Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point
On Air
Low Graphics

Thursday, August 27, 1998 Published at 15:50 GMT 16:50 UK

World: Europe

Panic in Russia

Russians queue to withdraw their money

Panic is seizing Russia amid fears that the country's economic system is on the brink of collapse.

Robert Parsons reports from Moscow: "Queues from dawn"
Thousands of Russians besieged banks to try to change roubles for hard currencies.

The rouble has fallen 30% over a week and the Central Bank is no longer making any attempt to prevent the freefall.

Acting prime minister Viktor Chernomyrdin is considering extreme measures to try to contain the currency's collapse after trading on Moscow's stock market was also suspended on Thursday.

[ image: Jostling in bank queues]
Jostling in bank queues
As the crisis deepened, rumours circulated in Moscow that President Boris Yeltsin was planning to step down.

This was fiercely denied by the Kremlin, which accused foreign media of spreading "inventions and lies".

BBC Moscow Correspondent Paul Anderson says Russians have lost faith in the currency and are looking to the country's politicians for action.

Opposing pressures

Mr Chernomyrdin has held crisis talks in Crimea with the International Monetary Fund but he is also talking with Communist Party leaders as he tries to form a new government.

BBC Moscow Correspondent Robert Parsons: "Growing mood of desperation"
Conflicting demands from the IMF and the Communists are adding to the pressure Mr Chernomyrdin is under.

The IMF has made it clear there will be no more aid until Russia gets its house in order.

But many Communists are calling for a reverse of the monetarist policies of the previous government, which were agreed with the IMF.

Our correspondent says if Mr Chernomyrdin decides to try to spend his way out of trouble foreign investors will abandon Russia.

He is understood to be in favour of price controls and a suspension of the rouble's convertibility, moves that will be seen as a step back towards the techniques of the command economy.

Resignation rumours

Fuelling panic on the streets is an apparent vacuum at the centre of power.

Mr Chernomyrdin has yet to make any official policy statements or form a government and President Boris Yeltsin has barely made an appearance in the last five weeks.

[ image: Food is being stockpiled against rising prices]
Food is being stockpiled against rising prices
Opponents of Mr Yeltsin blame him for the crisis and are calling for his resignation. His continuing absence from the public eye has sparked rumours that he may be preparing to retire.

Mr Yeltsin reinstated Mr Chernomyrdin as prime minister just five months after sacking him and installing a young, reformist Sergei Kiriyenko.

Mr Kiriyenko was popular in the west who saw him a symbol of Russia's will to reform.

But domestically he was derided as too young and inexperienced. When Russia was forced to devalue the rouble it also spelled the end of his short term in charge.

Many Russians fear the crisis will wipe out their life savings. They were prepared to queue for hours to swap roubles for stable currencies like the US dollar.

Before trading was stopped some banks were imposing a limit on transactions.

As the rouble falls in value the cost of imported food rises. Russian families are stockpiling supplies fearing food may soon become unaffordable.

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage | ©

Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia

Relevant Stories

27 Aug 98 | The Economy
Red Thursday: world markets in freefall

27 Aug 98 | Europe
Where vegetables are valuable

27 Aug 98 | Europe
Struggle to fill Russia's power vacuum

27 Aug 98 | The Economy
Rouble chaos, market meltdown

27 Aug 98 | The Economy
The fallout from Russia

27 Aug 98 | Russia crisis
Crisis on all fronts

28 Aug 98 | Europe
Viktor Chernomyrdin: Yeltsin's heir apparent?

Internet Links

Russian Government

Russian Central Bank


The BBC is not responsible for the content of external internet sites.

In this section

Violence greets Clinton visit

Russian forces pound Grozny

EU fraud: a billion dollar bill

Next steps for peace

Cardinal may face loan-shark charges

From Business
Vodafone takeover battle heats up

Trans-Turkish pipeline deal signed

French party seeks new leader

Jube tube debut

Athens riots for Clinton visit

UN envoy discusses Chechnya in Moscow

Solana new Western European Union chief

Moldova's PM-designate withdraws

Chechen government welcomes summit

In pictures: Clinton's violent welcome

Georgia protests over Russian 'attack'

UN chief: No Chechen 'catastrophe'

New arms control treaty for Europe

From Business
Mannesmann fights back

EU fraud -- a billion-dollar bill

New moves in Spain's terror scandal

EU allows labelling of British beef

UN seeks more security in Chechnya

Athens riots for Clinton visit

Russia's media war over Chechnya

Homeless suffer as quake toll rises

Analysis: East-West relations must shift