Yeltsin Eases Russia's Ruble Panic; Doubts Mount on His Leadership

Controversy underscores deep division within Cabinet over reforms

THE lines of panicked savers have disappeared from in front of Russia's banks. But the political tremors triggered by the unpopular, and now partially aborted, currency reform announced July 24 have not abated.

The currency affair has once again raised serious questions about the leadership of President Boris Yeltsin. Across the political spectrum, people are asking how much, if anything, the vacationing Russian leader knew about the Central Bank's decision to withdraw all pre-1993 currency from circulation.

The controversy has also reexposed the deep divisions within Mr. Yeltsin's government between the industrialist wing led by Prime Minister Viktor Chernomyrdin and the young reformers led by Finance Minister Boris Fyodorov, who took opposite stands on the currency move.

For the president, the most serious damage is the political capital that his opponents in the parliament, led by parliament chairman Ruslan Khasbulatov, have gained from the affair. The noise rising from the enemy camp only serves to underline the sense that Yeltsin has lost much of the ground gained since his victory in the April 25 popular referendum on his rule and reforms.

Yeltsin returned from vacation July 25 and the next day issued a decree which significantly softened the most onerous parts of the Central Bank's decision - raising the limit of old money that can be changed for new from 35,000 to 100,000 rubles and extending the time to do so until the end of August.

Nonetheless, the parliamentary leadership, meeting Wednesday, accused Yeltsin, the prime minister, finance minister, and Central Bank chief Viktor Gerashchenko of being responsible for the fiasco. Yesterday the parliamentary leadership decided to call its members back from summer recess for an emergency session tomorrow.

"I am confident that he didn't know," counters Sergei Blagovolin, a political analyst who is working closely with reformist former Premier Yegor Gaidar in a newly formed political movement supporting the president.

"On Friday, several members of the government and I were informed that the Central Bank would withdraw old bank notes," Vice Premier Sergei Shakhrai, who opposes the decision, told reporters on July 27. "I cannot tell whether the president knew about the action, but he should have been informed about it."

Whatever the truth is, the president's decree was an attempt to ameliorate the consequences of the move "without completely disavowing the decision to withdraw the old money," Mr. Shakhrai says. In doing so, the president was trying to strike a middle ground between the two clearly opposed wings of his Cabinet. Premier Chernomyrdin backed the bank, doing so not only at the start but until this point.

"He is now worried about his relations with the prime minister," Mr. Blagovolin says, explaining the president's decree. "If he completely repudiates the idea, it would strike Chernomyrdin."

On the other side, Finance Minister Fyodorov launched a furious attack on the bank from the first moments, and continued the assault after his arrival from vacation in the US on July 28 with a call for Central Bank chairman Gerashchenko to resign.

The sense of turmoil within the government was heightened July 27 when the president abruptly announced the firing of Viktor Barannikov, head of the powerful Security Ministry, the former KGB secret police. Mr. Barannikov has been among Yeltsin's most loyal followers, providing the backing of his ministry at key moments in past struggles with the president's more hard-line opponents in the parliament.

Blame for the death of Russian border troops on the Afghan-Tajikistan border was laid on Barannikov, whose ministry commands those forces.

But the announcement of his sacking also alluded to charges of corruption. Given the widespread corruption within and outside the government, many suspect other reasons for his departure. Among the theories are an attempt to cover up investigations of other ministers for corruption or an attempt by the KGB ranks to rid themselves of a minister who came from their rivals in the police.

The greatest challenge to Yeltsin's rule is the bogging down of his effort to gain backing for a new draft constitution and the holding of elections for a new parliament this fall. Shakhrai, one of the principal architects of that effort, worries that chances of having both the new constitution and elections before the end of the year are fading.

"The arsenal of measures at our disposal is not very rich," Shakhrai says. "It is not a question of taking new initiatives but completing those we began in May.... If there is no constitution by the end of December, we will face a situation of apathy and inertia."

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