Russia, meanwhile, seemed close to falling apart. While the ruble strengthened considerably against the dollar last week, most observers saw it as a temporary respite, due in part to the fact that citizens who had rushed to buy dollars were now having to exchange them back into rubles to buy essentials. Consumer prices, in the meantime, grew by 35.7 percent between September 1 and 7.
The bad economic news seemed endless. Russia’s gold reserves shrank by US$400 million between August 28 and September 4–by a total of 31 percent since the start of the year. The newspaper Russky Telegraf quoted Arkady Volsky, head of the Union of Industrialists and Entrepreneurs, as saying that sixteen Western investment companies had moved their operations to “more financially stable countries,” including Uzbekistan, Turkmenistan, Kazakhstan and Ukraine.
Many of Russia’s regions began instituting–unilaterally and, in fact, illegally–various emergency measures, including price controls and retail trade restrictions, in order to cope with the sharp price rises and panic buying sparked by the ruble’s devaluation. The situation in the Siberian city of Novosibirsk, where sugar tripled in price and flour doubled, was typical. In the Far Eastern city of Vladivostok, which has been experiencing horrendous economic problems for several years, an anonymous official told Reuters: “Here the population will soon take to the streets out of hunger and poverty, bash in shop windows and hang us.” Kommersant-daily reported that the Altai region had run out of medicine. Even relatively affluent St. Petersburg was compelled to impose price controls on food staples. Novgorod, a bastion of liberal governance, set up “mobile groups” of local officials and police to root out price gougers.
A truly ominous situation was developing in the western enclave of Kaliningrad. The parliament in neighboring Lithuania warned that the personnel of Russia’s Baltic fleet, which is based in the enclave, would face famine unless a Western relief effort was mounted. Estonian Prime Minister Mart Siiman announced that the three Baltic states were drafting a crisis program to deal with a possible wave of Russian refugees. He described the situation in Russia as “catastrophic.”
The authorities in Kaliningrad declared an “economic emergency” and reportedly suspended payments to the Russian federal budget. (Several day earlier, Aleksei Lebed, governor of the autonomous Siberian region of Khakassia and brother of Aleksandr, who runs neighboring Krasnoyarsk, announced his government would no longer turn over tax revenues to Moscow.) The governor of Sakhalin island in Russia’s Far East called the developments in Kaliningrad the “beginning of Russia’s dissolution,” and said that Sakhalin could follow the same scenario.
If economic separatism weren’t enough, the Caucasian republic of Dagestan appeared on the brink of civil war, while ethnic violence flared up again in the disputed region separating the republics of North Ossetia and Ingushetia.
It is no accident, then, that Yevgeny Primakov gave strong emphasis to these centrifugal tendencies in his September 11 address to the Duma. “We are facing a very serious threat of our country being split up,” he said, warning that “there will be no indulgence towards trends aimed at disrupting the balance of power, weakening the central leadership or ignoring the central leadership.”
On Sunday, September 13, the prime minister met behind closed doors with Russia’s “power ministers”–including the ministers of defense and the interior, and the head of the Federal Security Service. The reason for the meeting was not disclosed.
The same day, President Yeltsin called U.S. President Bill Clinton. Yeltsin, the Kremlin press service reported, “emphasized that the foreign policy line was unchanged, including the mutually advantageous and equal partnership with the U.S.A., consistency in carrying out reform and the absence of an alternative to the market course.” Primakov’s appointment, said Yeltsin, was a “graphic confirmation” of this.