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    Yeltsin Picks Reformist for Cabinet Post

    By David Hoffman
    Washington Post Foreign Service
    Tuesday, March 18 1997; Page A12

    President Boris Yeltsin, reaching beyond Moscow for one of Russia's youngest and most popular reformists, named Boris Nemtsov, governor of the Nizhny Novgorod region, as a first deputy prime minister today, the strongest signal yet that Yeltsin is determined to reanimate Russia's economic transformation.

    The Kremlin also announced that Anatoly Chubais, who was named a first deputy prime minister last week, will serve simultaneously as finance minister, giving him broad powers to oversee the economy and focus on the urgent problem of overhauling Russia's chaotic and sclerotic tax system.

    Nemtsov, 37, is known for his pioneering regional economic changes, such as issuing local bonds, nurturing reorganization of collective farms, privatizing small shops and retooling industrial dinosaurs. His innovative ideas have included a clean-water program for schoolchildren, subsidies for women who have a second or third child, and free enterprise zones to give tax breaks to faltering factories.

    Located about 250 miles east of Moscow, Nizhny Novgorod, known as Gorky during the Soviet years, is Russia's third largest city and now one of its more prosperous regional hubs. Nemtsov is widely regarded as the leading exemplar of a new breed of regional leaders who are gaining power and achieving results independent of authorities in Moscow.

    Given the appointment last week of Chubais, 41, Yeltsin now appears to be giving form to his second term, with an agenda as far-reaching as his first government in 1992 -- which lifted controls on prices and trade and began a massive privatization program.

    "I have a challenging offer for you," Yeltsin told Nemtsov at a Kremlin meeting. "Two young men, you and Anatoly Chubais in the government, will set up a fresh young team from scratch. No appointments have been made. All appointments for ministerial positions will be cleared with you."

    Yeltsin vowed he would not be "shuffling the old Moscow pack," and his remarks today seemed a clear signal that Chubais and Nemtsov would be calling the shots, although both nominally will report to Prime Minister Viktor Chernomyrdin.

    Nemtsov was appointed governor by Yeltsin in 1991, then was elected to the same post in December 1995 with more than 60 percent of the vote at the same time that Communist candidates were scoring big gains in the lower house of parliament, the State Duma. Nemtsov is genuinely popular, while Chubais, who has never held elective office, is widely blamed for the inequities of the privatization effort he oversaw.

    Nemtsov has been given responsibility for dealing with Russia's most troubling social issues, including a deepening crisis of wage and pension arrears, and with state monopolies, which Yeltsin said are still in need of reform. Some reform advocates want to break up the electric and gas monopolies, among others, but Yeltsin said his priority is to lower tariffs "unhurriedly." Another item Yeltsin has put on his agenda is reform of housing subsidies.

    Nemtsov said just last month that he did not want to leave his region, where "I can do concrete things." In Moscow, he told commercial NTV television, "it's impossible to do things. . . . I don't think I can save Russia. I have no messianic moods. I have no superiority mania. There's nothing extraordinary happening that would call for my urgent move to Moscow. I am a provincial. I don't feel good in Moscow."

    But Nemtsov told reporters today he is taking the job because Yeltsin had implored him to do so. "The president is full of determination to get order, and we will be doing it together," he said.

    "I will not lie; I will not take bribes and steal," Nemtsov said. "I will explain to people what I am doing, including the most unpleasant things, if I have to do them."

    The appointment of Nemtsov, a former physicist who entered politics to fight construction of a nuclear power plant, drew applause from reformers, along with warnings that he faces enormous obstacles. Yegor Gaidar, the acting prime minister in Yeltsin's first government, said Nemtsov "showed in action that he understands what reforms are, and he knows how to do them."

    Grigory Yavlinsky, head of the centrist Yabloko party in parliament, who spurned an invitation to join the government, said Nemtsov is a "talented person" who "has an uneasy job to do, and I wish him success."

    Later today, Yeltsin announced further details of a broad government realignment in which most of Chernomyrdin's former deputies were sacked. The current finance minister, Alexander Livshits, is being transferred to the presidential administration as deputy chief of staff. Vladimir Potanin, a prominent banker who joined the government after last year's election, has been dropped from the cabinet, along with two other former first deputy prime ministers, Viktor Ilyushin and Alexei Bolshakov. Anatoly Kulikov will remain deputy prime minister and internal affairs minister with a broad portfolio for law enforcement.

    Chernomyrdin announced that Vladimir Bulgak, formerly communications minister, will be a new deputy prime minister for reform of science, research, production and industry policies. Valery Serov will remain deputy prime minister for nationalities, and Alfred Kokh as deputy prime minister in charge of privatization.

    Oleg Sysoyev, mayor of the industrial city of Samara, is being brought to Moscow, apparently to oversee the reform of housing subsidies. Yakov Urinson, former deputy economics minister, was promoted to economics minister, replacing Yevgeny Yasin.

    © Copyright 1997 The Washington Post Company

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