Economic ruin, political chaos

By Abdel-Malik Khalil

Viktor Chernomyrdin is at the centre of Russia's latest politial crisis (photo: AFP)

The Duma voted 273-138 to reject Chernomyrdin -- that was the second time that the Duma refused to confirm Chernomyrdin, who for his part warned that further delay in forming a new government would exacerbate Russia's economic woes. "That would be a tragedy and a catasrophe for Russia," Chernomyrdin said on a televised appeal to the Russian people. His appeal fell on deaf ears.

"Our stance remains unchanged," Communist Party leader Gennady Zyuganov told reporters. He spoke disparagingly of yeltsin. "He doesn't even understand the programme he hasproposed." Yeltsin, in the meantime, defended Chernomyrdin's candidacy and and said that he'll not nominate anyone else. Yeltsin would rather disolve the Duma and rule by decree.

Meanwhile, the Russian economy is hurtling out of control. And with the Russian economy fast floundering and someone had to shoulder the blame. The scapegoat was none other than the embattled chief of the Russian Central Bank, Sergei Dubinin, tendered his resignation on Monday following the free fall of the Russian currency, the ruble. Dubinin recalled the last time he had been hounded out of office four years ago following the so-called "Black Tuesday" of October 1994, when the ruble fell by 21 per cent in one day.

Dubinin, who had been central bank governor since November 1995, came under fire immediately after Yeltsin sacked Sergei Kiriyenko and reinstalled Chernomyrdin as cabinet chief. However according to the latest polls, ordinary Russians fear that Dubinin's removal might aggrevate the economic situation further. The Communists for their part believe that only Yeltsin and Chernomyrdin are to blame. "The situation in the country is the result of the course carried out by Yeltsin and Chernomyrdin. in the past few years. We are on the verge of catastrophe," Zyuganov said.

The Russian Central Bank under Dubinin had intended that the national currency should trade no higher than 9.5 rubles to the dollar by the end of the year. But, the ruble fell heavily almost immediately, losing almost 70 per cent of its value to the dollar in three weeks . The ruble was trading at just over six to the dollar when the crisis errupted a month ago.

"Under my leadership, the central bank did not print worthless money," Dubinin wrote Yeltsin in his resignation letter. "Monetary policies cannot forever compensate for weakness in tax collection and the management of national debt, both internal and external," Dubinin explained.

Meanwhile, the Russian central Bank cancelled hard currency trading on Monday as traders only wanted to buy dollars, not to sell them. However, currency exchange booths on the streets remained open.

The International Monetary Fund (IMF) has threatened to suspend its $4.3 billion assistance package on 15 September if Yeltsin bows to Communist pressure to roll back economic reforms. The Communists called for radical changes to the IMF's terms for extending a $22.6 billion loan to Russia. The IMF has made it very clear that it has no intention of changing the rerms of the loan offer. The Communists are on a collision course with Russia's Western creditors, and Yeltsin is unable control the situation or stop the Communists' rising star and soaring popularity ratings.

Yeltsin brought Chernomyrdin back as prime minsister because he hoped the familiar figure would restore confidence in the government, badly damaged by the country's financial mess. Russia has since been gripped in a political crisis, because the opposition Communist Party rejected a deal offered by Yeltsin that would have given the more say in cabinet appointments for the first time in Russian history. Chernomyrdin held the post of prime minister for five years before being dismissed in March.

The Communists, by far the largest political bloc in the Duma, say that Yeltsin's offer would still leave the Russian president with sweeping powers. According the the deal, Yeltsin would have retained control of the security forces with the right to fill three key posts -- the defense, foreign and interior ministries. But observers believe that the Communist rebuttal was part of a plan to force more concessions out of Yeltsin.