Yeltsin Fires Cabinet

MOSCOW (Reuters)–President Boris Yeltsin surprised the world Monday by dismissing loyal Prime Minister Viktor Chernomyrdin and his entire government to try to reinvigorate Russia’s plodding–piecemeal reforms.

Yeltsin–who seems to draw strength from crises–gave the impression it was all in a day’s work and no cause for panic.

Markets and foreign governmen’s tended to agree–saying reforms looked safe and may even be strengthened.

But at a stroke–the 67-year-old Kremlin chief made nonsense of the conventional wisdom that Chernomyrdin was destined to be Russia’s next president. He threw wide open the race to elect his successor in the year 2000.

"The dismissal of the government does not mean a change of course in our policy," Yeltsin said in a television address from the Kremlin–after spending most of last week away with a cold. "It is an effort to make economic reforms more energetic and effective–to give them a political push–a new impulse."

After initially saying he would take over temporarily as prime minister himself–Yeltsin named a young technocrat–Fuel and Energy Minister Sergei Kiriyenko–as acting premier.

With a nod to disgruntled public opinion across the vast Russian Federation–the president conceded many people had yet to benefit from the transition from a planned to a market economy.

The new team would need to secure "tangible results" and waste less time in political intrigues than the old cabinet.

"Many people do not feel that change has been for the better," he said. Muscovites polled on the streets agreed.

"Let the whole lot of them drop dead for all I care," said Anastasia–aged 60. "I’m so disillusioned with the whole bunch."

Millions of workers in both the state and private sectors have not been paid for months and have endured hardships under six years of reform. Yeltsin has increasingly expressed disappointment with the pace of reforms in the last few months.

With Kiriyenko named only in an acting capacity–it was not clear whom Yeltsin would nominate as the next prime minister–but analysts said deputy premier Ivan Rybkin was a contender.

Leading reformer Anatoly Chubais–one of those dismissed–said most ministers would probably keep their posts.

"The offer came as a complete surprise," the 35-year-old Kiriyenko told reporters. "I learned about it this morning."

Yeltsin’s spokesman Sergei Yastrzhembsky suggested on Russian television that Kiriyenko could get the job full-time.

While evidently also taken by surprise–Washington and European nations were similarly unfazed by the news from Moscow. Opposition politicians in Russia were initially at a loss for words.

The Kremlin said foreign policy would not be altered–and US President Bill Clinton–on a trip to Africa–said he had no reason to doubt this. Russia’s ex-Soviet neighbors shed few tears for the outgoing cabinet–with Georgian President Eduard Shevardnadze telling Reuters: "I think it’s all for the best."

Reassured Russian markets bounced back after taking an initial hit on the news that Chernomyrdin–seen as a stolid–calming influence during his five years in the job–had gone. The benchmark RTS share index began the day four percent off–but ended 2.1 percent higher.

Abroad–market reaction was muted–but Russia delayed a sovereign eurobond issue – its first planned borrowing this year on international capital markets – and Moscow city followed suit. Market analysts said Yeltsin’s move could help–not hinder–reform. Chubais echoed this view.

"The perspective for the reformers is quite good," he told reporters–speaking in English. "It’s even better than now."

He said he did not yet know what his next job would be.

The other first deputy premier and star reformer–Boris Nemtsov–has said he has an agreement with Yeltsin to stay in the government for at least another year.

Yeltsin said in his address he had given his "old associate" Chernomyrdin the job of preparing for the 1999 parliamentary election and the presidential vote the year after.

Technically–Chernomyrdin–who is 59–resigned as prime minister–but there was little doubt he was pushed.

His new task as election organizer could stop him from running in 2000–or it might help him prepare for a bid. Either way–his main political power base has been cut from beneath him just as it seemed the establishment and mighty business empires were lining up behind him.

Chernomyrdin was typically stoical–telling a swan song news conference: "This was not a tragedy for me."

He is likely to make the most of his role as head of the centrist political bloc Our Home is Russia. But he said it was premature to say whether he would run for president.

Analysts said Yeltsin–who likes to play rivals off against each other–may have been irked by the power Chernomyrdin had mustered.

Yeltsin’s announcement heralded his return to the Kremlin after recovering from what officials variously described as a respiratory infection or a cold. His spokesman Sergei Yastrzhembsky said on Monday his health was "superb."

The president–who underwent heart surgery in 1996 and often alternates bouts of work with spells away–later returned to his Gorky-9 residence outside Moscow. He hosts a "troika" summit with French President Jacques Chirac and German Chancellor Helmut Kohl at another residence near the capital on Thursday.

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