Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Yeltsin Sets Pay Fund As Miners Vow Strike

President Boris Yeltsin said Friday that he is creating a special fund from which he intends to pay trillions of rubles in back wages across the country, even as furious coal miners announced a potentially devastating nationwide strike over pay to start Feb. 1.

Yeltsin's creation of a special "presidential fund," which would have in it enough money to pay everyone in the country one month's salary, had clear political implications just months ahead of presidential elections scheduled for June 16.

But there was no indication Friday as to where the money for Yeltsin's new salary fund will come from.

The offer of largess may in any case already have come too late for the miners, who expressed disgust with their president. Unions representing the country's teachers also said Friday that they will be going on strike. (Story, page 4.)

Friday's strike declarations and the creation of such a huge Kremlin slush fund capped a chaotic week for economic policy. While the government reiterated its commitment to economic reform, it made dramatic pay and personnel decisions that cast serious doubt on its words.

As a result there were expressions of alarm from Western capitals, loan talks with the International Monetary Fund faltered and Russia's financial markets have been left rattled. (Stories, Page 2 and 10.)

"The major [changes] are Kadannikov as first deputy prime minister for economic policy, to replace Anatoly Chubais.

But as the president addressed a meeting of regional officials, he continued to push two messages that are likely to be in conflict.

"The most important task for Russia and its regions is fully fledged protection of the social and economic rights of the people," he said, according to Reuters. But then he added: "We will not allow anyone to turn back reforms or interrupt them."

Earlier in the week Yeltsin had announced other potentially budget-busting decrees to finance reconstruction in Chechnya and to boost pensions and student grants. Such pledges, if enacted, would almost certainly derail the tight budget approved by the State Duma last December and send inflation spiraling.

Mikhail Zadornov, the influential head of the State Duma budget committee, told Interfax on Friday that Yeltsin's pledge of some $5 billion for Chechnya was "economically and politically absurd," while his decrees on pensions and student grants violated parliamentary prerogative.

The miners, who picketed the White House all week and Thursday rejected a government offer to pay 600 billion rubles ($127 million) in unpaid wages, were in no mood to hear promises about a future presidential fund.

"Thank you very much, Boris Nikolayevich, but we asked for a meeting with you a long time ago, and you could have heard our demands a month earlier. Then we could reach a compromise to suit us all," said Vitaly Budko, leader of the union representing virtually all of the Russia's 580,000 coal miners.

"But the conflict spread further until we came on a demonstration, and finally decided to go on strike," he said. "A strike is the only way to show that we don't want to suffer any more."

Budko indicated he expected 70 percent or more of the country's miners to heed the strike call. Previous attempts at nationwide miners' strikes have drawn a patchy response, but this time there have been reports from the major mining regions of Vorkuta, Rostov and Kuzbass that the strike call will be obeyed.

The miners burned their economic slogans on the bridge in front of the government headquarters in the White House building Friday. Vladimir Katalnikov, a State Duma deputy from the Kuzbass region in the Southern Urals, said the strike would have a political tint.

"If the [miners'] union doesn't start this strike, it will be the Communists. But we won't let this happen," Katalnikov said, adding that he was sure the Kuzbass region would join the nationwide industrial action Feb. 1.

While the government has held the upper hand in previous strike threats because of the cushion provided by large coal stocks, a minister said earlier this week that some regions in the Western Siberia and the Far East have coal supplies for "may be a day or two," and would be left with no electricity at all if the miners make good on their promises.

"Today in the Far East and Khabarovsk regions, electricity is not available on average six to nine hours a day," said Alexander Yevtushenko, first deputy fuel and energy minister.

Western analysts were skeptical whether Yeltsin would be able successfully to assuage a disaffected electorate without jeopardizing foreign loans and the success of the government's anti-inflationary policy, although they said these policies were not yet entirely lost.

"The question is, is this election-year thumping the table or does it represent a change in direction?" said Mather Sagers, a Russia analyst at the PlanEcon consultancy in Washington. "The atmospherics say, 'Yes, it is heading off in another direction.'"

John Heywood, head of Eastern European firms at Price Waterhouse in London, voiced cautious optimism.

"I think they are very smart people and I don't believe they will do anything that will be of long-term damage at all," he said, adding that the appointment of Kadannikov, head of the ailing AvtoVAZ manufacturer of Lada cars, "will be seen as a very good choice."

Yeltsin's every move now is crafted for electoral appeal, he added.

Zadornov, a member of the Duma's liberal Yabloko faction, agreed that the president's recent decrees were political in nature, but he added, according to Interfax, that Yeltsin has "very seriously shattered his authority in the eyes of ordinary Russians during the last 10 days."

?State Duma deputies and staffers finally received their pay Thursday after a month-long freeze.

There were long lines to the cash machines in the Duma and at the chamber's own branch of the Stolichny Savings Bank, where most staffers and deputies have accounts. The legislators and their aides had not received their salaries since December, the first such delay since the Duma was first elected in 1993.