Online NewsHour: Russia Shake Up-- March 23, 1998

KREMLIN SHAKE-UP

March 23, 1998

The NewsHour with Jim Lehrer Transcript

In an unexpected move, Russian President Boris Yeltsin dismissed his entire cabinet today. Speaking to the Russian people on television, Mr.Yeltsin said he hopes his action will "make economic reforms more energetic and effective." Jim Lehrer and guests discuss Mr. Yeltsin's decision and its meaning for Russia and the world.

A RealAudio version of this segment is available.
NEWSHOUR LINKS:
March 19, 1998:
Former Yeltsin security chief Alexander Lebed warns of possible danger from "loose nukes."
December 5, 1997:
An Online NewsHour forum on the last shake-up in the Kremlin.
July 22, 1997:
Elizabeth Farnsworth speaks with David Hoffman, The Washington Post's Moscow Correspondent.
May 27, 1997:
Russia agrees to the expansion of NATO.
February 7, 1997:
Prime Minister Viktor Chernomyrdin meets with Vice President Gore.
December 25, 1996:
ITN reports on Moscow's powerful mayor.
Browse the NewsHour's coverage of Europe and the Conference of Independent States.
OUTSIDE LINKS:
Russian Foreign Ministry
The Russian Embassy in Washington, DC.
ADRIAN BRITTON: On state television Boris Yeltsin shook hands with a man he had just sacked, Victor Chernomyrdin, who had been his prime minister and close ally for five years. But in a televised address the president chastised him and the entire cabinet for failing to steer economic reforms through parliament.
President Yeltsin speaks.

BORIS YELTSIN: (speaking through interpreter) I believe that in recent times the government clearly lacked dynamism, initiative, new viewpoints, fresh approaches and ideas.
ADRIAN BRITTON: Today's Kremlin announcement is the latest in a series of unpredictable, often erratic maneuvers by President Yeltsin. This evening Russian National News carried Kremlin assurances that Yeltsin's reforms would continue, but the president, who unexpectedly returned to work last Friday, after a week's illness, may find a more radical cabinet will intensify the feuding between government and the lower House of parliament. Tonight the former energy minister,

Sergei Kiriyenko, Russia's acting prime minister

Sergei Kiriyenko, is Russia's acting prime minister, just 35, but with a reputation as a radical market reformer.
JIM LEHRER: We get two views of this now. Alexei Arbatov is a member of the Russian parliament from the Yabloko Party, the largest democratic party in the Duma. He's in Washington for meetings with members of the U.S. Congress. Leon Aron is a resident scholar at the American Enterprise Institute. He was born in Russia and is writing a biography of President Yeltsin that will appear next year. First, for the record, Leon Aaron, what President Yeltsin did today was completely legal, within the constitution of Russia.
LEON ARON: Yes. Entirely legal. The President under Article 111 of the Russian constitution has the right to dismiss the government, and then he has to go within two weeks, he has to go to the lower House of the parliament, the Duma, and present a new government. And then things get really interesting, because if the Duma does not approve of the government, the president either has to present a different government or dissolve the Duma and schedule a new election.
JIM LEHRER: Start all over again. Okay. We'll get to all of that in a minute, but, first, why did he do it? What's your analysis of why he did it, Mr. Arbatov?
The reasons behind Mr. Yeltsin's decision.

ALEXEI ARBATOV: I believe that the economic situation is not as good as promised. The economic growth is not coming very soon, and the budget crisis is still not resolved. The revenues fall very short from the plan every year, so I hope that the president has really decided to change the course of the economic development and not just to reshuffle the cabinet and to continue basically the same course, while providing some scapegoats for the public dissatisfaction.
JIM LEHRER: Could that possibly be what's involved here, Chernomyrdin and company are the scapegoats for people that don't like what the economic policy is doing?
ALEXEI ARBATOV: Well, it might--if president does not appoint a new prime minister with clear views and different program of economic reforms, then it would mean that he has decided to let the steam out by changing the government so he could promise people that something would change in the nearest future. We will see. The principal point is what is a replacement. That will clearly indicate whether we will have more of the same policy and then the motives for the reshuffling will be also clear, or we will have a very different policy, and the motives would have been different.
JIM LEHRER: Sure. On Chernomyrdin, Leon Aron, President Yeltsin said that one of the reasons that he let go his good friend is so he could--Chernomyrdin--so he could--I'm paraphrasing crazily here--but essentially so you can go get ready to run for president in the year 2000. Do you buy that?
Mr. Aron: "...in Russia it's always a good policy to be a bit--to take a bit of a distance from the government. "

