Return of the command economy?

By Abdel-Malek Khalil

Primakov called for greater state control in important sectors of the Russian economy and a rapid emission of rubles to save Russia's ailing banks.

First deputy premier, communist Yuri Maslyukov, doubling as Russia's new economic manager, is spearheading the return to the command economy. Primakov's "old-new strategy", as some of his critics have called it, will endanger foreign investment and unleash hyperinflation, his detractors warn. "The national policies launched last Thursday could deliver a very serious blow to economic growth and reforms," said Dmitri Vasileyev who last Friday resigned from the chairmanship of Russia's Federal Securities Commission. "Russia is threatened with a return to the Gorbachev era."

It appears, however, that the vast majority of Russians do not actually mind a return to the "Gorbachev era". The mood in Moscow was buoyant as Primakov fulfilled his promise of paying salary arrears to the Russian armed forces. Things have come a long way since days of the former Red Army.

Since his appointment three weeks ago, Primakov has stressed that payment of salaries and pensions will be his government's priority as it grapples with Russia's grave economic crisis. Russia owes an estimated $2.5 billion in back salaries and social payments. Of that, about 10 per cent is owed to the military.

In another blow to the proponents of market reforms, Boris Fyodorov was dismissed from his posts of acting deputy prime minister and tax chief, Russian news agencies reported. Fyodorov's departure leaves Mikhail Zadanov, whom Yeltsin reappointed finance minister on Friday, as the strongest supporter of reform in the evolving cabinet.

Those who champion the free market recoil at the prospects of a command economy resurfacing in Russia after a decade of economic deregulation and privatisation. They called on Primakov to boost foreign investors' confidence in the country's economy instead of flirting with the economic policies of the Soviet past.

Critics are also alarmed at the government's recent decision to issue 11 billion rubles ($700 million).

However, Communist Party leader Gennady Zyuganov, who was very critical of former Prime Minister Viktor Chernomyrdin's record, has applauded Primakov's policies. Former Soviet President Mikhail Gorbachev has also added his name to the long list of Russian political personalities who favour Primakov's new economic policies.

Many Russians are weary of the economic policies introduced by Chernomyrdin, President Boris Yeltsin's original choice for premier after the short reign of Sergei Kiriyenko. "Under Chernomyrdin's premiership from 1992 until March 1998, corruption was rife and a few people made a lot of money while the vast majority of people suffered under crippling economic conditions," Andrey Piontkovsky, head of the Centre for Strategic Studies wrote recently. "Chernomyrdin's policies only resulted in the plundering of Russia's resources, especially its raw materials, by a small group of businessmen and politicians."

Yeltsin's closest presidential aides, including his daughter Tatiana Dyachenko and chief of the President's staff, Valentin Yumashev, both guided by financial tycoon Boris Berezovsky, are lying low. They feel that Yeltsin's popularity will depend on the success of Primakov's policies and that a majority of Russians support the Primakov reforms.

But Primakov's critics have lashed out at suggestions that the government should follow a strong command economy industrial policy and nationalise certain failing businesses. "Who will invest in a country where businesses can be nationalised at any moment?" asked Vasilyev.

Former Deputy Prime Minister Boris Nemstov, who was fired last month along with Kiriyenko after the drastic ruble devaluation, added his voice to Primakov's critics, saying he despised what he dubbed the "return of Soviet-era apparatchiks".

Meanwhile, President Yeltsin on Monday reappointed Fazit Gazizullin as head of Russia's state property ministry which is charged with privatisation. Gazizullin was first appointed privatisation minister in December 1997. His ministry had planned to rake in the lion's share of some 15 billion rubles in revenues by selling off oil holding company Rosneft, but the privatisation was scrapped last week after three unsuccessful tenders.

The recent economic crisis in Russia has left the government's privatisation plans in shambles.