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Thursday August 27, 1998
The Guardian
Russia in emergency talks with IMF
Chernomyrdin appeals for aid as West decries Moscow debt
plan and leading bank collapses
By James Meek and Tom Whitehouse in Moscow, and Larry Elliott
The Russian prime minister, Viktor Chernomyrdin, flew to Crimea in
Ukraine last night for emergency talks with the head of the
International Monetary Fund as the crashing rouble and the collapse of a
leading bank pushed Russia further into chaos.
With Western bankers rounding on Moscow over its plans to reschedule
some $40 billion (?24 billion) of debt, and the stock
market in free fall, Mr Chernomyrdin last night desperately sought more
aid from the IMF and leading industrial countries.
The recalled prime minister is due to make a televised appeal to the
nation within days, amid mounting speculation that President
Boris Yeltsin's time is running out.
The trip by the IMF head, Michel Camdessus, to meet Mr Chernomyrdin and
the leaders of the former Soviet republics Ukraine
and Belarus - which have been sucked into the Russian economic crisis -
was kept secret until the last minute.
As the rouble plumbed new lows against the dollar yesterday, the central
bank declared the trade null and void and said it would no
longer spend its dwindling reserves to support the currency.
The first big banking collapse since rouble devaluation was announced
yesterday when Bank Imperial, the 13th biggest bank, had
its licence withdrawn.
Deutschmark trade yesterday suggested the rouble would have fallen to
almost 14 against the dollar, a loss of more than 100 per
cent in 10 days and a clear signpost on the road to hyperinflation.
Trading in the Ukrainian currency, the hrynva, was halted on the Kiev
exchange yesterday as bankers scrambled for dollars. In
neo-Soviet Belarus the local currency has fallen about 600 per cent in
recent months.
In Russia price rises accelerated yesterday, many banks and exchange
booths were closed and depositors queued at branches still
open to withdraw cash - usually without success.
One Russian advertising executive said: "I've lost a huge contract. No
one is doing business. How can they? What price should
they trade at? What currency should they use? You can't use the dollar
because it's officially illegal. And the rouble?"
A Moscow-based British economist, Al Breach, said Russia could not now
rule out general default on its foreign debts. "If you
default on one set of debts, why not default on all of them?" he said.
Calls for Mr Yeltsin to quit grew more insistent yesterday. Gennady
Seleznyov, chairman of the lower house of parliament, the
state Duma, said deputies had drafted a law guaranteeing any retiring
president 10-year membership of the upper house. This
would make him immune from prosecution - though not his family or
associates.
Mr Chernomyrdin's options were narrowing to radical alternatives
yesterday - essentially whether to govern with or without
parliament.
The Communist-led alliance, without whose support Mr Chernomyrdin cannot
legally be confirmed as head of government, firmed
up its demands: Mr Yeltsin's resignation; a sharp change of economic
course involving tariff barriers, closer economic integration
with ex-Soviet republics and increased rouble investment in industry;
and constitutional changes to turn Russia into a parliamentary
republic.
Asked yesterday whether changing the constitution would not take up too
much time, the Communist leader, Gennady Zyuganov,
said: "An emergency situation demands emergency measures. They can be
taken in three days by the houses of parliament."
He said his alliance would support only a government that "clearly and
definitely renounced so-called monetarist reforms".
If Mr Yeltsin were to step down or give his backing, and the security
forces were behind him, Mr Chernomyrdin could dissolve the
Duma and impose draconian measures to restore order. The arrival in
Moscow yesterday of the former general Alexander Lebed,
who governs Krasnoyarsk in Siberia, spawned rumours of a
Chernomyrdin-Lebed junta in the making.
© Copyright Guardian Media Group plc.1998
--
Gregory Schwartz
Dept. of Political Science
York University
4700 Keele St.
Toronto, Ontario
M3J 1P3
Canada
Tel: (416) 736-5265
Fax: (416) 736-5686
Web: http://www.yorku.ca/dept/polisci
--------------4AED7C9B62F150D2070C1E11
<HTML>
Thursday August 27, 1998
<BR><I>The</I> <B>Guardian</B>
<BR>
<BR><B><FONT SIZE=+3>Russia in emergency talks with IMF</FONT></B>
<P> Chernomyrdin appeals for aid as West decries Moscow
debt
<BR> plan and leading bank collapses
<P> By James Meek and Tom Whitehouse in Moscow, and Larry
Elliott
<P>The Russian prime minister, Viktor Chernomyrdin, flew to Crimea in Ukraine
last night for emergency talks with the head of the
<BR>International Monetary Fund as the crashing rouble and the collapse
of a leading bank pushed Russia further into chaos.
