By Alastair Macdonald

MOSCOW, July 16 (Reuter) - President Boris Yeltsin may be on holiday but he left no doubt who was running Russia on Wednesday when he fired off a salvo of commands that should mean a big shake-up in the army and trouble for corporate tax-dodgers.

Briefing Russian media after meeting Prime Minister Viktor Chernomyrdin at the presidential fishing retreat near the Finnish border, Yeltsin confirmed plans to slash half a million soldiers from the armed forces and rein in military spending.

And he had harsh words for the big corporate bosses he has already accused of holding back billions of dollars in unpaid wages to their workers and unpaid taxes to the state.

"We should first take 50 or so big firms and the government should personally talk it over with them and say, 'That's it, either you're sacked or this firm goes bankrupt or somehow you pay up, understand, loans, taxes to the state and the wages that are due," Yeltsin said in remarks broadcast on NTV television.

"Hearing that, hundreds of managers are probably shaking," NTV commented. "But hundreds of generals should probably shake even more, when they find out all the details of the...decrees.

The president has decided he can no longer treat the army with a course of medication and has gone for the scalpel."

Separately, the Kremlin newspaper Rossiiskaya Gazeta published a degree and orders to presidential emissaries in Russia's regions that reveal a clear bid to tighten Yeltsin's control over unruly provincial leaders and their spending.

Yeltsin also signed a string of decrees to reorganise and reform the armed forces. Details were not immediately available, but Russian media quoted Yeltsin as saying the reorganisation covered the land forces, missile units and air defence forces.

He confirmed plans to trim the armed forces to 1.2 million by cutting half a million service jobs, as well as cutting civilian posts in the military and holding down Defence Ministry administration costs to one percent of the military budget.

The 66-year-old Kremlin leader, enjoying a return to apparently rude health after many months of illness, is eager to reform the military as a way of making the once-mighty but now cash-strapped and demoralised armed forces more efficient.

He plans to scrap conscription and build a professional force, although that will certainly cost more in the short run.

Yeltsin said the strategic missile forces and the space defence forces -- which are independent entities now -- would be united and "simply called missile forces." Air force and anti-aircraft defence forces would also be merged.

The president said he was dissatisfied with tax collection in the first half of July, which had dropped 20 percent compared to June, and he demanded a tougher approach, Russian media said.

Poor collection of taxes has led to a vicious circle of non-payments which is strangling the Russian economy. An improvement is vital for the government to keep a promise to pay off all back wages to public employees by early next year.

Before this month, tax collection had nudged up under pressure from a reshuffled government led by youthful reformers.

Itar-Tass news agency quoted Yeltsin firing a tax broadside at the opposition-dominated parliament, saying that unlike him and his ministers, not a single legislator had filed a public statement of wealth, despite many of them owning several houses.

Yeltsin was quoted telling Chernomyrdin to inform European Union leaders in Brussels this week of his displeasure at continued EU anti-dumping measures against Russian exports.

Interfax news agency quoted Yeltsin saying he would leave Karelia on Friday after nearly two weeks fishing among the northwestern forests. He will travel to the southern Volga River region where he previously said he would stay near Samara.

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Johnson's Russia List

#1056

17 July 1997

djohnson@cdi.org