Yeltsin: economy at risk of disaster
MOSCOW, June 23 — President Boris Yeltsin said on Tuesday Russia’s financial crisis had reached alarming proportions and demanded radical measures to avert a growing danger of social and political problems. He told the opposition-dominated State Duma, the lower house of parliament, it must quickly adopt Prime Minister Sergei Kiriyenko’s anti-crisis plans or face unspecified "other measures" — a scarcely veiled threat to dissolve the chamber.
"THE ECONOMIC CRISIS has become so acute that there are social and political dangers," Yeltsin said at the start of a rare joint meeting of the government and parliament on the financial problems. Yeltsin, speaking sitting down in a packed hall in the government’s White House headquarters, said Russia had lost momentum in implementing market reforms.
Kiriyenko spoke after Yeltsin and was outlining a program to end the financial crisis and restore investors’ confidence in the battered economy. The program could hold the key to the young prime minister’s hopes of political survival. Kiriyenko, who is 35 and took office in April, faces a crisis which was partly brought on by financial problems in Asia but was also provoked by internal problems such as a cash crunch and low tax collection which have contributed to wage arrears.
He is promising austerity measures which will not be popular but will be designed to shield Russia’s poor as the country tackles a crisis which has buffered the ruble, sent interest rates up and caused turmoil on financial markets. Most of the moves outlined in the program are expected to need the approval of the Duma which could cause delays and cause new political confrontations. Yeltsin has threatened in the past to exercise his right to dissolve the Duma and call a new election if it blocks important economic moves. Gennady Seleznyov, the Duma’s communist speaker, said before the meeting that he thought a devaluation of the ruble was likely soon and that it could bring down the government.
"If there is a sharp devaluation, then either the president or the Duma will dismiss the government," Interfax news agency quoted Seleznyov as saying. The government has repeatedly ruled out a devaluation, a measure which would immediately ensure ordinary Russians felt the pain of a financial crisis that many fail so far to understand. In a reminder of the problems the government faces, unpaid miners, energy and other workers briefly blocked a railway and road in the Pacific port city of Vladivostok on Tuesday. Workers from a nuclear submarine-building plant set up a tent city near the local administration’s offices to press wage demands. They carried red banners declaring "Government - stop living off our money" and "Yeltsin — quit!"
Yeltsin and Kiriyenko are anxious to prevent the crisis touching off serious social unrest and creating more political stability which would undermine them and their reform plans. Interfax said the priorities of the program were a stable ruble, lower state borrowing and lending rates. Interfax, which obtained a copy of the program, said the document called for restoring investors’ confidence in Russia’s economy and markets.
An International Monetary Fund team arrived on Monday to begin a review of economic reforms and the anti-crisis plan. The team, under close watch from nervous Russian and international markets after it delayed a decision last week on handing out $670 million from an existing loan, will also discuss possible extra aid for Russia during its visit. The IMF has highlighted Russia’s poor tax collection and lax fiscal laws as among its biggest problems. Russian officials have said they could ask for up to $15 billion in the form of a Supplemental Reserve Facility.