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. Last Updated: 07/27/2016


Bloody Monday

The week began with a bang as President Boris Yeltsin fired the entire government, including his prime minister, Viktor Chernomyrdin, and his deputy, Anatoly Chubais. Markets plunged on first news of the sudden reshuffle but by the end of the day had recovered, giving the lie to earlier claims that investor confidence depended exclusively on Chubais. On Tuesday, foreign investors showed their support even further by snapping up $685 million worth of bonds in Russia's first offering since the Asian financial crisis.

On Friday, Yeltsin named the former fuel and energy minister, Sergei Kiriyenko, as his nominee to replace Chernomyrdin. Kiriyenko had been filling in as acting prime minister since the shake-up Monday.

After months of wrangling with the State Duma, Russia's lower house of parliament, Yeltsin signed the long-overdue 1998 federal budget. The president signed the budget on the last day of the two-week deadline after it was approved by the Federation Council.

Oil Prices

Acting First Deputy Prime Minister Boris Nemtsov and the Federal Energy Commission said oil pipeline tariffs would be cut during the second quarter of the year in an attempt to help Russian companies deal with depressed oil prices. Earlier in the week, Vagit Alekperov, the president of LUKoil, said the oil giant is planning to cut back on its exports.

Oil major Yuksi announced it would contract with U.S.-based field services company Schlumberger Ltd. to revive oil fields and increase production. The move, which could be worth up to $2 billion annually, was a first for the Russian oil industry. Earlier in the week, Yuksi announced that it would sell 5 percent of its shares to French oil major Elf Aquitaine in a deal worth $528 million. Analysts said the move may boost Yuksi's odds of acquiring a 75 percent stake in state-owned Rosneft later this month.

French energy group Total and Russia's Tyumen Oil Co. signed a preliminary agreement to study prospects for cooperation in oil production.

Jordan Not Approved

The Central Bank announced it had refused to approve the prominent American investment banker Boris Jordan for the post of chief executive of MFK Renaissance. In other news, a source close to the banking business said the investment banking group had acquired a blocking share packet in Moscow radio station Europa Plus.

The Central Bank announced that overall pretax profits for Russian banks fell to 18.9 billion redenominated rubles ($3.10 billion) in 1997, from 35.5 billion rubles in 1996.

De Beers Deal

World diamond cartel De Beers won a bid to form a 50-50 partnership with Russia's Soglasiye in a move that company officials hope will position the gem giant for access to the multibillion-dollar Lomonosov deposit.

Mosenergo Drop

According to a new report by Deutsche Morgan Grenfell, Mosenergo, Moscow's energy company, suffered a huge 52 percent drop in profits last year.

Cellular provider Vimpelcom announced a 1997 net income of $61 million, a 36 percent increase over the figures for 1996. Growth in 1997 was slower, however, than the year before, when profits expanded by 52.5 percent.

The Karelian paper mill Segezhabumprom resumed operations 10 weeks after Swedish paper giant AssiDoman pulled its funding out of the joint venture, citing problems with a deal to restructure company debt.

U.S. and Russian aerospace experts hailed the successful completion of a four-year series of tests on Russia's Tu-144LL airplane, considered by many to be the future of supersonic air travel.

Belarus Blues

The Belarussian monetary crisis brought the beleaguered former Soviet republic to new lows this week when the state announced the creation of a telephone hotline that people can use to denounce economic "wreckers." Government officials also appealed to the people for any "recommendations for the rational use of monetary resources." Earlier in the week, the Belarussian Central Bank infuriated Russian banks by barring foreigners from trading on foreign exchange markets. Russians are the main forex traders in Belarus.

A representative from the Kazakhstan Electricity Grid Operation Co. said the giant utility was holding discussions with Merrill Lynch on a prospective international bond issue later this year to raise funding for large-scale repairs.