Russian prime minister, his Cabinet fired by Putin

MOSCOW -- Less than three weeks before the presidential election, President Vladimir Putin fired his prime minister Tuesday in a surprise stroke that rids the Russian leadership of a top holdover from the Boris Yeltsin era. The dismissal of Prime Minister Mikhail Kasyanov and his Cabinet also apparently bolstered the authority of Putin's inner circle of former KGB agents and set the stage for a makeover of the country's top leadership.

Kasyanov was a strong advocate of the business tycoons many Russians regarded with disdain. His ouster is likely to widen Putin's already overwhelming lead before the March 14 presidential election by attracting voters who accused Putin of continuing Yeltsin-era policies that the tycoons used to amass great wealth.

Under the Russian government system, the prime minister is primarily responsible for steering economic policy. The dismissal of the prime minister also means the dismissal of the rest of the government, though any of them could be reappointed.

In a statement broadcast on state television, Putin said he was reshuffling the Cabinet ahead of the vote to "avoid uncertainty in the federal executive structures." He said the Cabinet's performance was "satisfactory" but he wants a new government to push reforms further.

"The president wanted to show that he was rupturing ties with the old regime," said Igor Bunin, the head of the Center for Political Technologies, an independent think-tank.

Lilia Shevtsova of the Carnegie Endowment said that firing Kasyanov could allow Putin to "lay blame on the government for everything he hasn't achieved during his term."

Putin named Deputy Prime Minister Viktor Khristenko, widely perceived as essentially a yes-man for the president, as interim premier. Putin now has two weeks to submit his nomination for a new prime minister to the legislature.

"Within a week of being appointed, the chairman of the government will have to present me with proposals for a new structure of the federal bodies of executive authority," Putin said.

It was unclear if that statement meant Putin was planning a major overhaul of the way the government is shaped. The timeframe also raised the possibility that Putin would not have a government in place before the election.

The White House, aware of the importance of the U.S.-Russian relationship but increasingly concerned about political developments under Putin, weighed carefully how to respond. Several hours after Putin's announcement, White House press secretary Scott McClellan was still telling reporters he needed more time to look into the matter.

The Bush administration is worried about independent media in Russia and believes parliament -- dominated by Putin supporters -- isn't the strong legislative arm it could be.

Kasyanov was named finance minister in 1999 and became prime minister after Putin, then prime minister, was elected president in March 2000. He had clashed with Putin's proteges who were crowding the Cabinet and the presidential administration.

Speculation about his ouster intensified in recent months after he criticized a probe of Russia's Yukos oil giant even after Putin bluntly warned the Cabinet against meddling in the issue. The attack on Yukos is broadly perceived as the Kremlin-instigated effort to curb the political ambitions of the company's billionaire ex-chief, Mikhail Khodorkovsky.

Kasyanov had said that the Yukos probe hurt Russia's investment climate and set back economic development.

"With Kasyanov's dismissal, big business lost their last major lobbying channel in government," said Roland Nash, the chief strategist for the Renaissance Capital investment bank.

Last fall, Putin sacked his longtime chief of staff, Alexander Voloshin, who had championed the tycoons' interests.

Kasyanov was dogged by media allegations of corruption early in his career, earning him the nickname "Misha 2 percent." He shook off that negative image by championing liberal reforms and presiding over an economic boom in recent years.

Kasyanov's time as prime minister actually marked a period of relative stability. Yeltsin famously fired four prime ministers in 19 months, finally settling on Putin just months before abruptly resigning from the presidency himself on Dec. 31, 1999.

"Kasyanov represented a sense of stability with a good track record on reform," Nash said. "More reforms were implemented in the past four years than entire past decade."

The ouster of the Cabinet pushed shares down briefly on the Russian stock market, but the benchmark RTSI index ended the day down only about 1.5 percent.

"There is no sense that policy will change," said James Fenkner of the Troika Dialog investment company. "The market is waiting for a new reform push."

Few pundits believed that Khristenko will hold the job. Most said that Alexei Kudrin, who served as first deputy to Kasyanov and shares Putin's St. Petersburg roots, appears to be the top candidate.

Some mentioned Defense Minister Sergei Ivanov, who like Putin is a veteran of the KGB.

Kasyanov served in the Soviet-era state planning agency Gosplan during the 1980s and steadily rose through economic and financial posts after the Soviet collapse.

As deputy finance minister in 1996, he worked out a deal for repaying debts Russia inherited from the Soviet Union. Two years later, he played a key role in efforts to restore Russia's credibility after the government defaulted on foreign debt and the ruble plunged.