The Communists and nationalists control more than 160 seats and have already secured the post of speaker for an anti-reform party bureaucrat. And Mr Yeltsin, the only solid anchor for reform, seems increasingly adrift himself.

Gennady Zyuganov, head of a revamped Communist Party, hailed Mr Gaidar's resignation as a sign that 'pragmatists' had gained the upper hand in the cabinet: 'The ship steered by Gaidar is sinking; the rouble is falling and industry is coming to a halt everywhere.'

The central figure of this emerging pragmatism is the Russian Prime Minister, Viktor Chernomyrdin. 'So long as there is Chernomyrdin there is stability,' said Vladimir Zhirinovsky, the big winner in last month's election.

Mr Gaidar, who says he discussed resigning for three weeks with Mr Yeltsin, quit on Sunday, saying he could no longer 'pretend to work' in the face of 'unceasing pressure' from conservatives. Ms Pamfilova termed her own departure an 'act of despair', voicing outrage that the government had ordered Swiss parquet for a refurbished White House 'when it takes us so much effort to find even pitiful resources to tackle some of the social problems'.

Instead of rallying together, the reformist camp yesterday showed signs of splintering further. Andrei Makarov, a key figure in Russia's Choice, accused Mr Gaidar of political opportunism: 'Gaidar is more concerned about himself than the interests of the bloc.'

The Liberal Democratic Party, the vehicle for Mr Zhirinovsky's quirky imperial vision, secured control over five committees. Vladimir Isakov, a hardline nationalist who opposed President Yeltsin relentlessly in the old parliament, will head the committee on legislation and legal reform. Russia's Choice chairs four committees, including defence. The committee on security goes to Viktor Ilyuhkin, a leader of the revived Communist Party.

Nationalists and Communists all cheered Mr Gaidar's exit. 'It is wonderful, I am very happy about it,' said Alexander Nevzorov, a newly-elected member of the State Duma and former television presenter. 'It is very good to have one wrecker less in power.'

Russia's economic outlook has, in fact, brightened of late. Inflation has fallen steadily over the past three months, dropping to a 15- month low of 12 per cent in December. Production is still falling but less precipitously than in 1992. But the damage is immense, highlighted yesterday by the announcement that Siberia's biggest defence plant, Sibpribormash, was shutting because a local power plant, fed up with unpaid bills, pulled the plug.

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