Crisis call brings Yeltsin home: Russians went on a spending spree yesterday to dump pre-1993 currency - invalid from today - as shoppers in neighbouring Abkhazia swarmed into Russia, roubles in hand

Click to follow
The Independent Online
PRESIDENT Boris Yeltsin returned to Moscow yesterday, cutting short a holiday on the advice of liberals who warned him that the conservative parliament was trying to undermine his reforms while he relaxed among the pine forests of northern Russia. Mr Yeltsin's spokesman said he would be back at work this morning.

Ordinary Russians, however, were more concerned about the implications of Saturday's announcement that all roubles issued before 1993 would be withdrawn from circulation today. 'I'm not rich, I don't have any big denomination notes, only these small ones with the head of Lenin and they are all old,' said Maria Vladimirovna, a pensioner who joined a weekend rush to buy food while the old money was still legal.

The Central Bank promised people they would not lose out as they had done in previous money reforms because they can, until 7 August, exchange old notes for new at savings banks. But old money over a limit of 35,000 roubles (pounds 23) - the average monthly wage - must be deposited for six months. Russians have worked out that with bank interest rates at between 40 and 100 per cent and annual inflation at 750 per cent, this is grossly unfair.

So far there have been no reports of unrest except for a mention on Moscow Radio of savings banks in the Siberian city of Omsk being 'under attack by the indignant population'. But disorder could break out when banks open today if huge queues build up or if cashiers have insufficient new notes.

The Central Bank also had words of reassurance for former Soviet republics that still use the rouble, saying if they stuck to Moscow's tight monetary policy, they could have supplies of 1993 banknotes. But the republics saw the move for what it was - Russia's effective abandonment of the old Soviet rouble and the launch of a new national currency. Belarus, whose version of the rouble plunged at the news, said it was considering speeding up the introduction of its own currency. Georgia said it would dump the rouble as early as next month.

In the long run the reform may help to stabilise Russia's finances, but it seems inevitable that in the short term there will be renewed demand for dollars and the rouble will fall again after several weeks at a rate of about 1,000 roubles to dollars 1.

The Central Bank, controlled by the Soviet-era parliament, had the blessing of Mr Yeltsin's radical government for the money reform. But last week parliament voted unilaterally to slow down privatisation, restrict the operations of foreign banks and double the planned budget deficit. It also called for the sacking of Mr Yeltsin's interior minister, and ordered corruption charges to be brought against one of his main aides.

This was the challenge that brought Mr Yeltsin rushing back to the capital. The newspaper Izvestia, implying that a hardline coup was being prepared, said Mr Yeltsin had no right 'even on holiday to distance himself from events which could lead to a situation in which he returns to a different country'.

The danger of a coup is probably exaggerated, but liberals and foreign businessmen feel that Mr Yeltsin has wasted the vote of public confidence he won in April's referendum. Still without regional agreement for a new Russian constitution, he now faces yet another round in the power struggle with parliament.

Leading article, page 15

Comments