LEON ARON: Well, I think this is one part of it. I think what Alexei described is the policy part of it, but there's also, as always, there's politics involved too, and the--one of the aspects is Chernomyrdin. I think generally in Russia it's always a good policy to be a bit--to take a bit of a distance from the government. And Chernomyrdin is now untied. He could go outside the government. He could start--campaign to get some funding, and, more importantly, he will distance himself from the government and its mistakes, and he may even start, you know, criticizing the government eventually. So I think Yeltsin, at the moment, of all the candidates we know about, Chernomyrdin is the closest to Yeltsin, provided that the economy remains stable, so in essence--
JIM LEHRER: And Yeltsin, of course, would not be running in the year 2000?
LEON ARON: Well, nothing is ever known. I mean, there could be a legal escape for Yeltsin, if he wants to. But assuming he does not, I think we should assume that he would not.
JIM LEHRER: In simplest terms, this should not be seen then by Americans as a hit against Chernomyrdin?
LEON ARON: No. And it becomes clear when you see--when you read what they actually said about each other. Yeltsin essentially thanked the government for doing a great deal of work. And, indeed, you know, three years ago, the inflation was 160 percent. It's now under 10 percent. You know, the ruble trade at 6000 to a dollar now. It's six rubles to a dollar. So there has been a great deal of work done, but I agree with Alexei, I think Yeltsin decided that it's time for the economy to take off, and he, I think, believes that a different government would be able to create a better condition for the economy to take off.
JIM LEHRER: And for the average Russian the economy still has not taken off, isn't that correct?
ALEXEI ARBATOV: No, it hasn't, and I wanted to challenge the view just expressed on economic successes. Inflation was down, but the expense of enormous budget crisis we were short of revenues every year, 70 percent of the economy operates either on barter or on money surrogates--substitutes. The decline was 50--
JIM LEHRER: Like what? What's a money surrogate?
ALEXEI ARBATOV: Well, it's--the government is not giving money to those who depend on the budget, like some enterprises, ministers, but gives them bonds, government bonds, which are very difficult to use to pay for communal services of electricity and so on. It's done in order to officially keep inflation down, but at the expense of huge delays in payments of wages and pensions, at the expense of the 70 percent economy, not operating in a normal way.
JIM LEHRER: Now, you told us before we went on the air that you've been on the phone today with friends back in Russia.
ALEXEI ARBATOV: Yes. Many times.
JIM LEHRER: Many times. What has been the public reaction as they transmitted to you?
Russia's reaction.

