Originally created 09/12/98

Parliament confirms Primakov as Russian prime minister



MOSCOW -- Russia's fractious parliament came together and confirmed Yevgeny Primakov as prime minister Friday after he called for the state to take the lead in solving Russia's worst economic crisis since the 1991 Soviet collapse.

While assuring lawmakers he had no intention of reviving the Soviet era's highly centralized economy, Primakov urged more state intervention in the economy and likened Russia's plight to one faced by Americans in the 1930s.

"Nobody criticized (President Franklin D.) Roosevelt when he introduced state controls over the economy after the Great Depression," Primakov told the State Duma, the lower chamber of parliament.

After he cautioned lawmakers against expecting quick results and warned them he was "no magician," they approved his nomination by a 317-63 vote. Immediately after the vote, President Boris Yeltsin signed a decree authorizing Primakov to assume the premiership.

Yeltsin chose the 68-year-old former foreign minister and intelligence chief as a compromise candidate after his previous pick, Viktor Chernomyrdin, was rejected twice by the Communist-dominated Duma.

Primakov's nomination raised hopes on Russia's battered financial markets. The price of the ruble was between 10 and 12 to the U.S. dollar on Friday -- up from 17 a week ago.

Reading without emotion from a prepared text, Primakov said the government would not abandon reforms aimed at building a market economy. "Reforms are necessary. The present situation cannot be overcome without them," he said.

At the same time, Primakov made clear his government wouldn't be bound by a strict capitalist model in trying to revive the economy.

"So what must we do? Repeat the wild capitalism that we had up till now? Or use the experience of other countries?" Primakov asked.

Primakov compared his predicament to Roosevelt's. After entering office in 1933, Roosevelt quickly pushed through a flood of anti-Depression measures, including massive public spending and creation of government agencies to regulate agriculture and industry.

Also Friday, Yeltsin nominated Viktor Gerashchenko to head the Central Bank. Gerashchenko, 60, had led the Soviet State Bank and then Russia's Central Bank for nearly three years until being ousted in October 1994 after the ruble nose-dived. Critics blamed Gerashchenko for fueling inflation with huge credits to ailing industry and agriculture.

Yuri Maslyukov, 60, was named first deputy prime minister for economic affairs.

The two men have ties to the Communist Party, but both have worked under Yeltsin before and are thought to favor continuing reform with greater state supervision.

Primakov said in order to improve the economy, the government had to clean up its own household. "We need to strengthen discipline. We should stop this sloppiness which now exists in the government," he said.

In a subtle slap at the previous government, Primakov pledged that he would do everything to build up Russia's economic base.

"Instead of destroying the financial and credit system in place, we will use it for developing industry and the national economy," he said. While the previous Cabinet's concentration on increasing state revenues was important, privatization and development of the tax system "should serve not only fiscal reasons ... but also restructure the economy, restructure industry and rejuvenate fixed assets," he said.

Primakov warned that Russia was in danger of being split up, and called for its disgruntled regions to be allowed more independence from the center in decision-making. Many regions have already paved the way by introducing price controls and other emergency measures this week in an attempt to stave off economic disaster.

Primakov is seen as a technocrat, non-ideological and loyal to Yeltsin. As foreign minister, Primakov won praise at home for his efforts to restore some of Russia's diminished international clout and create a "multipolar" world designed to counterbalance U.S. dominance.

In a televised address to the nation before the Duma vote, Yeltsin said a major crisis had been avoided by compromise. He called for measures to stabilize prices, restore supplies to shops and prop up the banking system.

"I understand that it's hard for everyone, but one cannot give in to emotions ... we'll have to draw lessons from the current crisis and now we'll have to work on overcoming it," Yeltsin said.

In London, Britain announced Friday that officials of the Group of Seven top industrialized nations will hold an emergency meeting Monday to discuss Russia's economic crisis.

The emergency summit called by Prime Minister Tony Blair is expected to consider an aid package to rescue the Russian economy.