Finance Minister Mikhail Zadornov was as welcome as a pathogen in a clean room at last week’s Washington, D.C., meetings of the International Monetary Fund. In a plea for money, he presented Russia’s “anticrisis” fourth-quarter draft budget to his counterparts from the Group of Seven. The draft budget–it has yet to be approved by the Duma–closes the country’s yawning financial gap with US$4.3 billion from the IMF (the second tranche of the US$22 billion loan agreed to in July); plus US$2.5 billion in new money from the G-7 countries; plus another billion to come from improved tax collection.
Under the circumstances, the G-7 ministers were remarkably polite. They did not throw him out of the window but instead lectured him on the need to avoid excessive growth in the money supply and urged him to renegotiate payment terms with his commercial creditors. Zadornov returned to Moscow to report that release of credits from the international financial institutions will depend on Russia’s taking practical steps to deal with the crisis.
But so far there are neither steps, nor plans for steps, nor plans for plans. The only steps taken last week were walking gingerly back from the leaked proposals of Deputy Prime Minister Yuri Maslyukov to turn Russia into a financial autarky–a place in which, in the words of The Economist, “the government can steal and squander its citizens’ wealth without the inconvenience of allowing them any alternative.” Maslyukov himself went on television to deny that he had any plan to interfere with the circulation of dollars in Russia. “The more dollars we have in this country the easier it will be to make good on our debts,” he said. Prime Minister Yevgeny Primakov told a group of Western companies with direct investments in Russia that there would be no prohibition on dollars entering or circulating in the country, only some restrictions on dollar outflows. They must have found that reassuring.
The prospects for funding the government with anything but newly created rubles remain extremely poor. Total federal tax collections for the month of September were reported at 9.8 billion rubles, about US$575 million at 17 rubles to the dollar. That is 2 billion rubles less than the August collection, which was half of July’s. The chairmen of Russia’s thirteen largest oil companies attacked a proposal in Zadornov’s draft budget to raise taxes on oil exports. (Readers may recall these taxes were to have been eliminated under Russia’s February 1996, agreement with the IMF.) The deputy minister of economics projected inflation for 1998 at 200-230 percent, with gross domestic product likely to be more than 5 percent below last year’s level. Imports are drying up, down 45 percent in September–bad news in a country that last year brought 40 percent of its food in from abroad, and this year faces the worst grain harvest since the early 1950s.
Nevertheless the much-promoted general strike and day of protest on October 7 was peaceful, passionless, and poorly attended. Communist Party chief Gennady Zyuganov had predicted a turnout of 40 million. Less exuberant labor-union leaders expected 25-30 million nationwide. In the end the number of participants may have been half that, some 14 million according to a Justice Department official. Crowds in Moscow numbered no more than 50,000, said the police. Demonstrators seemed to know what they were against, but not what they were for.
Not that there is any shortage of people who want to tell them. Moscow Mayor Yuri Luzhkov peeled off his seventh veil and declared himself willing to be the presidential candidate of a center-left coalition. Gennady Seleznev, the Communist who is speaker of the Duma, also announced his readiness to lead a left-of-center coalition into parliamentary elections next year and presidential elections in 2000. Seleznev took a swipe at rival Luzhkov, calling him “as far from left-of-center as I am from Pope of Rome.” But Luzhkov’s statements, made, oddly enough, during a trip to Britain, received favorable commentary from Communist chief Zyuganov, Agrarian Party leader Mikhail Lapshin, and political rookie of the year General Andrei Nikolaev. Nikolaev, the former head of the Border Forces, the Union of Popular Rule and Labor, a new movement that could serve as a vehicle for the candidacy of Luzhkov, who has not signed up with any political party.