This is the latest from The Times (of London)
Greg.
****
Wall St. sent reeling by
Russian crisis
FROM BRONWEN MADDOX IN WASHINGTON AND
RICHARD BEESTON IN MOSCOW
WALL STREET shares suffered their second-biggest
points fall last night after Russia's economic crisis
deepened with the parliament's rejection of President
Yeltsin's choice of Prime Minister.
As President Clinton boarded Air Force One for a
three-day visit to Moscow, brokers were looking aghast
at the neon displays confirming that yesterday's sell-off
had wiped out the market's entire rise for this year.
At the close, the Dow Jones index had fallen by 512.61
points - 6.3 per cent - to 7539, taking it below the 8,000
mark for the first time since January. The Dow had nearly
quadrupled from 1990 to its peak on July 17, but it has
fallen by nearly 20 per cent since then.
London share prices are also expected to open sharply
lower today. The market was already in decline and the
FTSE 100 index dropped by more than a hundred points
on each of the last three days of trading.
The latest alarms came in response to the growing crisis in
Russia and the deepening economic turmoil in the Far
East. In Moscow yesterday, deputies in the Duma voted
by 251 to 94 not to endorse Viktor Chernomyrdin as
Prime Minister, leaving the country rudderless at a time
when crucial decisions are needed to save the
near-bankrupt economy.
Aleksandr Kotenkov, Mr Yeltsin's representative in
parliament, said that if the politicians could not put their
differences aside quickly, Russia could lurch into even
greater economic chaos and trigger civil strife. "If this
chaos lasts for several more weeks, it may happen that
there will be neither Communists nor us," he said. "I mean
a popular uprising, merciless and senseless."
In the Duma - the lower house of parliament - speaker
after speaker from across the political spectrum had
attacked Mr Chernomyrdin's record in government. But
he emerged impassive from the chamber to make clear
that he had no intention of backing down and that he
would again seek confirmation next week. Indeed Mr
Yeltsin had resubmitted his name within hours of the vote.
"This country cannot continue without a Government," Mr
Chernomyrdin said. "No matter what, I must make
decisions because life goes on. I will deal with this."
A candidate for Prime Minister can go before the Duma
three times to seek confirmation. If he is rejected on the
final vote, parliament is dissolved and fresh elections held.
The country endured a similar spectacle five months ago
when Sergei Kiriyenko won confirmation on the last vote,
mainly because deputies wanted to avoid elections. The
same reasoning may apply again, except that Russia can ill
afford to be without an effective Government while its
economy falls apart.
In particular, Russia desperately needs the next tranche of
IMF loans worth $4.3 billion due in mid-September. But
no money will be forthcoming until a functioning
Government with a clear financial policy is in place, and
although there are behind-the-scenes efforts to revive the
power-sharing compromise worked out at the weekend,
the rouble began to slide again as soon as word of the
latest stalemate filtered out.
The Duma's failure to endorse Mr Chernomyrdin also
means that President Clinton arrives today empty-handed,
since his repeated offers of help have been conditional on
economic reform. With the Dow Jones diving as he left
Washington, he described the trip as an example of one of
the most important lessons every child had to learn: "We
are living in a smaller and smaller world. This global
society, this global economy, is real. Our economies are
increasingly interconnected."
Wall Street's extraordinary eight-year rise has been driven
by the apparently unstoppable growth of the American
economy, and the turmoil gripping more than a third of the
global economy has actually helped by pushing down the
cost of oil, gas and other commodities. But the markets
now fear that America will not be able to insulate itself
much longer.
--
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
