Yeltsin Asked To Surrender Powers
Yeltsin Asked To Surrender Powers
Aug. 27, 1998
MOSCOW (AP) _ Opposition lawmakers demanded today that President Boris Yeltsin surrender at least some of his sweeping powers as the Central Bank halted dollar sales for the second straight day to save its dwindling hard currency reserves.
A commission of government officials and opposition lawmakers has drafted a power-sharing agreement that would compel Yeltsin to give lawmakers more say over Cabinet appointments and government policies.
But the Kremlin today quashed speculation that Yeltsin may resign. ``No resignation has been on the agenda,'' the president's office said.
Communists and other hard-liners urged the government today to pump more cash into the economy and provide social guarantees to state workers. But critics warned that the increase in money supply could again trigger the hyperinflation that plagued Russia at the start of its market reforms.
They also urged that Yeltsin's government nationalize strategic industries, require exporters to exchange some of hard-currency earnings into rubles and further restrict hard-currency exports.
Meanwhile, the indefinite suspension of hard-currency sales paralyzed activity for many banks and sent the street rate of the dollar above 10 rubles. That is well above the official exchange rate of 7.86 rubles to the dollar _ or 12.7 cents per ruble _ that the Central Bank has held frozen since Tuesday.
Late in the day, the bank canceled trading for Friday, ensuring that the freeze would remain until next week.
It was difficult to buy any significant amount of dollars on the street today. While the banking crisis has not yet caused panic, it has business people and ordinary Russians alike increasingly worried. Some employees have been unable to draw their paychecks, which western companies tend to pay directly into employees' bank accounts.
In addition, importers have difficulty paying for imported goods, which account for more than half the groceries on Russian store shelves as well a large proportion of appliances and other items.
``We can't stock up because they withhold our money. When we receive it, we just spend it,'' said Tatyana Atamas, a 30-year-old teacher.
The Central Bank said it was forced to stop selling dollars because it needed to save its hard currency reserves for key imports and other urgent needs, rather than spending them in attempts to prop up the weak ruble.
Since July, the bank has spent close to half its total reserves _ some $8.8 billion _ on trying to prop up the ruble. The bank said that its hard currency reserves as of last Friday stood at $13.4 billion, down $1.7 billion in the week since Aug. 14.
Alexander Shokhin, the head of a parliament faction close to acting Prime Minister Viktor Chernomyrdin, said the government may consider suspending the ruble's convertibility and instituting price controls to cope with the crisis.
Shokhin also said some major commercial banks may be nationalized.
``Now we can't rely on liberal monetary approaches,'' he said.
The financial crisis so far has had little effect on ordinary Russians, who don't own stocks or bonds or mutual funds. The anxiety some are beginning to feel comes largely from fear of inflation, which is expected to rise in the wake of the government's decision to devalue the ruble.
``Prices on most things haven't risen much yet, but we are buying more just in case,'' said 51-year-old Galina Filatova, who runs a small candy shop. ``Before, I might have bought one package of sugar, but now I'm buying three at a time.''
Russian stocks continued their steep dive today in thin trading. Despite the low volume, the stock market suspended trading twice when stock values dropped sharply. At midday, the index had dropped to 69.29 points, down 9.15 percent from its close Wednesday.
In New York, the Dow industrials plunged in prenoon trading, partly due to fears about Russia's worsening financial crisis.