 Vyacheslav Voyakin Prices are going up in local shops and markets as the ruble’s value falls. |
It is dinnertime at Vladivostok’s popular Pizza M restaurant and all eyes are glued to the tube. Clients strain forward, anticipating the latest statistics — and they’re not interested in rebounds or corner kicks. They’re hungry for the dollar-ruble exchange rate.
Three weeks after the Aug. 17 ruble devaluation and 11 days after President Yeltsin sacked former Prime Minister Sergei Kiriyenko, Vladivostok is holding its collective breath, waiting for the State Duma to choose a new prime minister and the ruble to stop its downward slide.
But the resounding rejection Aug. 31 by the 450-seat Duma of Yeltsin appointee Viktor Chernomyrdin for the post of prime minister – 253-94 — and threats by a Communist-led faction to block him in a second vote today are crushing hopes of a speedy stabilization.
Instead, the political impasse threatens to deep-freeze Russia’s battered economy by prolonging the ruble’s downward spiral, which has lost more than 50 percent of its value in the past three weeks.
On Sept. 3, the Central Bank set the official exchange rate at 12.8 rubles to the dollar, up from the pre-crisis rate of 6.2.
“Everything is stopped, everyone is waiting,” said Lyubov Zolotova, director of Vladivostok’s Lyubo tourist agency, which runs shuttle tours for vacationers and small-scale traders to China. The devaluated ruble has made purchasing goods overseas for resale in Russia risky, and for two weeks there have been no China tours for her company.
“I don’t think the worst has gone by,” she said.
Nearly everyone is feeling the pinch of ruble devaluation in a 10 to 30 percent rise in prices on imported foods, electronics, and clothes. Business at kiosks selling Italian hosiery was unusually brisk as the price hike scheduled for week’s end would raise hosiery prices 80 percent over pre-crisis prices.
“We can’t survive if we don’t do this,” said vendor Larisa Tsveka.
Some banks, hard-pressed for cash, have frozen accounts paralyzing business transactions. Some trading companies have closed doors pending ruble stabilization, causing their distributors to cease operations as well.
As for Vladivostok tourism, business is down 30 percent, said Alexander Berestovoi, representative of the krai’s Committee on Tourism, with Interfax Eurasia reporting a loss of 100 million rubles ($7.8 million at Sept. 3 exchange rates).
The ruble devaluation could even jeopardize Sept. 27 mayoral elections as money earmarked for funding drops in value, warned City Electoral Commission head Ilya Grinchenko.
Where the ruble goes from here will depend on market policy set in Moscow, in itself a function of who takes helm as prime minister.
Communists, key opponents of Yeltsin’s bid to give the prime minister post to Chernomyrdin, put a list of demands on the bargaining table last week, including demands for more ministerial positions, greater power-sharing, and Yeltsin’s resignation on the formation of a new government.
Support for Communists is slim in Primorye, where only three of the 39 regional Duma deputies are Communist. However, support for their bid to block Chernomyrdin’s appointment to prime minister, a position he held from 1992 to March 1998, is strong.
In interviews, Vladivostok residents said choosing Chernomyrdin would be a step back to the cronyism and corruption they say marked privatization under his rule.
“Chernomyrdin will never bring the country into the world market,” said Vladimir Gilgenberg, Primorsky krai Duma deputy and editor-in-chief of the Dalyokaya Okraina newspaper. “There is no perspective for a country that doesn’t fight corruption,” he said.
Gilgenberg argued that U.S. President Clinton’s message to Russia to tough out market reform, delivered during his Sept. 1-3 Moscow visit, was too little and too late. He said the U.S. was not quick enough to support young reformers like Yegor Gaidar, Anatoly Chubais, and Kiriyenko.
“I liked Kiriyenko,” said Yevgeny Bondarenko, an employee at Frigat-Aero, a shuttle trader charter that been hard hit by the ruble’s fall. “He saw problems and spoke in normal Russian. He offered concrete solutions.”
Like many interviewed, Bondarenko suspects Kiriyenko was installed to take the brunt of ruble devaluation, so that Chernomyrdin could rreturn “a people’s hero.”
Krai Duma Deputy Azat Yusupov, a member of the Communist Party of the Russian Federation, said the State Duma should not repeat its mistake of this past spring, when it caved in to pressure and on a third and final vote, affirmed Kiriyenko. “Over the past six years, the economy has been ruined,” said Yusupov. Staying on the same free market path would be a mistake for Russia, he said, adding, “We need to chart our own course.”
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