• ACI Russia

08/02/1998 15:54:06 Russian govt wins time, but problems abound

By Alastair Macdonald

MOSCOW, Aug 2 (Reuters) - The Russian government won praise from two very

different sources this weekend, the International Monetary Fund and rebel

Chechnya, but there were reminders too that both its financial and frontier

problems are far from over.

The IMF said an austerity plan was working and the Chechen leader hailed a

promise of aid from Moscow. But social unrest still brewed and there were

reports of violence around Chechnya.

The IMF's deputy managing director declared himself pleased with the

government's efforts to tighten its belt, gather taxes and so ensure the Fund

continues with a $22.6 billion rescue plan agreed last month to stave off

looming bankruptcy.

"Good progress has been made and if it continues that way the outcome will

be good," Stanley Fischer said on Saturday after meeting chief debt negotiator

Anatoly Chubais and others.

Almost simultaneously, the president of Chechnya, who led his million-strong

Moslem region's guerrillas to victory in a bitter war against the Russian army

two years ago, said he hoped at last to see some of Moscow's promised


Aslan Maskhadov won a new pledge of economic aid to rebuild Chechnya's

devastated economy from Prime Minister Sergei Kiriyenko, who was despatched by

President Boris Yeltsin after Maskhadov survived an assassination attempt last


"After today's meeting we have new hope that the agreements will, if only in

part, be put into practice," said Maskhadov.

Russia can ill afford generosity right now and it remains to be seen whether

these promises are any more honoured than similar ones made when Yeltsin and

Maskhadov signed a peace treaty last year, setting aside differences over

Chechnya's sovereignty.

But Moscow appears to believe that Maskhadov, a soft-spoken former Soviet

colonel who won a free election in January 1997, as preferable to the violent

anarchy, fuelled in some cases by criminal groups or fundamentalist Islam, that

threatens to engulf Chechnya.

"We need stability and peace in Chechnya and the whole North Caucasus,"

Kiriyenko said in Nazran, just outside Chechnya's borders. "We need to settle

Chechnya's economic problems."

"There is a lawfully elected president and executive in Chechnya who have

the support of the people and we will give those authorities all the help we

can," he added.

Maskhadov, clearly eager to believe he was getting off on a new footing with

Moscow, made a point of stressing that the 36-year-old Kiriyenko, in office for

just four months, was of a new generation untainted by the war and the Kremlin

old guard.

U.S. Treasury Secretary Robert Rubin last week called Kiriyenko's team "the

best government they (Russians) have had".

But time is short, at least as far as getting the budget in shape without

provoking either a crisis of confidence among investors or stoking social


Yeltsin, trying to defend his place in history with two years of his term to

run, flew back early from holiday last Wednesday saying he needed to prepare for

just such tensions.

On the Pacific island of Sakhalin, engineers at a major power station, which

has been sealed off for nearly two weeks by miners seeking months of back pay,

prepared on Sunday to shut off electricity to all but hospitals and water

pumping stations.

In relatively well-off Moscow, consumers will feel the pinch after shops

jacked up prices on basic foodstuffs by 10 percent on Saturday as new sales tax

rules came into force.

In Chechnya, officials accused Russian troops of firing over the border,

while officials in a neighbouring region accused Chechens of opening fire at

night. There was also a report that an armed group broke into a Chechen police

post, freeing three suspected criminals and making off with dozens of weapons.

Violence was not confined to the Caucasus, however.

At Smolensk, in western Russia, the head of the country's biggest diamond

processing factory was gunned down in an apparent contract killing outside his

home on Sunday.

For Kiriyenko, marking his 100th day since being confirmed in office by

parliament, it was another reminder of the lawlessness still rife in an economy

from which he is striving to extract more taxes to fund the state while hoping

the impatience of millions of unpaid workers remains in check.

He hardly needed the IMF's Fischer to remind him: "There is still a lot of

work to be done...in the next weeks and months."


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