Chaos in Russia
Boris Yeltsin's Resignation?
On Friday, August 28, 1998, Russian President Boris Yeltsin,
dismissed speculation he was about to step down, and said he
would serve out his full term until 2000 and then retire. “I
am not going anywhere. I am not going to resign. I am going to
work. As is laid down, according to the constitutional term, in
2000 a new president will be elected and I will not take part in
that presidential election,” Yeltsin said in an interview on
RTR Russian Television. Yeltsin also pledged to take
measures to protect the savings of Russian citizens, who
throughout the week have stood in long lines outside financial
institutions to withdraw their holdings as the ruble's value
continued to slide. Yeltsin said he could not say that Russia's
economic crisis would not grow, but that he did hope the crisis
would only grow "a minimum amount." Yeltsin said that a
plan had been put together to bring the country out of its
current financial crisis, but he gave no specifics on the plan.
He said he is optimistic, and believes rescuing the economy from
crisis "can be done." He also promised not to dissolve
the Duma, Russia's lower house of parliament, where opposition
lawmakers are pushing to erode his presidential powers.
Russian Financial Crisis
- Russia's economic crisis snowballed when the government
announced it was devaluing the ruble and effectively
defaulting on $32 billion in debt. Soon after, Yeltsin
fired the 5-month-old government of Prime Minister Sergei
Kiriyenko. Since then, the ruble has fallen more than 40
percent against the U.S. currency.
- Acting Prime Minister Viktor Chernomyrdin accepted a
package of Soviet-era economic measures, which
parliamentary leaders had demanded as a condition for
confirming his appointment, Russian news agencies
reported. These demands from the Communist-led State Duma
included an economic strategy that would reassert state
control over the banking and defense sectors.
- In another apparent concession to hard-liners, Yeltsin
fired prominent reformer Anatoly Chubais, putting him out
of a government job for the third time. Chubais was the
government's chief negotiator with international lenders,
obtaining a $22.6 billion emergency bailout package this
summer that failed to stem the financial crisis.
- In the midst of the shaky political situation, the
official currency exchange remained closed for the third
straight day. The last transactions on Tuesday, August
25, 1998 left the official exchange rate at 7.86 rubles
to the dollar. The street rate was about 10 rubles to the
dollar. The Russian stock market rose 5.6 percent on very
thin trading of 5.5 million shares. The benchmark Russian
Trading System index is at historic lows.
Other Developments
- A health ministry official told Interfax news agency that
Russia, which imports 60 percent of its medicines, has
enough drugs to last only three months.
- The government said it would try to sell 1 billion rubles
worth of short-term bonds next week. At the official
exchange rate, that would be $127 million.
- All currency trades were suspended for a third day
Friday, on orders from the Central Bank, effectively
freezing the market through the weekend. The last
transactions on Tuesday left the official exchange rate
at 7.86 rubles to the dollar, or 12.7 cents. The street
rate is below 10 rubles to the dollar.
- Central banks in Romania and Hungry had to intervene
Friday to prop up their own plummeting currencies.
special thanks to: CBS, CNN, and MSNBC on this story
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