WATCH YELTSIN'S HEALTH #1
Russia Today - 09/17/98
MOSCOW -- (Reuters) Prime Minister Yevgeny Primakov, a compromise choice between President Boris Yeltsin and Russia's Communists, seemed to hit problems forming a government on Thursday when Yeltsin said the process would take another week.
Meanwhile, with a troika of anxious European Union ministers arriving later to hear how Primakov and his Communist first deputy plan to haul Russia out of its deepest crisis in years, the ruble weakened yet again as Russians continued to queue up to dump the currency for dollars.
Many savers -- and some of Russia's Western creditors -- fear the new government may be tempted simply to print new rubles to pay off huge debts to state employees and pensioners.
Primakov, confirmed in office last Friday after a dramatic climb down by Yeltsin over his attempts to reinstall former premier Victor Chernomyrdin, had said he expected to name a full Cabinet by the end of this week. Under the constitution, he has until Friday to present the president with his proposals.
The former foreign minister has already appointed moderate Communist Yury Maslyukov as first deputy and three Chernomyrdin supporters as other deputy prime ministers. He has confirmed continuity in the defense, interior and foreign ministries.
But Russian news agencies quoted Yeltsin as saying the choice of a finance minister was a tough one and he would need up to a week to consider it, leaving Russia still without a full government nearly a month after Yeltsin sacked the old one.
According to Interfax, the president said: "The question of the finance minister is a difficult one, but I think it will be solved within a week."
In other, televised remarks at a Kremlin meeting with Defense Minister Igor Sergeyev and Interior Minister Sergei Stepashin, Yeltsin said: "I think yet another week is needed to finalize the formation of the government."
Thursday's Izvestiya newspaper commented: "The Cabinet taking shape under Primakov is so mixed that it is
impossible to say what color it is -- red, pink or white."
The ruble, which lost some 30 percent of its value on the streets of Moscow on Wednesday, was weaker again, with many exchange points simply refusing to accept the Russian currency.
On the SELT electronic trading system of the Moscow Interbank Currency Exchange (MICEX), the central bank delayed trade for half an hour. By late morning it was around 15.50 per dollar compared with the official 12.4509 set the previous day.
That is less than half what it was worth exactly a month ago, before the previous government of Sergei Kiriyenko announced a freeze on debt payments and let the ruble float on Aug. 17. A week ago it was worth
just 20 per dollar.
Primakov, confirmed in his post by the Communist-led parliament last Friday, must now persuade Russians and Western governments that he can steer the country out of its decade-long depression without sparking
hyperinflation.
He and Maslyukov, once head of Soviet planning, were later to meet German Foreign Minister Klaus Kinkel, British Minister for Europe Joyce Quin and Foreign Minister Wolfgang Schuessel of Austria, which holds the EU presidency.
Speculation focuses on whether Primakov, who says market reforms must be tempered by state help for domestic industry and welfare, will keep on liberals like former Deputy Prime Minister Boris Fyodorov and
acting Finance Minister Mikhail Zadornov.
Even seasoned observers are getting few clues to Primakov's thinking. A former head of foreign intelligence, he has choked off the usual leaks from the White House government building.
Primakov, who began his career as a correspondent for the Soviet Communist Party daily Pravda, defended himself against charges of censorship on Thursday.
"I was and remain a firm supporter of freedom of speech and the independence of the media from anyone," Tass quoted him telling the Russian journalists' union.
Yeltsin has tried to play down the gravity of Russia's crisis, telling his old ally, German Chancellor Helmut Kohl, by telephone on Wednesday that things were returning to normal.
He was likely to deliver the same message to another old friend, former Japanese Prime Minister Ryutaro Hashimoto, in talks scheduled in the Kremlin on Thursday. Hashimoto, now a foreign policy adviser to his successor Keizo Obuchi, is in Moscow to help promote traditionally troubled bilateral ties.
But Yeltsin, once a combative leader who relished a challenge, is looking isolated these days.
"Boris Yeltsin is gradually losing his image as a player on the world stage," said Nezavisimaya Gazeta, a daily controlled by Yeltsin's former ally, influential business magnate Boris Berezovsky, who has called on the president to quit. ( (c) 1998 Reuters)
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