Publication: Monitor Volume: 4 Issue: 77

As Friday’s crucial vote over Russia’s new prime minister approaches, it is clear that the fight revolves over control over Russia’s so-called natural monopolies–gas, electricity and railways.

President Boris Yeltsin has said that, if the State Duma rejects his nominee, Sergei Kirienko, for the third time on April 24, he will dissolve parliament. Duma Speaker Gennady Seleznev called on Yeltsin yesterday to meet with the speakers of both houses of parliament and to reveal to them the outlines of the new government. Seleznev may be genuinely anxious to prevent the dissolution of parliament, but other politicians are playing a game of bluff and counterbluff. While the Communist-dominated opposition say they are determined to reject Kirienko on principle, there are hints that they would be prepared to swallow their principles in return for certain concessions.

The price the Communists are demanding is: (1) the exclusion of Boris Nemtsov from the new government or, at least, an undertaking by Yeltsin and Kirienko that Nemtsov will not be given control over the gas monopoly Gazprom, the railways or the oil industry; and (2) an undertaking that Anatoly Chubais will not be appointed chairman of the board of the electricity monopoly, United Energy Systems (UES). (Komsomolskaya pravda, Izvestia, April 21)

When Chubais and Nemtsov were appointed to Russia’s new government in March 1997, they promised to break up the monopolies. They immediately ran into dogged resistance. They did manage to force Gazprom to pay its “gargantuan” tax arrears. In other respects, however, their efforts to bring the monopolies to heel were a failure.

Kirienko says he opposes selling the state’s controlling stakes in UES, Gazprom and Transneft (the oil trunk pipeline monopoly). He cannot, however, afford to give in to the monopolies’ demand to set their own rules because doing so would mean giving up the government’s right to govern. As Izvestia wrote yesterday: “Those who control the Big-3 (gas, electricity and railways) control Russia’s entire economy. There is hardly an enterprise or region that does not owe huge sums of money to the Big-3. It follows that whoever controls the Big-3 … can control virtually any enterprise or region at will.” (Izvestia, April 21) Desire to assert their autonomy vis-a-vis the Big-3 seems to be behind the support for Kirienko being expressed by a wide range of regional governors and the Federation Council on which they sit. By the same token, opposition to any moves against the monopolies explains why the Duma’s normally pro-government faction Our Home is Russia, whose leader Viktor Chernomyrdin has close ties to Gazprom, is threatening to vote against Kirienko on Friday.