Russian Duma To Yeltsin: Get Out
Warning the country's financial crisis will get even more severe, Russia's prime minister urged quick adoption in parliament Friday of measures to avert a full-blown financial collapse.
Highlighting the day's acrimony, the State Duma responded by seeking the ouster of Premier Sergei Kiriyenko, President Boris Yeltsin and the rest of their reformist-minded government.
The chaos caused the hemorrhaging Russian stock market to fall again, and the panic in Moscow spilled over into trading on other world markets. Meanwhile, traders said a flight to quality stemming from Russian unrest was a major cause in the rise of U.S. Treasury bond prices.
Deputies broke their summer vacations early to debate the devaluation of the ruble and renege on its short-term debt. The extraordinary session, shown live on Russian television, brought together the troika of policy makers under heavy fire for failing to drag the country out of months of economic crisis - Kiriyenko, Finance Minister Mikhail Zadornov and central bank chief Sergei Dubinin.
Kiriyenko warned lawmakers that there were no political forces in Russia that could conjure a quick fix for the economy.
"We are only at the start of the financial crisis," Kiriyenko told members of the Duma, parliament's lower house. "I told you in April we were just entering the most difficult phase of the crisis and that by autumn we would feel the biggest burden of accumulated state debt and the most difficult consequences of a fall in world prices for Russia's main exports."
"We will have to take further difficult decisions," Kiriyenko said. "We cannot be a popular government."
The central bank chief, who has garnered praise from international officials such as U.S. Treasury Secretary Robert Rubin for his handling of the Russian financial crisis, defended the devaluation as good for the country. Devaluation has allowed the central bank to protect foreign currency reserves, he said.
"Our intervention has dropped sharply" and is now "three times less" than it has been in previous weeks, he said.
The devaluation has provoked howls of protest because it is likely to lead to higher costs on imported goods and hence inflation, while also severely hurting the banking sector.
Russia's financial difficulties have taken on new dimensions since the government effectively devalued the ruble Monday by allowing its ceiling to go as high as 9 rubles to the dollar, vs. 6.5 rubles previously. On Friday, the official exchange rate was 6.99 rubles to the dollar, unchanged from Thursday.
The Duma closed its emergency session with 246 deputies approving a motion for the government to quit. Under the Russian constitution, however, the president can simply ignore calls on him to resign even if a majority passes such a declaration.
During the debate, Yeltsin remained outside of Moscow at his vacation home, where he has stayed throughout the turmoil since devaluatio. After the Duma resolution passed, presidential spokesman Sergei Yastrzembsky announced the 67-year-old leader would return to the capital Monday.
Written By Margaret Coker, Moscow correspondent for CBS MarketWatch