Investors looked last week at the $4.8 billion the International Monetary Fund put into Russia’s Central Bank. They looked at the $18 billion yet to come in the bailout package. Then they looked hard at the budget deficit, the fiscal shambles, and the political stalemate. They looked even harder at the behavior of Russia’s home-grown tycoons, and at each other. They concluded that Russian policies cannot sustain the ruble’s value, and that the smart money is already acting on that opinion. Since those who sell first will reap the biggest gains (or suffer the smallest losses), the rush out of Russia has begun. Foreign-exchange reserves have dropped by a third in about three months and now stand at under $10 billion. A dollar still buys only 6.28 rubles today, but investors willing to wait a year to take delivery can get eleven of them for the same price. The stock market last week gave up all the gains from the short-lived bailout rally: it has now lost about two thirds of its value since the beginning of the year. Yields on ruble-denominated treasury bills are back up in the 75%-80% range. The market price on Russia’s dollar-denominated Eurobonds has fallen so low that yields are now 11% over the yields on comparable U.S. Treasury bonds.

At these rates, the Central Bank probably cannot raise new loans either at home or abroad without reinforcing investors’ suspicions that the government is out of resources. The Economist magazine writes that “a forced rescheduling [of government debt] for domestic investors looks inevitable.”

President Boris Yeltsin and his government seem overwhelmed by the unwillingness of the market to yield to the mix of cajolery, promises, threats, and foreign loans that has worked in the past to keep the ruble strong and the world safe for capital flight. The economic measures the government has taken thus far have been feeble in design and faulty in execution. Most strikingly, Prime Minister Sergei Kirienko — not for the first time — told tax collector Boris Fedorov to ease off on Gazprom, the gas monopoly that owes (says the government) $2.3 billion in back taxes. Let’s spend a couple of months, Kirienko advised, to figure out who owes whom how much. This is dithering — what might be called procrastination without the sense of urgency.

The president cut short his vacation amid speculation, fed by his entourage, that once again big changes in the government are about to be announced. One rumor promotes the return of twice-fired Anatoly Chubais to serve for a third time in the upper ranks of the government. Another has Yeltsin recalling Yegor Gaidar, the reformist prime minister he fired in 1993. A third has key regional leaders being named to cabinet posts, to add political strength to a highly unpopular administration.

Two moves have already been made, and neither suggests a commitment to reform. First, Communist parliamentarian Yuri Maslyukov accepted the post of minister of trade and industry, defying his party’s leadership and reversing his own decision of two weeks ago to turn the job down. If the appointment was intended to broaden the government’s appeal, it failed. A number of top Communists want Maslyukov expelled from the party, while some reformers in the cabinet have complained publicly about turning an important economic post over to the man who was the last chief of central planning of the Union of Soviet Socialist Republics.

Second, high-ranking Yeltsin aide Vladimir Putin took over from a fired Nikolai Kovalev as head of the Federal Security Service (FSB), the successor to the old KGB. Prime Minister Kirienko said Putin’s job is to re-focus the FSB on economic security — cracking down on smuggling, embezzlement, financial fraud, capital flight, and, yes, tax evasion. Putin, a lawyer and a successful KGB spy in Germany, is by all accounts a sophisticated and accomplished civil servant. He learned politics in post-Soviet Russia from Leningrad’s able ex-mayor, Anatoly Sobchak. But the emphasis on compulsion and enforcement to promote economic change is not the most positive signal to the international community.