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| INTRIGUE IN THE KREMLIN The Shake-Up in the Russian Cabinet December 5, 1997 |
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Questions answered in this forum:Will corruption and crime dismantle reform? Will Chubais' reform programs be maintained by the next administrator ? How did Russia move from state owned business to independent business? Should we invest in Russia? What can the West expect from this cabinet shuffle ? Viewer comments
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Bob Herman of Juneau, AK, asks: What program(s) were in progress when Chubais was terminated? Will they be maintained and /or implemented with the next administrator?
Clifford Gaddy of the Brookings Institution responds:
The Chubais team had two main goals for this legislative season. The first was to secure parliamentary approval of a comprehensive new tax code. The second was adoption of the 1998 government budget. To accomplish these tasks, Chubais would have needed all the power and persuasiveness he could possibly marshal. The book advance scandal has so weakened his position that it's highly unlikely he'll win either the budget or the tax code battle.
In concrete terms this means that 1998 would, at best, have brought more of the same for the Russian economy. (And we all know that's not been very good.) What's worse is that Russia's domestic problems are now being compounded by the effects of the Asian financial crisis. Interest rates have shot upward, and the downward market pressure on the ruble has intensified.
David McGuffin, Moscow correspondent for Feature Story, Inc., responds:
Bob, The programs that are most connected to Chubais right now are the Tax Reform bill and the 1998 budget.
The budget, which aims to cut back spending and move toward narrowing the governments large deficit, was passed on first reading today by the lower house of the Russian parliament, the state Duma, after months of delays. So on this front the government has some cause for relief.
The new Tax Code is a slightly different kettle of fish. Over a year ago the IMF was withholding loans to Russia because of its problems in raising tax revenue. One year later the IMF is withholding another loan for the same reason.
To top things off, last month Yeltsin agreed to return the new tax code, that aimed to clear this problem up, back to the Parliament for revision. Meaning that any tax reform is still a ways off. These are problems that existed before and after Chubais' recent scrape with scandal.
Next: How did Russia move from state owned business to independent business?
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