Shares plunge on Russian chaos

BILL CLINTON will arrive today in Russia, a country virtually running with no government, as worries over its political and economic future saw the US stock market suffer its second biggest points fall in history.

The United States president, weakened by the Monica Lewinsky affair, will find a nation in the grip of the worst political crisis since President Boris Yeltsin sent tanks to bombard the legislature in October 1993. The depth of the crisis was underlined yesterday when the State Duma, or lower house, voted overwhelmingly to reject Mr Yeltsin's nomination for prime minister, Viktor Chernomyrdin - the moderate reformer whom he fired only five months ago.

The Communist-dominated parliament was unimpressed by Mr Chernomyrdin's warnings that Russia was on the verge of political chaos, preferring to remember that he ran the government for nearly six years - a period it associates with crime, corruption, a humiliating war in Chechnya and the chronic decline of a nuclear superpower.

The political crisis helped send the US stock market plummeting to one of its worst days in history. The Dow Jones index fell by more than 6.4 per cent to close at 7539.07 - a slump of 512.61 points, the second largest points drop yet seen. The largest points fall was 524.26 in October 1997. In percentage terms yesterday's fall was not in the major league - Black Monday in 1987 represented a 22.6 per cent fall.

In Moscow, last night, Mr Yeltsin attempted to regain the political initiative, renominating Mr Chernomyrdin, even though the 253-94 vote against him set a new low for aspiring prime ministers - worse even than the first score of his 36-year-old predecessor, Sergei Kiriyenko, who was sacked just over a week ago.

Although Mr Yeltsin has few friends at home, those abroad were working overtime yesterday to voice their support amid real anxiety that the Communists could force big concessions out of the Kremlin, paving the way for the return of command economics. Tony Blair telephoned Mr Yeltsin to express his support. And, shortly before setting out for Moscow, Mr Clinton said the United States had a "strong obligation" to help Russia, so long as it stayed "on the path of reform".

To Russian ears, that will sound like an offer of more foreign money, although it seems unlikely that the West will part with new funds. The International Monetary Fund is already doing its best to influence the outcome of Moscow's political stand-off by threatening to withhold the next $4.3bn tranche of a $23bn rescue package if Russia does not stick to tough market reforms. A delegation from the fund is due to arrive in Moscow tomorrow.

Mr Chernomyrdin's defeat in the Duma came after the collapse of a power- sharing deal, brokered between parliamentary leaders and Kremlin aides, that briefly promised to reduce President Yeltsin's vast powers by transferring some to the legislature. In the event, the acting prime minister's appeal for unity was ignored during a three-hour debate, in which abuse was heaped upon him.

Russia can now expect a further round of intense negotiations as the political parties - particularly the Communists - press for a better deal from the Kremlin in return for confirming Mr Chernomyrdin in post. If he fails to be confirmed twice more, then the Duma is automatically dissolved and early elections will be held. Mr Yeltsin's parliamentary envoy, Alexander Kotenkov, warned there could be "a merciless and senseless popular uprising" if the deadlock is not resolved.