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PM's Trade Ministry move may seek to oust minister Gref - paper

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A proposal by Russia's prime minister to create a new trade ministry could be an attempt to undermine Economic Development and Trade Minister German Gref, a leading business daily said Friday.

MOSCOW, June 2 (RIA Novosti) - A proposal by Russia's prime minister to create a new trade ministry could be an attempt to undermine Economic Development and Trade Minister German Gref, a leading business daily said Friday.

Kommersant said Prime Minister Mikhail Fradkov had proposed to the cabinet Thursday to effectively hive off part of Gref's ministry and make a separate trade ministry as a way to boost declining Russian exports. However, the paper said the proposal could well be unrelated to the real reasons behind the drop in exports.

The share of machines and equipment in Russian exports fell in 2005 from 7.8% to 5.6% but the paper attributed the downward trend partially to an upsurge in global prices for oil - Russia's principle export.

The state Statistics Service cited a 4.5% decline in exports of machines, equipment and vehicles in 2005 - against 18.6% growth in 2004 - while the physical volume of exports dropped from 8% to 3%. But Kommersant said the main reason was ruble appreciation, as the effective real ruble rate had risen 10.5% in 2005 and led to Russian goods being less competitive on foreign markets.

Although the sources close to the prime minister said Fradkov's proposal should not be seen as personal criticism of Gref, the Ministry of Economic Development and Trade reacted immediately to the initiative.

Ministry state secretary Andrei Sharonov said a country with a market economy did not need a separate trade ministry, and added that Gref's ministry had been formed deliberately to combine the functions of both ministries, which was already having a positive effect.

"The desire to insult Gref has played a bad trick on the prime minister himself, and he lost his instinct for self-preservation," the former deputy chief of the government staff, Alexei Volin, told Kommersant.

Gref recently came under heightened pressure after the Federal Customs Service was transferred from his ministry to the prime minister's control on May 11. Shortly afterward, Gref asked President Vladimir Putin to accept his resignation, although he did not file for it officially, the paper said.

"The president has not seen any [resignation] document," a Kremlin source said. "But if German [Gref] decides to continue with his research or business career, the president will not mind."

Kommersant said the minister had a month or six weeks to consider his position.

Experts differ on possible consequences of Gref's departure, if any. Roland Nash of Renaissance Capital told the paper it could push down the stock market. However, Yevgeny Gavrilenkov of Troika Dialog brokerage disagreed, saying that the Russian stock market tended to follow international trends.

"And the blue chip - [natural gas monopoly] Gazprom - has no connection to Gref's fate," he said but added that the current economy was based on budget policy, and this is where Gref's role was significant, Kommersant said.

Finance Minister Alexei Kudrin declined to comment Friday on Gref's possible resignation and the formation of a trade ministry.

"I do not know anything about it," he said.

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