Russia's Got a Prime Minister, Now It Needs a Dream Team

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So Russia finally has a prime minister-designate, the Soviet-era hawk and ex-spy Yevgeni Primakov.

Big deal.

Yes, he's a common-sense, consensus candidate who can marshal Russia's parliamentary support. It's likely the parliament will approve him as

President Boris Yeltsin's

pick for prime minister. Plus, "they just need someone to run the government," says money manager Frank Fernandez, head of

Global Emerging Markets Advisors

in Manhattan.

What do Western investors gain in Primakov? A known entity. His face is well-recognized following his stint as foreign minister. He is gray and a solid-enough nationalist to command the broad respect that fresh-faced provincial and former prime minister

Sergei Kirienko

was so obviously lacking. And his long career as spy master with the

KGB

equips

him as well as anybody to deal with lurking robber barons.

Primakov is undoubtedly clever. He thrived within the Soviet intelligence apparatus for decades, speaks fluent Arabic and theoretically enjoys a doctorate in 1956-era "economics." But his experience in Russian politics has not had anything to do with economic policy.

So his choices for chiefs of economic policy team will be crucial.

Ever a survivor and consensus-builder, Primakov could well tap a number of communists as well as reformers in his cabinet. With his knowledge of economics thin, he will hopefully re-appoint acting deputy prime minister and

IMF

liaison

Boris Fyodorov

, a successful investment banker, to make the important fiscal decisions. A cabinet dream team would include Fyodorov in charge of the economy, ex-Minister of Finance

Mikhail Zadornov

back in his old job, and longtime government critic and reform-minded Yabloko party head

Grigory Yavlinsky

heading up a central bank ready to take on Russia's financial-industrial oligarchs.

His choices are especially important as the honeymoon with Russia's parliament will likely only last "as long as the ruble printing presses are running -- possibly

ending as soon as the end of this month when the government gets down to discussing the budget," writes

Renaissance Capital

in a research note Thursday. After that, the parliament may be as intransigent as ever on the budget, tax reform and painful state-industry bankruptcies.

Primakov has traveled extensively in the West and has seen the concrete benefits of a market-based economy -- and potentially a reformist path.

Admittedly, very few dreams have been fulfilled in Russia. And already, Soviet-era monsters are looming to take their place alongside the dream team at Primakov's consensus table.

Viktor Geraschenko

was a Kremlin suggestion for chairman of the central bank,

Associated Press

reported Thursday. Geraschenko is blamed by many economists for fueling inflation during his period in charge of the bank in the early 1990s by printing rubles to help the government meet its obligations.

So when is it time to buy? Well, the good news is that the crisis in the financial markets has largely run its course, thanks to the fact that the financial markets will no longer exist on any significant scale. In fact, the Russian financial markets are effectively sterile through the 1999-to-2000 election season, says Moscow brokerage firm

Nikoil

. "No matter how undervalued Russian companies may appear, systemic risks far outweigh potential gains," the firm wrote in a recent research report.

Even under the stewardship of competent political leaders, "economic policy will be the schizophrenic brainchild of self-interested industrial magnates and misguided conservatives," the Nikoil report adds. Their projections: annual inflation of 20% to 30% in the next six months, reintroduced statist industrial policies, scattered popular unrest, and default on Russia's Eurobond obligations.

Primakov's the next prime minister. Still think it's a big deal?

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