<P>With Western bankers rounding on Moscow over its plans to reschedule
some $40 billion (£24 billion) of debt, and the stock
<BR>market in free fall, Mr Chernomyrdin last night desperately sought
more aid from the IMF and leading industrial countries.
<P>The recalled prime minister is due to make a televised appeal to the
nation within days, amid mounting speculation that President
<BR>Boris Yeltsin's time is running out.
<P>The trip by the IMF head, Michel Camdessus, to meet Mr Chernomyrdin
and the leaders of the former Soviet republics Ukraine
<BR>and Belarus - which have been sucked into the Russian economic crisis
- was kept secret until the last minute.
<P>As the rouble plumbed new lows against the dollar yesterday, the central
bank declared the trade null and void and said it would no
<BR>longer spend its dwindling reserves to support the currency.
<P>The first big banking collapse since rouble devaluation was announced
yesterday when Bank Imperial, the 13th biggest bank, had
<BR>its licence withdrawn.
<P>Deutschmark trade yesterday suggested the rouble would have fallen to
almost 14 against the dollar, a loss of more than 100 per
<BR>cent in 10 days and a clear signpost on the road to hyperinflation.
<P>Trading in the Ukrainian currency, the hrynva, was halted on the Kiev
exchange yesterday as bankers scrambled for dollars. In
<BR>neo-Soviet Belarus the local currency has fallen about 600 per cent
in recent months.
<P>In Russia price rises accelerated yesterday, many banks and exchange
booths were closed and depositors queued at branches still
<BR>open to withdraw cash - usually without success.
<P>One Russian advertising executive said: "I've lost a huge contract.
No one is doing business. How can they? What price should
<BR>they trade at? What currency should they use? You can't use the dollar
because it's officially illegal. And the rouble?"
<P>A Moscow-based British economist, Al Breach, said Russia could not now
rule out general default on its foreign debts. "If you
<BR>default on one set of debts, why not default on all of them?" he said.
<P>Calls for Mr Yeltsin to quit grew more insistent yesterday. Gennady
Seleznyov, chairman of the lower house of parliament, the
<BR>state Duma, said deputies had drafted a law guaranteeing any retiring
president 10-year membership of the upper house. This
<BR>would make him immune from prosecution - though not his family or associates.
<P>Mr Chernomyrdin's options were narrowing to radical alternatives yesterday
- essentially whether to govern with or without
<BR>parliament.
<P>The Communist-led alliance, without whose support Mr Chernomyrdin cannot
legally be confirmed as head of government, firmed
<BR>up its demands: Mr Yeltsin's resignation; a sharp change of economic
course involving tariff barriers, closer economic integration
<BR>with ex-Soviet republics and increased rouble investment in industry;
and constitutional changes to turn Russia into a parliamentary
<BR>republic.
<P>Asked yesterday whether changing the constitution would not take up
too much time, the Communist leader, Gennady Zyuganov,
<BR>said: "An emergency situation demands emergency measures. They can
be taken in three days by the houses of parliament."
<P>He said his alliance would support only a government that "clearly and
definitely renounced so-called monetarist reforms".
<P>If Mr Yeltsin were to step down or give his backing, and the security
forces were behind him, Mr Chernomyrdin could dissolve the
<BR>Duma and impose draconian measures to restore order. The arrival in
Moscow yesterday of the former general Alexander Lebed,
<BR>who governs Krasnoyarsk in Siberia, spawned rumours of a Chernomyrdin-Lebed
junta in the making.
<P>© Copyright Guardian Media Group plc.1998
<BR>
<P>--
<BR>Gregory Schwartz
<BR>Dept. of Political Science
<BR>York University
<BR>4700 Keele St.
<BR>Toronto, Ontario
<BR>M3J 1P3
<BR>Canada
<P>Tel: (416) 736-5265
<BR>Fax: (416) 736-5686
<BR>Web: <A
HREF="http://www.yorku.ca/dept/polisci">http://www.yorku.ca/dept/polisci</A>
<BR> </HTML>
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