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Friday, August 21, 1998 Published at 07:33 GMT 08:33 UK

Business: The Economy

Parliament calls on Yeltsin to resign

Sergei Kiriyenko: politically he is very alone

Russia's lower house of parliament, the Duma, has called on President Boris Yeltsin to "stop fulfilling his presidential powers before the end of his term."

Alan Little reports from Moscow on Friday's activities in the Duma
In its resolution the Duma said that "the country is in a deep crisis and the president is not taking measures to protect the constitutional rights of the citizens ... which has created a realistic threat to Russia's territorial integrity, independence and security."

The resolution was passed with a clear majority, 245 to 32.

However, in line with the Russian constitution, the president can ignore parliament's request.

Communists and reformers united

[ image:
"Impeachment" reads the poster of demonstrators outside the Duma
The calls for Yeltsin's resignation came after a week of turmoil on Russia's financial markets. The Duma had been recalled from holidays to debate the government's handling of the economy and its controversial decision to devalue the rouble.

In the debate, Communist Party leader Gennady Zyuganov said the president's resignation would be a blessing for the country. He demanded that "Yeltsin and his entourage" should step down.

Other opposition parties weighed in too. Grigory Yavlinsky, leader of the reformist Yabloko party, said he had an "absolute distrust to the government and the president."

But he said the "current government only deals with what was created by its predecessors."

The crisis starts now

[ image: Sergei Kiriyenko: Russia's most difficult time will come in autumn]
Sergei Kiriyenko: Russia's most difficult time will come in autumn
Russia's Prime Minister Sergei Kiriyenko, meanwhile, defended the government's record, but warned the country was only at the start of a serious financial crisis.

Mr Kiriyenko urged the Duma to drop its opposition to emergency measures designed to reform the tax system and economy in order to overcome Russia's "serious financial crisis."

Mr Kiriyenko pulled no punches: "We cannot allow ourselves the luxury of being a popular government" he said and predicted that the full effect of Russia's problems had not been felt yet.

Mr Yeltsin is not attending the Duma debate. He is currently on the Arctic Kola peninsula to attend a naval exercise.

Markets in a tailspin

The Moscow stock market ended the week with yet another slump, losing almost 6% on Friday.

The rouble did not fare any better. In the wake Monday's decision to stop defending the rouble until it reaches a level of 9.5 to the US dollar the Russian currency has been on a steady slide, now trading at around 7 roubles to the dollar.

On the brink

The day before, Mr Kiriyenko had acknowledged that the debt moratorium had been a desperate attempt to avoid a complete government default.

Mr Kiriyenko said: "If we were to continue servicing our debt and making payments on treasury bills we would be unable to pay wages and pensions."

Calming nerves

On Thursday, Russia's government and central bank tried to calm the nerves of Russian savers, while warning at the same time of tough times ahead.

[ image: Prices are going up as the rouble goes down]
Prices are going up as the rouble goes down
In a move to avoid a full-scale panic, the Central Bank governor Sergei Dubinin promised all investors to "guarantee 100% of deposits" with Russian banks.

The governor pleaded not to rush and convert the devalued roubles into US dollars.

Russia's financial markets are sceptical. "How are they going to guarantee that," one trader said. "Are they going to print money? If they do so that will lead to more devaluation and inflation, and so it goes on."

Bank collapse?

The central bank may have to make good on its guarantee within a few days. Mr Dubinin's first deputy, Sergei Aleksashenko, warned that some major Russian banks could fail "within the next few days."

Russia has more than 1,500 commercial banks, but some analysts say that only about a dozen of them may have enough capital to survive.

Many of them have borrowed heavily in dollars which they cannot now pay back. And the banks are heavily involved in the government debt market which was suspended this week.

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