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. Last Updated: 07/27/2016

Fyodorov, Yeltsin to Hold Talks On Crisis

President Boris Yeltsin will meet with Boris Fyodorov on Wednesday in an effort to resolve a government crisis surrounding the finance minister's refusal to join a cabinet that he believes spells disaster for Russia's economy.

Presidential spokesman Anatoly Krasikov said Yeltsin would try to convince Fyodorov -- seen in the West as a key symbol of Russia's commitment to market reforms -- to stay at his post.

"It would be good if Fyodorov stayed and continued his fight against inflation," Krasikov said. "The president has always valued Fyodorov and understands Fyodorov's significance to the reformist course."

But Krasikov hinted that Yeltsin may still let Fyodorov go, thus avoiding a showdown with Prime Minister Viktor Chernomyrdin.

"I would not exaggerate the role of individuals," Krasikov said. "Fighting inflation is not the duty of Fyodorov alone."

The negotiations over Fyodorov have now dragged on for more than a week, prompting speculation about a crisis in the government and a dispute between Yeltsin and Chernomyrdin, with the future course of Russia's economic reform program as the prize.

Chernomyrdin has rejected Fyodorov's demands for the removal of Central Bank Chairman Viktor Gerashchenko and the pro-Communist deputy prime minister for agriculture, Alexander Zaveryukha.

Fyodorov has not yet given Yeltsin his official resignation. But he has said he will not enter the government as a mere finance minister, because without the rank of deputy prime minister he would lack the power to control the new cabinet's spending.

Sergei Shakhrai, another former deputy prime minister who was offered a lesser position as minister for regional and nationalities policy, said Tuesday that he had not yet accepted the post. Shakhrai said he feared that he would be overruled by Zaveryukha and Deputy Prime Minister Yury Yarov, whose portfolios overlap his.

Chernomyrdin on Tuesday told agricultural directors in the central Russian city of Oryol that the government would pay off 4 trillion rubles ($2.6 million) in state debts to key industries, a figure that will encourage critics who say the new cabinet plans to open the government coffers, feeding inflation.

In an interview published Tuesday, Fyodorov bet Chernomyrdin $100 that inflation figures would be twice as high as those promised by the prime minister last week.

"A few days ago Chernomyrdin promised that in the first half of the year inflation would be 15 to 18 percent per month," Fyodorov told Moskovsky Komsomolets. "I'll make a bet with him that these figures will be at least two times higher. I personally bet $100."

Swedish economist Anders Aslund, who angrily resigned as advisor to the government last week, added his gloomy forecast to Fyodorov's at a press conference in Moscow.

"Power is in the hands of state enterprise directors and state farm bosses. They give themselves huge loans, cheap credits -- cheap for the directors, expensive for the people. The result is hyperinflation," said Aslund.

Chernomyrdin has repeatedly said his polices would not retreat from market reforms and has denied reports of a split with the president.

Yeltsin, as he is wont to do during times of crisis, has maintained a stony silence.

Kremlin sources, however, said Yeltsin was on Tuesday preparing to cancel a government decision to build a $500 million dollar parliament center that the author of Russia's reform program, Yegor Gaidar, had cited as a cause of his resignation 10 days ago.

The president also signed a decree raising the salaries of civil servants by 90 percent, Itar-Tass reported, a measure that would also boost spending.

Despite agreeing to see Fyodorov Wednesday, Yeltsin may be unwilling to risk provoking the new parliament by forcing Chernomyrdin to accept the finance minister's demands.

But observers agreed that the Fyodorov crisis had opened a rift between Chernomyrdin and a president not known for being a good loser