The time of “Hercules” is up

Viktor Geraschenko’s resignation from the post of the Central Bank chairman has produced no sensations: no speeches by the deputies, no protest actions and sobbing of the population. What a pity! They were to have been.

Viktor Geraschenko is called “Hercules” behind his back by the people connected with the bank system. His achievements on the chairman’s post are considerable, they can be compared with those ones done by the government presided by Yeugeny Primakov and Yury Maslyukov, when Geraschenko was factually the third basic part of the Cabinet, although not being a formal member of it.

The country has already seen different people on the post of the Central Bank chairman. As it turned out, Viktor Geraschenko was the only adequate person to the post among 145 million Russians over the last 15 years. Appointment of other people to the post entailed lamentable consequences: the money system had collapsed in August of 1998, after which Viktor Geraschenko was re-appointed to the post of the Central Bank chairman. It was he who made for further positive changes in the credit and financial system of the country. However, as soon as the economic situation started recovering, the Central Bank chairmanship became more and more attractive for those people who came to power after election of Vladimir Putin Russia’s new president.

Resignation of “Hercules” has been rumored about for a long period already. It is an open secret, what Viktor Geraschenko is going to do after the resignation, and it is not a surprise for anyone. Things do happen.

To avoid sudden ruble fluctuations on the currency exchange, the resignation was announced in the second part of the day, Friday. It is to be pointed out here, the system created by Geraschenko himself practically rules out any uncontrolled fluctuations on the national currency market, as it is a well-regulated market. Probably, the resignation was announced in the second part of the day to avoid any political line instability. It seems to be not accidental then that the president scheduled his meetings with the opposition leaders Zyuganov, Glazyev for the second part of the day. Yury Maslyukov, academicians Petrakov, Lvov and Bogomolov were invited to the meeting as well. This prevented any harsh statements in the parliament, moreover, after the conversation with Vladimir Putin Gennady Zyuganov even allowed no comments on Geraschenko’s resignation for the press. He said: “I would like to avoid any comments on Putin’s suggestions. First, I would like to have a look at the president’s letter addressed to Duma speaker Gennady Seleznev, to consider the reasons for Geraschenko’s resignation. Only afterwards the faction will be able to issue any comments on the situation.”

Certainly, under different conditions Communist leader would take the occasion, especially regarding the fact that Viktor Geraschenko has nothing to be blamed for, at the time when his successor suggested by the president to the Duma, First deputy minister of finance Sergey Ignatyev, is very vulnerable for criticism. It is quite natural for criticism to follow the presidential suggestion: Sergey Ignatyev comes from St.Petersburg (it is to be mentioned here, it has become a tradition to appoint more people from St.Petersburg to the government, as the President comes from Russia’s northern city himself), and he was recommended by Minister of Finance Alexey Kudrin.

The appointment of a new chairman to the Central Bank from the Finance Ministry’s structure coincides with adoption of a new law on the Central Bank. The new law is to make the structure dependent from the government. Sergey Ignatyev’s curriculum vitae is blameless from the point of view of his professional achievements. His resume is much better than of any other governmental top-official coming from St.Petersburg.

Sergey Ignatyev was born in St.Petersburg on January 10, 1948, his further life had been quite adequate to his position:

- Graduated from the Moscow State University in 1975 and the post-graduate course in 1978, got the status of a candidate of economic science;

- 1978 – 1988 worked as a lecturer in the Soviet trade institute, Leningrad; then worked at the Leningrad financial economic institute;

- 1991 – appointed Russia’s deputy ministry for economy and finance;

- 1992-1993 – occupied the post of Russia’s Central Bank deputy chairman;

- 1993-1996 – Russia’s deputy minister for economy;

- September, 1996 – April, 1997 – aide to the RF President;

- Starting with April, 1997 – Russia’s first deputy minister for finance.

It demonstrates, the prospective chairman of Russia’s Central Bank is not an ordinary book-keeper from a second-rate office or an advisor to KGB fixed-post spy in Zimbabwe, that is rather comforting for us. But at the same time, Sergey Ignatyev does not belong to “Viktor Geraschenko’s school” like Tatyana Paramonova, the deputy chairman of the Central Bank. But it does not seem to be a positive factor, as Russia’s has no other schools in the sphere of central bank management.

Sergey Ignatyev will probably have to create a banker school of his own, like Sergey Ivanov had to do in the military sphere, German Gref – in the economy, Alexey Miller – in gas production and Anatoly Chubais – in the power industry. Vladimir Putin is lucky: the foreign economic situation in the country has been favorable over the two past years, no crisis has been experienced mostly due to the impulse imparted by the government with the leaders Primakov - Maslyukov - Geraschenko. At the same time, it is perfectly evident even for the president, the situation is being used not to the maximum: there is no economic growth, Russia’s development is slow, and the gap with the developed countries is even increasing. The people coming from St.Petersburg and proposed to the government offer very logical concepts and well-grounded suggestions to the president. But the suggestions and concepts seem to be scarcely connected with the reality. Indeed, it is really hard for people ignorant of industrial management to understand the process in the industry and national economy on the whole. As a result, we have got gradual economic growth as fixed on the paper, but in fact the 2001 growth rate is even lower than in 2000, and the forecasts for 2002 say it will be close to zero. That is why everybody is anticipating a new crisis.

Does it mean, it is time to apply such practice to the Central Bank? The events may be developing according to a well-known scenario: it will be either a revalued ruble and increasing inflation, or devaluation. Viktor Geraschenko managed to avoid the two extremes, but his time is already up.

Translated by Maria Gousseva

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