The Kremlin: new resignations to follow

Who is responsible for the failure of the privileges reform in Russia?

Many of us wonder if anyone in the Government who is guilty of the failure will lose the position. There is much rumor on the subject, and each is said to be based upon comments of “a reliable source in the Kremlin”. At that, every rumor has its logical grounds.

The Cabinet headed by Prime Minister Mikhail Fradkov may be considered the number one candidate for resignation. Since the very first day it came to power, the Government was considered a transition and provisional government. This is probably the reason why Mikhail Fradkov was and still is a stranger in the political environment. The Government has shouldered unpopular reforms, and majority of these reforms are being carried out today. It seems that the Cabinet and the prime minister have already performed their roles, unless the Kremlin has no other surprising initiative in store.

In addition to the Cabinet, which may be resigned, people say there are three more candidatures for resignation.

Russian Minister for Health and Social Development Mikhail Zurabov won people’s dislike already when he actively promoted the pension reform in Russia. His name is not yet that hated among the population as the name of Anatoly Chubais, but the Russian population already treats the minister negatively. Parliamentarians in the Duma and participants of protest actions in the streets demand that Mikhail Zurabov must resign. Political experts say Mikhail Zurabov is likely to be resigned in February already. This resignation may seriously reduce people’s resentment about the abolishment of privileges, experts say. The Rosbalt news agency reports that it is not accidentally that the scandal connected with the land owned by Mikhail Zurabov’s wife has come up right now (Zurabov’s wife purchase the land in the Moscow Region at understated price).

Minister for Economic Development and Trade German Gref and Minister of Finance Alexey Kudrin are another candidates whom Russians would like to resign.

Minister for Economic Development and Trade German Gref has never been popular among the population, which is quite natural for the minister overseeing economic issues in Russia. What is more, German Gref sticks to the western market principles, that is why many groups in the Kremlin dislike him. Within the past years, the Ministry for Economic Development has been focused on maximum liberalization of Russia’s economy; on breakdown of governmental monopolies and establishment of private monopolies (for instance, privatization of Svyazinvest that the Anti-monopoly Ministry does not welcome).

Probable resignation of the minister for economic development became quite evident when in 2004 it was perfectly clear the Russian economy slowed down and the inflation exceeded the estimated level. That occurred against the background of favorable world prices for energy resources. German Gref has already admitted that he contributed to the inflation increase when introduced quotas for meat import; those quotas whipped up the price increase. German Gref even dared to say it was impossible to double GDP, the objective of the next ten years outlined by President Putin; that sounded like forming an economic opposition in the Government.

It is said that the National Strategy Council has prepared a report “Government and business: together for national modernization”. This report is said to be connected with probable resignation of the minister for economic development who has failed to establish a dialogue with the Russian business.

Indeed, German Gref introduced a medium-term program for Russia’s economic development with a view to establish a dialogue with the business, but it turned out ineffective. It is said Prime Minister Fradkov has declined the program once again, and the minister for economic development has to rewrite it once more. It is alleged that the program does not include personal recommendations of the prime minister. The large-scale business had an opportunity to get acquainted with the program at the council for competitiveness and also found out the program disagreed with some ideas of businessmen.

The position of Minister of Finance Alexey Kudrin is seen as an alliance with German Gref. According to The Kommersant newspaper, Prime Minister Fradkov doubted if Alexey Kudrin could be appointed head of the governmental budgetary commission, even though the minister traditionally took the position in previous years. Last week, Minister for Economy Alexey Kudrin was blamed for the failure at the talks with the Paris Club Creditors as concerning pre-schedule payment of Russia's debt. Instead of a discount, the creditors demanded Russia must pay a 2.5 per cent premium.

So, it is not a problem to find a candidate in the Government for resignation. It is only Russian business that does not like the idea of prospective resignations in the Government. Indeed, businessmen will have to negotiate again with new people who take over the positions of German Gref, Mikhail Zurabov and Alexey Kudrin. But today businessmen are rather cautious about vagueness in the economic sphere. What is more, mass media have reported recently that concerns of several financial and industrial groups in Russia are connected with those figures in the Government who may be soon resigned.

Economics Department