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Western Press Review: Russians React To Ruble Reduction

Prague, 5 August 1997 (RFE/RL) -- Redenomination of the ruble announced yesterday by Russian President Boris Yeltsin sets off a flurry of Western press commentary on economic matters.

FINANCIAL TIMES: The redenomination is not a frantic response to crisis

An editorial today in the British newspaper welcomes the ruble reform, calling it a sign that the Russian economy is stabilizing. Says the Times: "After all they have suffered, it may seem rich to tell the citizens of Russia they should welcome the latest redenomination (of the ruble). After all, they have only been had this way twice in the past six years, and five times this century."

The editorial says: "This time, there are two very encouraging differences. The first is that the redenomination is not a frantic response to crisis, but an attempt to emphasize a success: the victory over inflation." It says: "Equally important is the way in which the change is being carried out. For the first time, Russia's rulers have given their citizens due warning of what they mean to do, and also are doing their best to explain why."

WALL STREET JOURNAL EUROPE: Demand for dollars may increase over the short term

Today's edition carries a news analysis by Betsy McKay, writing from Moscow, predicting that the reaction from wary Russians will be a mixture of history-based concern and approval of a simplification of commerce. She writes: "The measure was likely to prove unsettling to some Russians, however, many of whom have lost savings in previous draconian monetary reforms." McKay says: "Given (Russians') history, economists predicted that demand for dollars, in which many Russians already hold their savings, might increase over the short term."

She says: "Some people were likely to welcome the change because the abundance of zeros on banknotes often causes shoppers to confuse one denomination for another, and businessmen and government officials have to keep tabs regularly on accounts ranging in the billions and trillions of rubles."

BOSTON GLOBE: The Kremlin can announce its victory over inflation

In today's paper, David Filipov writes that the redenomination is mostly symbolic, representing both good news and old irritations. He writes in a news analysis: "The largely symbolic move gives the Kremlin an opportunity to announce some good news for a change: its victory over inflation, which topped out at more than 2,600 percent in 1993 and was over 100 percent annually until last year, when prices rose only 22 percent. Inflation this year is running at about 12 percent."

Filipov says: " 'No one will lose anything as a result of this reform,' Yeltsin said, adding that the move was an expression of confidence in a currency Russians once eagerly dumped for dollars and deutschmarks. 'Once you receive your wages, it is no longer necessary today as it was not long ago to run to the exchange kiosk,' (he said). That remark caused some observers to recall that millions of Russians wait months to receive their paychecks."

WASHINGTON POST: Redenomination is intended to improve the image of the ruble

Daniel Williams, analyzing the development in today's edition, also emphasizes the symbolism. He writes from Moscow: "Beyond the simple math, President Boris Yeltsin tried to imbue the move with historical meaning by declaring an end to the hyper-inflation that has plagued Russia during the 1990s."

Williams says: "At the least, Yeltsin appears to be trying to win confidence in his government's economic performance." He writes: "The redenomination is also intended to improve the image of the ruble and so encourage businesses to use that currency rather than dollars and German marks in transactions."

LOS ANGELES TIMES: Renumbering the ruble will lead to price increases

Richard C. Paddock's news analysis in today's edition assumes a skeptical tone. He writes: "Despite the president's optimism, his announcement alarmed many Russians who vividly recall losing their savings in earlier currency 'reforms'." He says: "In addition, some economists and politicians warned that renumbering the ruble will lead to price increases that will harm the poor most of all."

Paddock contends, despite the lessening of inflation: "Russia's economic crisis, however, is far from over. The government's strategy has left it without the cash it needs to pay trillions of rubles it owes, contributing to a cycle of debt that has left thousands of companies across the country broke and unable to pay salaries or taxes."

Caspian Sea

NEW YORK TIMES/INTERNATIONAL HERALD TRIBUNE: The U.S. subordinates its democratic principles when access to oil is involved

A Times editorial republished today in the Tribune warns that the United States and the Caspian Sea powers face both practical and moral questions raised by the Caspian's rich oil potential. The editorial says: "On one level, the challenge for Americans is practical. Only a relative trickle of Caspian oil can reach markets through a soon-to-be reopened pipeline that passes through unstable Chechnya to the Black Sea. But building new pipelines that extend west and south involves intricate political considerations in the region's eight countries and in neighboring Russia, China, Turkey and Iran."

It concludes: "Corruption, political repression and human rights abuses remain endemic in the region. The United States has a nasty habit of subordinating its democratic principles when access to foreign oil reserves seizes the attention of politicians and their corporate benefactors. It happened in Iraq. It should not happen in the Caspian basin."

The euro

SUDDEUTSCHE ZEITUNG: Bundesbank profits will be distributed to other countries

In today's edition, Alexander Hageluken takes up in a commentary the topic of the euro. He says that on top of other complications around aspects of a single European currency, there emerges a new, unanticipated -- and, perhaps, unacceptable -- potential loss to the Bundesbank. Here's his view: "Anybody who has in recent days turned away in a state of torpor from the incessant talk about the future European currency, the euro, will have no excuse for this sort of behavior in the future. Because a new dispute concerning the euro and central bank profits has turned up. It is a new aspect of an old problem.

"The Bundesbank makes money from interest on its securities business. It is a lucrative activity. Many European countries hold the mark as the reserve currency. Since demand for the mark has been strong, the Bundesbank distributes far more securities than other central banks. But when monetary union takes place, profits from these transactions will go into a common account and be distributed along the criteria of each country's economic strength and population. This way of distribution was negotiated in Maastricht."

He says: "It is clear that the German negotiators did not do their job on the distribution issue at Maastricht. Now there will have to be a renegotiation. That is easier said than done. France for example, stands to do very well out of the arrangement the way it is."