Yeltsin woos parliament over anti-crisis package

PUBLISHED : Wednesday, 15 July, 1998, 12:00am
UPDATED : Wednesday, 15 July, 1998, 12:00am

Russian President Boris Yeltsin yesterday began an urgent attempt to win the support of the opposition-dominated State Duma, or lower house, the backing of which is vital for the granting of a US$22.6 billion international aid package.

In unusually conciliatory remarks, Mr Yeltsin appealed to the Duma to pass an anti-crisis economic package, drawn up by Prime Minister Sergei Kiriyenko , on which the International Monetary Fund-led package was based.

'We will not be able to implement the stabilisation programme if you do not approve it,' Mr Yeltsin said at the start of a two-day meeting designed to discuss the package.

'It is tied to you. Some questions, of course, I can decide myself, but its fate mostly depends on you,' he said.

The comments were in stark contrast to much angrier previous confrontations with parliament, which in 1993 saw Mr Yeltsin exercise a presidential decree to dissolve the body, and send tanks to quell any opposition.

This week, the IMF, World Bank and Japan led contributions to a massive bailout fund for Russia, but all made payment conditional on Mr Kiriyenko's tough anti-crisis package being approved by both houses of parliament, and fully implemented. Last week, the upper house, the Federation Council, approved the plan.

Mr Yeltsin was quoted by his press secretary, Sergei Yastrzhembsky, saying government and parliament were 'all one team'.

He said: 'There will be no coups, changes in the constitution, no dissolution of the State Duma, no early elections.' Some draft laws have been approved by the Duma, while others have been rejected, and the government is now keen to win approval for the whole package.

Deputy Prime Minister Boris Nemtsov said four laws rejected by the Duma had cost Russia the equivalent of some of the credits on offer.

He said it would prove 'very, very difficult' to significantly improve the budget without the new laws being established.

Russian parliamentary deputies yesterday expressed cautious optimism about the fate of an austerity package.

But they also wanted to review the conditions and proposed use of the loans the government had fought so hard for.

Gennady Seleznyov, the Communist Party speaker of the State Duma, said any increase in foreign debt had to be considered by parliament.

'In any case, the government has to introduce its proposals [on the credit] to the Duma,' he said, adding he was against taking on debt not backed by the country's resources.

'The credits have to be parliament-controlled. They must be more effective and the credit policy must be tougher,' he said.

Russia's chief financial negotiator, Anatoly Chubais, warned however that the government did have certain 'defence mechanisms' if the Duma attempted to block the plan.

Economists warned that even if the Duma passed the plan, the economy was still vulnerable.

Its heavy dependence on commodities for export, at a time when its oil, gas and base metals markets are plunging, meant that any recovery was still in danger of being derailed.

Russia is the world's third-largest producer of oil, extracting about 6.1 million barrels per day, but world prices have touched 10- to 12-year lows in recent months, and it has been pumping out oil at rates that will further serve to depress the overstocked oil market.

Last month, the International Energy Agency said June net exports for the former Soviet Union had reached 3.1 million barrels per day - the highest in post-Soviet Russia.

Russia is also the world's largest natural-gas producer, with output of 544 billion cubic metres, of which an estimated 200 billion cubic metres was exported.

Like oil prices, the price of gas is also falling, while lower metals prices are serving to cripple the national budget.