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Russia: Government May Print Money To Pay Off Workers

  • Floriana Fossato



Moscow, 15 September 1998 (RFE/RL) -- Russia's new Prime Minister Yevgeny Primakov said yesterday at the inaugural meeting of his cabinet that the government may resort to "extraordinary measures" to pay off wage and pension arrears to state workers. Primakov stopped short of explaining what he meant by these "measures," but it appears that he envisaged printing money.

Viktor Gerashchenko, the man Primakov appointed to head the Central Bank, has said he favors supporting "careful" printing of rubles. Gerashchenko headed the bank at the beginning of the 1990s and was criticized for allowing printing of money that prompted major inflation then.

But Western analysts and liberal Russian politicians have expressed concern that the move could lead to massive and uncontrollable inflation.

Former first deputy Prime Minister Boris Nemtsov told RFE/RL in an exclusive interview that he does not believe in the possibility of controlled emission of money.

Nemtsov said: "If one starts printing money, stopping becomes very difficult." He also criticized Primakov's choice to turn to a group of Gorbachev-era economists such as Leonid Abalkin, Nikolai Petrakov and Dmitry Lvov as possible economic advisors.

"Those were the people who advised (former USSR President Mikhail) Gorbachev....and now, after 8 years of inactivity, they sat in the time machine and came back...There is no doubt about the direction Russia's economy will take if their advice is implemented," said Nemtsov.

He expressed concern that government officials "talk about the necessity of maintaining investment, but say nothing about the need of private property guarantees or open privatization of companies."

For the moment, however, prospects of putting an end to tight monetarist policies and printing money to subsidize ailing industries ring a welcome bell both to politicians in the communist-dominated State Duma and impoverished ordinary Russian citizens.

The situation is confusing. "I am completely confused" said Viktoria, a 35 teacher in a private musical school, standing in a recruitment queue for hotel personnel. "On the one hand, I am afraid I will soon loose my job and we'll go back to Soviet-era empty shelves in our shops," she said "but on the other hand, things seem to be stabilizing with Primakov."

Until a few months ago hotel-personnel recruiting would have attracted some hopefuls, but now a the huge crowd was almost blocking traffic in a little street in downtown Moscow.

"I read an ad at the week-end, saying a new luxury hotel should open soon and recruitment of personnel is on," said Maria, who recently lost her job as a seller in a jewelry shop. Trained as a mathematician, Maria worked as a saleswoman and now hopes to be hired as a waitress. "I don't speak English," she says "and I could not expect to be hired as a receptionist. But in the mess Russia is now, it would be better than nothing."

Since the financial and political downfall which began last month after years of economic decline, banks and private companies in the Russian capital have been laying off workers, while state sector workers and pensioners are afraid they will never get their back wages and pensions.

"But I hope hotels will still be functioning and if I get a job at this new establishment, this will means a reliable source of income for my family," said Viktoria. "What else can we do apart from hoping and relying on our own hands," said another implacable woman in the queue "nobody cares about us anyway."

Primakov said his government would adopt policies leading to "socially-oriented economy." The Russians are waiting.



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