Yeltsin Axes Primakov Names Stepashin

MOSCOW (Reuters)–President Boris Yeltsin plunged Russia into political crisis and caused turmoil on financial markets on Wednesday by ditching Prime Minister Yevgeny Primakov and naming long-time ally Sergei Stepashin as acting premier.

The opposition Communists–who dominate Russia’s State Duma lower house of parliament–made clear they would take up the gauntlet thrown down by the ailing and unpredictable president. They threatened possible street protests across Russia.

"The situation is once again far from stability–in the economy and in politics," Yeltsin said on television.

The West said it did not expect Primakov’s removal to alter Russia’s line in the Kosovo crisis–although Yeltsin threatened to end cooperation if its views were overlooked.

Markets in Russia and abroad tumbled on news of the sacking–which Yeltsin said in a 10-minute broadcast was prompted by Primakov’s plodding inability to revive the economy.

"One has the feeling the government’s activity on the economy came down simply to negotiations with the International Monetary Fund–as if curing Russia’s economy depended solely on the handing out of Western loans," he said–speaking firmly but slightly slurring his words.

Political analysts said Yeltsin’s move was motivated as much by an impeachment debate due to start in the Duma on Thursday as it was by his displeasure with Primakov–who met the president for 20 minutes in the Kremlin on Wednesday morning.

Communist leader Gennady Zyuganov told a news conference party officials would meet to discuss nationwide anti-Yeltsin protests and added: "We hope the people of our country will react to this situation."

Yeltsin–now on his fourth prime minister in little more than a year–praised Primakov for stabilizing political life in the world’s largest country but criticized the former foreign minister for neglecting the economy and blithely treading water.

"The caution of the prime minister–his readiness to take only those measures that would receive the maximum approval and support–is starting to create harm," Yeltsin said. "Indeed–on the eve of elections–not many can be found who will support tough economic decisions."

A parliamentary election is scheduled for December and a presidential poll is due in mid-2000.

Yeltsin appointed Interior Minister Stepashin–47–as first deputy prime minister this month with the main job of ensuring fair elections. After meeting Yeltsin on Wednesday–Stepashin told acting cabinet ministers: "We have only one goal today: to advance with clear and tough market reforms."

Yeltsin’s move–which meant the dismissal of the whole Primakov government–although it will stay on for now in a caretaker role–seemed certain to complicate rather than ease matters.

The decision alienated the Duma. This could lead to a constitutional deadlock and an early parliamentary election.

Under the constitution–the Duma must approve Yeltsin’s candidate for prime minister. Early signs were Stepashin would not have an easy ride.

Primakov–now 69–was appointed a compromise premier in September last year after Russia’s economy crashed. But Kremlin sources said Yeltsin soon grew jealous of his influence and irritated by the prominent role of Communist First Deputy Prime Minister Yuri Maslyukov in IMF talks.

"For now it’s pretty ugly–not least for the IMF funds," Juliet Sampson of Bank America told Reuters Television. Maslyukov–who is unlikely to keep his job–said Russia would have to start many things from scratch with the IMF.

Just two weeks ago–the Fund conditionally approved another $4.5 billion loan–money that Russia desperately needs in order to avoid defaulting on its external debt–including to the IMF itself.

Financial markets in Russia and elsewhere reacted sharply to Primakov’s firing.

Benchmark Russian Eurobonds slid as much as five points and the euro fell over half a cent to a one-week low against the dollar. In the European afternoon–it was trading at around $1.0650–just above the day’s low and down from an earlier Wednesday high of $1.0730.

The ruble also fell against the dollar–and trade on Russia’s main RTS over-the-counter share market was suspended twice after sharp falls triggered circuit breakers.

Speculation on the markets and in political circles had been mounting that Yeltsin would move against Primakov ahead of the impeachment debate. It was not clear whether that would now go ahead–but Duma Speaker Gennady Seleznyov said Yeltsin had now increased the chances of his impeachment.


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