June 27, 2005

Russia’s Putin tosses lifeline to embattled PM

By Oleg Shchedrov

MOSCOW (Reuters) - Russian President Vladimir Putin threw alifeline to his embattled prime minister on Monday, praisingMikhail Fradkov's government for sticking to the course he hadlaid out.

At a meeting with top ministers, Putin dropped his usualrole of tough taskmaster to tell Fradkov he was impressed bythe cabinet's commitment to fulfil tasks he had set earlier inthe year in the state of the nation speech.

"I note with satisfaction that the government has taken upthe basic provisions and targets set out in the presidentialaddress," he said in televised comments. "Some of them havebeen already implemented at the legislative level."

The Kremlin leader's praise came at a time when Fradkov,locked in conflict with liberal ministers over whether Putin'splans are realistic, faces growing public criticism over hisgovernment's performance.

In his state of the nation address in April, Putin taskedthe cabinet with speeding up economic growth, slowing despite awindfall of oil revenues, and boosting investor confidence hitby a Kremlin-orchestrated onslaught against oil major YUKOS.

On Monday, Putin specifically praised his cabinet forpushing through parliament bills that restricted to three yearsthe time limitation on privatization deals being overruled, andscrapped gift tax and death duties for close relatives.

Putin also said the government would soon come out with anew package of bills improving tax administration -- part ofhis order to end arbitrary actions by tax authorities, whichscare the business community.

Rumours of Fradkov's possible resignation have resurfacedregularly since the government's botched attempt to modernizeSoviet-era social security net ended in confusion, hittingPutin's own popularity.

Last week, the lower house of parliament dominated byPutin's allies blasted the cabinet for failing to coordinatewith it a bill boosting budget spending this year by 11percent. The State Duma nonetheless rubberstamped the bill.

Fradkov's situation is further soured by a growing gulfbetween him and a liberal wing in the government, led byEconomy Minister German Gref and Finance Minister AlexeiKudrin.

Last Thursday, Gref was in open dispute with Fradkov whoinsisted on pressing ahead with the task of doubling the grossdomestic product in 10 years set by Putin.

Fradkov and the liberals are also at odds over otherissues, including the pace of state involvement in the economyand the use of the stability fund, accumulated from high oilrevenues, which liberals want to use solely for paying externaldebts to avoid fueling inflation.

At Thursday's government meeting, Fradkov criticized Grefover the latter's plans to slash the number ofgovernment-funded investment programs.