ALEXEI ARBATOV: Very calm, very calm. People were surprised, but I consider it's a very wise step on the part of president. I only wish that it had been done two years ago; we might be in a better economic condition now. But people were surprised. It was done, as usual, in an unexpected and not very elegant way, but otherwise is very calm and no panic, no expectation of any trouble whatsoever.
JIM LEHRER: Now, Leon Aron, as you know, there have been many stories in the American press in the last several weeks, last several months, last two or three years, always about Boris Yeltsin's health and about whether or not he's really been in charge. How should this be read in that context? What do you think--
LEON ARON: Well, I think one of the reasons this was done on the politics side is to show that he's still in charge; that he could, in that political culture, you know, if you disappear with illness for a long time--you're the president, you're elected by the entire people. It doesn't look good. It erodes your political capital; it erodes your ability to govern, and I think Yeltsin wanted to show who's the master of the house, how he--you know--that's his favorite expression. And I think he did. The question is who will replace the cabinet.
JIM LEHRER: All right. Let's go through that now. Mr. Kiriyenko, the man who's put in today was the temporary prime minister, as was reported in our little piece at the top, he's 35 years old, what else should we know about him?
ALEXEI ARBATOV: I do not think that anybody knows anything else about him, and I doubt that it's worthwhile because I consider him to be a temporary figure. Of course, in Russia, everything could happen, and he could be appointed as a prime minister, but as far as I believe or feel, that's not going to happen.
JIM LEHRER: He came out of the energy--wasn't he the energy--well, that's of course what Chernomyrdin was too--
ALEXEI ARBATOV: But he also comes from the same town as Boris [Nemtsov], himself, from Nizhy Novgorod, but Boris, himself is a leading reformer in the government, so presumably there is some sort of connection, and he does have a reputation of a reformer, and I think this is one of the reasons the Russian markets, having initially dipped, went almost all the way up again because they were reassured both by what Yeltsin said and by his temporary replacement.
JIM LEHRER: I promise not to hold either of you to this, but what do you think he's going to do now in terms of appointing a new government? You said he has to do it in two weeks, right?
ALEXEI ARBATOV: Let me make a point--the president has sent on the prime minister and others into resignation. When he comes back to parliament, he will propose only prime minister, not the whole government. By constitution he doesn't propose to government--I mean, to parliament. He gives us a candidate for prime minister post. Then we approve or disapprove it, and then the prime minister proposes ministers to president. He appoints them. That's how it works.
JIM LEHRER: Then there's no deal made on the side?
ALEXEI ARBATOV: Well, the president--the Duma is involved only on the--of the prime minister--
JIM LEHRER: I see.
ALEXEI ARBATOV: Everything else in the government is not approved by the Duma.
JIM LEHRER: Do you have--based on what you were told today and your own knowledge that you just carry with you, do you have any feel for what he might do in terms of a new government?
Candidates for the future government.

ALEXEI ARBATOV: Well, if he wants a real change of economic policy and to really try to achieve economic growth to deal with those problems of devastation of the social sphere of science, culture, everything, all the bad side effects of the reforms, then he certainly should appoint some known figure with a clear program, and I cannot think of any better candidate than Grigory Yavlinsky for this position.
JIM LEHRER: Who's he?
ALEXEI ARBATOV: Grigory Yavlinsky is a leading economic. He is a chair of the largest democratic party in Russia, which is called Yabloko.
JIM LEHRER: That's your party?
ALEXEI ARBATOV: That's my party.
JIM LEHRER: All right. Do you have a candidate?
LEON ARON: Well, you know, I do not entirely exclude--there could be a centrist candidate, such as, for example, Yuri Luzhkov--the mayor of Moscow--or there could be a radical candidate, which is either Grigory Yavlinsky, or--
JIM LEHRER: Radical in what way? Define radical in these terms.
LEON ARON: Well, radical in terms of, you know, economic reforms with certain, you know, certain different overtones, and I don't exclude, for example, that it could be one of the governors, one of the more common governors of Russia--maybe Dmitry Ayatskov of Saratov.
ALEXEI ARBATOV: We have to introduce one other factor in our consideration, whether President Yeltsin wants to run in the year 2000 or not. If he wants to run, he doesn't want a very strong political figure as a prime minister, because that would be a competition, like Luzhkov, for instance, a very strong political figure.
JIM LEHRER: Who's he?
ALEXEI ARBATOV: He is the mayor of Moscow, very powerful, very popular. That figure would be an obstacle to President Yeltsin if he wants to run in the year 2000.
JIM LEHRER: So in other words, the politics of Russia are just as complicated as the politics of the United States?
ALEXEI ARBATOV: Well, in some sense maybe even more I think so.
JIM LEHRER: Just listening to--
LEON ARON: The nature of scandals are different.
JIM LEHRER: I got you. Thank you both very much.

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