MARKET JITTERS.

Russian government spokesmen have expressed disappointment that the surge in investment they expected to follow President Yeltsin’s reelection has not yet materialized. (Nezavisimaya gazeta, July 27) There are several reasons why investors are still jittery about parting with their money. The most obvious is the uncertain state of Yeltsin’s health. The president met yesterday with Prime Minister Viktor Chernomyrdin and is due to meet today with his Chief-of-Staff Anatoly Chubais, but he remains in a sanatorium and has not been seen in public for a month. As shown briefly on TV, his gait is stiff and few people put much credence in his aides’ assertions that the president is healthy and in good spirits.

Investors are waiting to see who will be in the new government, especially the key posts of first deputy premier in charge of the economy, and the heads of the Economics and Finance Ministries. Final appointments are not expected to be announced until the middle of August, after Yeltsin has been inaugurated on August 9 and parliament has confirmed Chernomyrdin as prime minister. In the meantime, market confidence has been dented by the clear signs of a power struggle between Chernomyrdin and Security Council secretary Aleksandr Lebed, and by some of Lebed’s anti-Western statements. Writing in today’s Nezavisimaya gazeta, Vitaly Tretyakov deplores the secrecy surrounding the formation of the new government, saying that Yeltsin is wrong to keep the population in the dark over the issue in which they have the greatest interest and for which they elected him — the future of Russian political and economic reforms. (Nezavisimaya gazeta, July 31)

On a practical level, foreign investors have been alarmed by the fate of Russia’s production-sharing law. Last week, the Duma rejected government-sponsored legislation essential to enable the law on production sharing, passed in December, to work. (AP, July 25; see Monitor, December 20, 1995) The government wanted the Duma to agree to open up to foreign investors some 38 percent of Russia’s oil production, 18 percent of its gold, 60 percent of its silver, 50 percent of its copper and 7 percent of its gas. The Communist-dominated Duma rejected the proposal, saying it represented a sellout of Russian interests to foreign capitalists, and the government is now planning to reduce from 200 to fewer than 60 its original list of oilfield and other natural-resource locations in which foreign investors will be allowed to seek concessions under the production-sharing law. (Financial Times, July 30) The fate of this legislation will be watched by foreign investors as an indication of whether or not the government is able to follow through on its professed determination to open up the economy to western markets.

Bonn Demands Autonomy for Chechnya, Return to Talks.