Publication: Monitor Volume: 6 Issue: 223

Prime Minister Mikhail Kasyanov yesterday denied persistent rumors that President Vladimir Putin is planning to fire either his entire cabinet or at least individual cabinet members. Kasyanov said that he and the cabinet were continuing their “usual constructive work” with the head of state. The prime minister, however, conceded that some of Putin’s recent criticism of the government was “well founded”–specifically, regarding the government’s failure to meet its financial obligations to military servicemen (NTV, November 29). Early this month, Putin publicly criticized Deputy Prime Minister Aleksei Kudrin for problems with payments to servicemen and for failing to prevent the widespread theft of nonferrous metals (see the Monitor, November 21-22). On November 17, Putin, during a visit to Novosibirsk, threatened to fire the cabinet over the latter issue. His comments were made in the context of the energy crisis in Primorsky Krai in Russia’s Far East, where thousands of apartments are without heat, due in part to the plundering of electricity-supplying equipment by thieves seeking nonferrous metals (Russian agencies, November 17; Moscow Times, November 23).

The problems of the Kasyanov cabinet, however, appear to be deeper than the issues of benefits to servicemen and nonferrous metals’ pilfering. A key issue is the economy in general. Kasyanov has been painting a rosy picture of the country’s economic prospects: in interview published this week in Germany’s Der Spiegel, he predicted that the gross national product would grow by 6.5 percent this year, and rated this result a “4+” out of 5 (NTV, November 27). Kasyanov’s assessment, however, may not have pleased Putin, given that the president earlier this month predicted that the economy would grow by more than 7 percent. More significantly, Putin’s economic adviser, Andrei Illarionov, yesterday criticized the government’s handling of the economy. While Illarionov lavished praised on the economy’s performance this year–he estimated GDP growth at around 7 percent and industrial growth at 10 percent, and called these numbers “the most impressive indicators of Russia’s development for the past three centuries”–he added that the success was largely due to high world oil prices and that the growth rate was unsustainable. Illarionov warned that the inflation rate had reached 2 percent per month, a result of a growth in the money supply, due in part to an increase in government spending (RTR, November 29; Moscow Times, November 30).

According to one account, Illarionov’s critique jibes with one Putin delivered during a November 27 economic policy meeting. The president reportedly criticized the cabinet for not taking full advantage of favorable conditions on world markets. In addition, the Kremlin is said to be unhappy with the failure of the government’s negotiations with the International Monetary Fund and its inability to reverse capital flight, which, according to one estimate, doubled in volume in the second half of this year (Kommersant, November 28).