• ACI Russia

08/29/1998 22:18:09 Yeltsin, Russia PM, Duma to negotiate new strategy

By Oleg Shchedrov

MOSCOW, Aug 30 (Reuters) - Russian politicians are to have

more talks on the country's deep political and economic crisis

on Sunday, hoping to finalise a new political strategy which

would remove some of President Boris Yeltsin's sweeping powers.

Officials of the acting government, parliament and

presidential aides will meet for negotiations in which the

Communist-led Duma lower house expects to win more influence,

including the right to control top cabinet nominations.

Acting Prime Minister Viktor Chernomyrdin, struggling to

head off economic collapse, on Saturday moved to calm mounting

Western fears about the fate of market reforms, saying Russia

would not return to the state controls of its Soviet past.

His pledge followed a tough warning from the International

Monetary Fund and the United States that the West would not come

to Russia's rescue if it reversed its six-year drive to a more

open, market-based economy.

"We are already part of the world economy and there will be

no return to the past," Chernomyrdin said in televised remarks.

In recent days the rouble has lost more than 40 percent of

its value and anxious Russians, fearing a meltdown of the whole

banking system, have besieged banks to withdraw life savings.

On Friday Chernomyrdin formed a group of senior reformers

headed by acting Deputy Prime Minister Boris Fyodorov, setting

them the task of preparing urgent anti-crisis measures.

In another possible sign of Chernomyrdin's determination to

stick to the reform path, news agencies and newspapers in

Argentina reported that he had asked the man who drove

four-digit inflation from the Latin American country to advise

his government.

News agency DyN and newspapers said Chernomyrdin had invited

Domingo Cavallo, a Harvard-trained economist and Argentina's

economy minister in the early 1990s, to advise the new cabinet.

Russian officials were not immediately available to confirm

the reports.

Chernomyrdin and Yeltsin's chief of staff Valentin Yumashev

spent four hours in the parliament building on Saturday night

negotiating with parliamentary deputies on a draft of a

compromise strategy worked out with the Communist- dominated


The talks produced no immediate results after four hours of

bargaining and were put off until 0630 GMT on Sunday.

Chernomyrdin and the Duma speaker Gennady Seleznyov said

they were generally happy with the pace of negotiations but did

not say if they would personally attend the new round of talks.

Interfax news agency said the draft, approved by experts

from both sides, provided for redrawing the constitution to hand

some of Yeltsin's sweeping powers to parliament.

It would give the Duma more control over the government but

also approve the nomination of Chernomyrdin as prime minister

and his deputies and some key ministers.

Interfax also quoted sources as saying Yeltsin, who said on

Friday he would not resign until his term ends in 2000, had

rejected a parliamentary offer to introduce a law to give him

legal protection from prosecution and a generous pension on


Yeltsin was spending the weekend at a rural retreat

preparing for his September 1-3 summit in Moscow with U.S.

President Bill Clinton.

Clinton and other Western leaders have offered Russia moral

support during its present difficulties but they insist Moscow

must continue tough market reforms as a condition for continued

financial backing.

On Saturday German Chancellor Helmut Kohl, Yeltsin's closest

Western ally, was quoted as saying Russia's crisis could pose

enormous problems in international financial relations.

The Kremlin said Yeltsin would meet Chernomyrdin on Monday.

The same day or possibly on Tuesday the Duma is scheduled to

consider Chernomyrdin's nomination as prime minister.

On Saturday acting Deputy Prime Minister Viktor Khristenko

met the local World Bank representative, Michael Carter, to

discuss Russia's continued cooperation with global lenders.

"The speedy resolution of our political problems and the

outlining of clear goals for the country's economic development

are among the basic requirements for financial support from

international financial organisations," Interfax news agency

quoted Khristenko as saying after his talks.

On Saturday Chernomyrdin said he had no plans to end the

internal convertibility of the rouble but would take measures to

prevent the flight of capital out of the country and protect

people's savings and that the central bank was working on this.

He said he would not shut currency exchange outlets because

this would spark the creation of a black market that would evade

the tax authorities. A de facto black market reminiscent of the

Soviet era has begun mushrooming on Russian streets in the

absence of an official dollar-rouble exchange rate.

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