CRISES IN RUSSIA IN 1998.   Term Paper ID:26152 Click to get this paper

Essay Subject: Examines major political shake-ups, Yeltsin's appointments & struggle with State Duma, economic crisis, U.S. policy.... More...

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Paper Abstract: Examines major political shake-ups, Yeltsin's appointments & struggle with State Duma, economic crisis, U.S. policy. Paper Introduction: Critics of the transformation of Russia point to a number of current problems they attribute to capitalism, such as rampant organized crime, official corruption, inability to pay members of the armed forces, a high unemployment rate, and high prices for certain goods. Many of these problems might have developed in any case. At the same time, in spite of these problems, it would seem that the move to a capitalist economy is not likely to change unless the masses become even more disenchanted with the system than they are now. The communists tried to appeal to voter discontent in the recent election and failed. The people may decry aspects of the new market economy, but they are still dedicated both to reform and to stability. Continuing down the road to reform is seen as a way of maintaining stability, and any change in direction is seen as dangerous. Capitalism in some form Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. The banking system istechnically insolvent and has huge off-balance-sheet long ruble, shortdollar positions (Hanke 15 ). It is as follows: March 23, 1998 -- Yeltsin fires loyal Prime Minister ViktorChernomyrdin and the entire cabinet, saying reforms have not been dynamicenough, and he then names virtually unknown energy minister SergeiKiriyenko as acting prime minister. A chronology of events this year shows how the crisis has developedand what components should be considered in it. OnMay 21, the World Bank chairman says Russia is in the grips of a monetarycrisis, but he also says he is sure the government can handle it. They arethen joined by miners. Shares tumble on the market. You cannot run a capitalistsystem without banks, and Russia has no real banks. Yeltsinmeets with Kiriyenko, the central bank chief, the finance minister, andaides to discuss the crisis and says Russian reserves are adequate to avoidfinancial market crash. Works Cited"Chronology of Russia's Slide into Financial Crisis." Reuters (May 28, 1998).Hanke, Steve H. The communists tried to appeal to voterdiscontent in the recent election and failed. At the same time, in spite ofthese problems, it would seem that the move to a capitalist economy is notlikely to change unless the masses become even more disenchanted with thesystem than they are now. The finance minister announces spending cuts of $1 billion. The people may decry aspectsof the new market economy, but they are still dedicated both to reform andto stability. President Clinton characterized the issuewhen he said, "Russia is facing an economic crisis that threatens theextraordinary progress the Russian people have made in just seven years,building a new society from the ground up. March 27 -- Yeltsin formally nominates Kiriyenko as premier and warnsthe State Duma he will use his powers to dissolve it if it does not approvehis choice. Critics of the transformation of Russia point to a number of currentproblems they attribute to capitalism, such as rampant organized crime,official corruption, inability to pay members of the armed forces, a highunemployment rate, and high prices for certain goods. The markets, already uneasy overstudent protests in Indonesia, did recover by the end of the day, althoughpolitical uncertainty kept investors sidelined. Soon after, Yeltsin's economicadviser Alexander Livshits says April tax receipts are poor. Yeltsin tellsthe government to maintain stability on financial markets as the centralbank chairman says the latest crisis was caused by foreign speculators. The central bank thenimposes temporary administration on the troubled Tokobank for two monthsbecause of liquidity problems and bad management. We do not want a return to Communistrule, though there is little we can do to stop it. The ruble and the stock markethave plummeted, banks are weak, tax collections have slowed, the governmenthas trouble paying its debts and its salaries" ("Remarks by the President"M2 PressWIRE). Realistically, the U.S. "Capitalism without Banks." Forbes (September 7, 1998), 15 -151."Remarks by the President to the Council on Foreign Relations. On May 13, Russianmarkets fall further because of Asian political and economic downturn.Kiriyenko signs an order calling for greater financial discipline. Marketshares then gain ground and the ruble strengthens (Reuter's, 1998). This is evident in the way theDuma treated him when he appointed Kiriyenko, though that move itself showsa weakness and inability to innovate sufficiently to cope with theproblems. Yeltsin then signs an austerity package to stabilize budget andcut spending. April 17 -- The Duma rejects Kiriyenko again, and the markets reactnegatively so that Russian shares, the ruble, and dollar-denominated debtlose some ground. Markets respondpositively so that shares and debt rise. Blind support of Yeltsinhas been the norm, and it has not proven to be effective at countering theeconomic insecurity facing Russia. Yeltsinlater convenes his powerful Security Council, stating that a web offinancial, labor, and ethnic crises is a threat to Russia's nationalsecurity. The miners' strikes growamid warnings of possible social unrest. The markets edge up over the wholeperiod, but major investors remain sidelined. The central bank triples key interest rates to 15 percent aftertreasury bill yields soar and share index tumbles 11 percent. April 1 -- Yeltsin urges the Duma to support his nominee to help theRussian economy, but Kiriyenko draws a gloomy picture of the economiccrisis and says it has to be tackled immediately. The political situation in Russiais the source of much of the tension, for while Yeltsin says he iscommitted to the process, he is not healthy enough or politically strongenough at this time to get the job done. He vows to crack down on tax evaders. government can do nothing until the politicalsituation shakes out better, meaning until Yeltsin is replaced by astronger executive with the same good intentions. May 8-May 28 -- Yeltsin signs a law limiting foreign ownership in UESafter both chambers of parliament override his veto. Many of theseproblems might have developed in any case. He also made reference to the new Prime Minister, Mr.Primakov,who had then been in office for only four days: "Never has there been amore important moment to set a clear direction for thefuture, to affirm the commitment of Russia to democracy and to freemarkets, and to take decisive steps to stabilize the economy and restoreinvestor confidence. Morerecently, an economic crisis has gripped Russia for a number of reasonsrelated to the political climate and the way in which the current regimehas been addressing economic issues. However, the chamberrejects him on the first of three votes and sends the markets into a newround of uncertainty. On May15, the Russian central bank raises some key interest rates trying toshield the ruble and prop up plunging shares. We have to be selectivein our economic support, and we have to require real change and real reformbefore we try to bolster the Russian economy further. April 24 -- Kiriyenko is finally approved by the Duma and the Kremlinindicates reformers will dominate the new cabinet. The approach taken by the United States at this point is the correctone--to support the IMF to the effect that it will help countries only whenthey show that they can gain control of their own economic system and dowhat is needed to improve the situation. M2 PressWIRE (September 16, 1998). Coal miners in theArctic north protest over unpaid wages and block a major railway. But if Russia is willing to take these steps, we mustdo everything we can to provide support to them" ("Remarks by thePresident" M2 PressWIRE). Anatoly Chubais, the reform guruof the previous government, loses his cabinet job but becomes head of thenational electricity company UES. April 29-May 5 -- The Russian government line-up is announced, withthe new cabinet dominated by reformers. Continuing down the road to reform is seen as a way ofmaintaining stability, and any change in direction is seen as dangerous.Capitalism in some form is best for the future of Russia, for this is theonly way to cure the ailing economic structure that Communism produced andthat led directly to the disintegration of the former Soviet empire. In September, it was stated in a book review, "Russia's problems arebeyond solving by IMF loans or devaluations. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.