Yeltsin Fires Finance Chief for Ruble Crash

xDescribing the collapse of the ruble as a "threat to national security," President Boris Yeltsin on Wednesday sacked his acting finance minister and demanded a top-level investigation into whether the crash may have been caused by "sabotage."


Sergei Dubinin, Russia's acting finance minister for the past seven months, was the first official to lose his job in the aftermath of Tuesday's ruble crash, in which the currency lost nearly 28 percent of its value against the U.S. dollar.


The ruble rebounded by 190 points Wednesday, after the Central Bank injected $90 million into the currency market.


But Yeltsin nevertheless urged parliament to dismiss Central Bank Chairman Viktor Gerashchenko, while the State Duma ordered the government to explain its economic policy next Wednesday and scheduled a vote of no-confidence in the government for two days later.


"The collapse of the ruble is an emergency which is a case of either sabotage or gross irresponsibility and negligence on the part of certain officials," Yeltsin told a Security Council session. "This is a threat to national security.


"We cannot allow everything that has been achieved in economic stabilization to go to waste," he said. "The population should not be allowed to pay for the Central Bank and the Finance Ministry's gross miscalculations."


Those miscalculations could have serious consequences for the cabinet of Prime Minister Viktor Chernomyrdin, which will now be on the defensive before an already hostile parliament next week.


"Unless the panic on the currency market is extinguished, there can be serious consequences for the government," Yeltsin's chief of staff Sergei Filatov told a press conference.


Boris Fyodorov, the former finance minister, joined the attack on the government, saying the reason for the collapse of the ruble was the lack of progress on economic reform in the country.


"I think the current drop ... just reflects that since the beginning of the year there has not been one single measure that has been reform oriented," he told a meeting of the Chartered Institute of Bankers.


Chernomyrdin, who had broken off his vacation to return to Moscow after the ruble's collapse, flew back to the Black Sea resort of Sochi Wednesday night after talks with Yeltsin, Interfax reported.


Yeltsin sent a copy of his Security Council announcement to the State Duma, where it was read out by the speaker, Ivan Rybkin, just seconds after Dubinin, still unaware he had been fired, finished his last speech as finance minister.


"If we continue the policy of giving away money to bankrupt enterprises and the finance ministry remains the only voice of protest, we will lose our national currency," Dubinin said in the speech. "We have to decide whether we want a stable financial system or whether we want to put forward populist slogans."


After learning he had just lost his job, Dubinin calmly walked out of the hall, pausing to answer reporters' questions.


"I thought I was the toughest supporter of a tough financial policy in the government," he said. "But if I was not tough enough, then I am to blame. I should have offered more opposition to populist financial decisions."


The former minister expressed confidence that the dollar's steep rise against the ruble was "a soap bubble" that would soon burst, bankrupting investors who gambled on the dollar's continued rise.


Gerashchenko, who also delivered a speech to the Duma, was matter-of-fact in his remarks, even cracking a few jokes. Supporting Dubinin's view that speculators at the interbank exchange artificially drove up the dollar rate, he said the Central Bank would soon bring it down to a realistic figure.


However, he admitted having made mistakes that contributed to the ruble's collapse. He said the ruble had been overvalued since the spring, when the Bank put pressure on the ruble by issuing credits to farms so they could get in the harvest and to Northern regions so they could buy food.


Gerashchenko admitted he should have allowed the ruble to go down gradually over several months rather than try to prop it up, spending approximately half of the Central Bank's hard currency reserves.


Both reformist and conservative economists in the Duma echoed this view, saying the ruble's drop had been predictable. All the faction leaders, speaking in response to Yeltsin's proposal that Gerashchenko be removed, said the Central Bank chief was to blame for "Black Tuesday," as the Russian press has dubbed the day of the collapse.


But despite the universal condemnation, Gerashchenko, a wily survivor of many of the last decade's political upheavals and traditional ally of the legislature, was not dismissed by the parliament Wednesday. A vote for discussing his fate immediately failed by 82-118.


Nationalist and communist legislators said they would rather deal with Gerashchenko and other government members during the Oct. 21 confidence vote.


"We are not schoolchildren and we cannot be appeased by explanations why a test tube broke during a chemical experiment," ultranationalist Vladimir Zhirinovsky said in an allegorical reference to the ruble's fall. "Firing two people will not change the system. There is a whole carload of people in the government who should be fired and jailed."


Reformists argued that firing both the finance minister and the Central Bank chairman at the same time might further undermine confidence in the ruble and cause it to fall more steeply.