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Viktor Chernomyrdin, Ex-Russian Premier, Dies at 72

Nov. 3 (Bloomberg) -- Viktor Chernomyrdin, the longest-serving prime minister in post-Soviet Russia and the first head of state natural-gas export monopoly OAO Gazprom, died in Moscow. He was 72.

Former President Boris Yeltsin appointed Chernomyrdin to head the government in December 1992. He held the post until March 1998. As prime minister, he oversaw the overhaul of Russia’s economy, including voucher privatization and the loans-for-shares program that created many of so-called oligarchs who continue to dominate Russian business.

Chernomyrdin provided “reliable support” for Yeltsin as the federal government fought a war against separatists in Chechnya and struggled to rebuild the country after the collapse of the Soviet Union, Mikhail Kasyanov, who served as a deputy finance minister in Chernomyrdin’s government and later became prime minister, said by telephone.

“He was unique,” Boris Nemtsov, Chernomyrdin’s first deputy in 1997-1998, said by telephone. “People of his generation mostly just liked to talk about Stalin or at most about Brezhnev. Chernomyrdin fully understood that this was all nonsense and that we needed to build a market economy.”

1998 Default

Yeltsin replaced Chernomyrdin five months before Russia’s August 1998 financial crisis, when the government defaulted on $40 billion of domestic debt.

“It’s true that the conditions for the default were created on his watch, but it wouldn’t be fair to blame him alone for that,” said Alexei Moiseev, chief economist at VTB Group, Russia’s second-biggest lender. “The direction of Russia’s political and economic development was such that it couldn’t have ended differently.”

Moiseev said Chernomyrdin was an economic conservative of the Soviet school who found it difficult to accept the “riotous” reforms of Yegor Gaidar, who had served as acting prime minister in the second half of 1992 before Chernomyrdin’s appointment.

“I remember that Chernomyrdin began his duties as prime minister by trying to regulate the price of bread,” Moiseev said.

Chernomyrdin will long be remembered in Russia for his pivotal role in the June 1995 hostage crisis in the southern city of Budyonnovsk during the first Chechen war. About 200 rebels led by Shamil Basayev took more than 1,500 people hostage in the local hospital. They demanded an end to military operations in Chechnya and direct talks with the federal government.

Combat Operations

After a four-day stand-off in which many hostages were killed in crossfire between the rebels and government forces, Chernomyrdin negotiated with Basayev by telephone on live television. In a compromise aimed at securing the release of the hostages, Chernomyrdin agreed to halt combat operations and guaranteed Basayev and his group safe passage back to Chechnya.

One hundred twenty-nine people died in the attack and hundreds more were injured.

Chernomyrdin was born in a village in the Orenburg region near the border with Kazakhstan. He began his career as a metalworker at a local oil refinery and rose to head the Soviet gas ministry in 1985. When the ministry was restructured as a state company called Gazprom in 1989, Chernomyrdin became its chairman.

Current Chief Executive Officer Alexei Miller called Chernomyrdin the “founder of Gazprom.”

Following his tenure as prime minister, Chernomyrdin was elected to the lower house of parliament. In May 2001, then President Vladimir Putin named Chernomyrdin ambassador to Ukraine. He served as Russia’s envoy in Kiev for eight years.

The cause of Chernomyrdin’s death wasn’t made public today. He is survived by two sons and four grandchildren.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net; Denis Maternovsky at dmaternovsky@bloomberg.net

To contact the editors responsible for this story: Willy Morris at wmorris@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net

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