Pressure Is Mounting for Russian Reforms

Russian President Boris N. Yeltsin came under heavy new pressure Friday to take decisive steps to avert a financial debacle as President Clinton personally phoned to urge reforms demanded by nervous global financial markets.

In a move that underscored the seriousness of the Russian financial crisis, Clinton spent 40 minutes on the telephone with the Russian president in what White House Press Secretary Mike McCurry said was a call “about doing the things necessary to ‘right’ [the] economy.”

The call came as financial markets in Russia stabilized Friday after a disastrous week that prompted fears of a nationwide financial collapse.

Although the Russian ruble remained weak Friday, stock prices in Moscow rebounded sharply as hopes rose among investors for a new international bailout of Russia’s finances. But trading remained thin, with investors clearly holding back.

The turmoil of earlier days appeared to abate after Yeltsin cut short his vacation at the Valdei lake resort in northwestern Russia to meet with Prime Minister Sergei V. Kiriyenko to discuss the financial situation.

A puffy-eyed, swollen-faced Yeltsin, speaking in the city now called Nizhny Novgorod, initially insisted that the economy remains stable and that there was no need to interrupt his monthlong vacation to sort out his country’s worsening woes.

“At the moment, there is no need for that,” he said. Shortly afterward, however, the president apparently changed his mind, saying that he was not catching big enough fish on his sporting vacation and might come back to town after all.

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After their meeting, Kiriyenko issued a statement saying the two would make preparations to call an emergency session of the Duma, the lower house of parliament, to enact special legislation to put the promised economic reforms into effect.

Earlier this week, the Duma had adjourned without acting on the legislative package, a move that contributed substantially to the ruble’s slide and the unusually heavy turmoil in the financial markets.

Yeltsin also asserted Friday that Russia has no plans to devalue the ruble officially, despite widespread speculation that the government will be forced to yield to market pressure. The ruble’s value has been declining steadily in the markets for several days.

Yeltsin’s decision--and a public appeal he made to the Duma’s hard-line leadership--appeared to have some effect. A few hours later, Communist leader Gennady A. Zyuganov, who earlier had refused an emergency session, said lawmakers now “wouldn’t mind” one.

Central Bank Chairman Sergei K. Dubinin and chief debt negotiator Anatoly B. Chubais also announced they were cutting short their vacations, adding to speculation that the government might be planning some major new actions.

For all the flurry among top Western economic officials, there was no immediate indication that either the United States and its trading partners or the International Monetary Fund were preparing to assemble a major new package of additional money for Moscow.

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McCurry noted pointedly that Russia already had won approval of a $22.6-billion rescue package that the IMF announced three weeks ago, and that Moscow still had not begun putting into effect the reforms it promised to make in return for that.

“This was not a phone call about money,” the White House spokesman said at a briefing on the Clinton-Yeltsin telephone conversation. “It was a phone call about doing the things necessary to right an economy that has been struggling to move forward.”

At the same time, senior U.S. policymakers continued to consult with top economic officials of the Group of 7--the United States and its major trading partners--in an effort to find ways to bolster international confidence in the Russian economy.

U.S. officials and virtually every Western analyst who has been following the situation in Russia say that the only way for Moscow to avert a debacle is for the government to take the steps that have been prescribed by the IMF--particularly devising a serious tax system.

Nevertheless, analysts said there are some things the Western governments could do to give Moscow more leeway, from accelerating the $22.6-billion IMF lending package--the 182-country IMF has disbursed only $4.8 billion of it so far--to providing more export credits to Russia.

In Moscow, Yeltsin and other leaders were being roundly criticized.

“Despite the chipper statements, one thing is absolutely clear today: Chaos reigns in the upper echelons of power,” NTV television commented.

Russia has to pay back about $20 billion in debt this year. Attacks on the ruble and tumbling markets have left its reserves at around $17 billion this week.

Several currency exchange outlets were out of dollars Friday--a rare phenomenon.

The market crisis comes amid a period of growing concern about the stability of some Russian banks. Although no defaults have been reported, the Central Bank said Thursday that it was looking into problems at two banks in particular, SBS Agro and Inkombank.

On Thursday, the Central Bank said it would not bail out banks in trouble. But Friday, SBS-Agro, Russia’s second-largest bank by assets, said it received a $100-million loan from the Central Bank and was one of several banks to receive such loans aimed at stabilizing markets.

Bennett reported from Moscow and Pine from Washington.