Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.news From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Yeltsin vows to end credit for state industry Date: Sun, 15 Nov 92 16:56:27 EST Message-ID: \SE A;WORLD \HD Yeltsin vows to end credit for state industry \BY Gerald Nadler \CR THE WASHINGTON TIMES \DT MOSCOW MOSCOW - President Boris Yeltsin warned Russia's industrial directors yesterday that they will no longer receive trillions of rubles in credit to stay afloat. "Storms and high winds are not over," Mr. Yeltsin told a congress organized by the Union of Industrialists and Entrepreneurs, known as the Civic Union. At the same time, he appealed to the managers of state-owned industries for support in his ongoing battle with hard-liners who want to roll back his free-market reforms. The union, headed by Arkady Volsky, is the most powerful political group in Russia and has demanded wholesale changes in Mr. Yeltsin's Cabinet. Despite tensions between the two, Mr. Yeltsin appeared to leave yesterday's meeting with some support. "The government had met the managers halfway," Mr. Volsky said. And Mr. Yeltsin praised some of Mr. Volsky's proposals. About 1,000 industrial bosses, most of them former Communists, attended the congress. They listened attentively but unenthusiastically to Mr. Yeltsin and acting Prime Minister Yegor Gaidar, the architect of Russia's economic reform. Mr. Yeltsin said his government has no choice but to cut off easy money to state-owned companies. The 1.5 trillion rubles ($3.6 billion) that Russia's Central Bank issued to struggling enterprises in August and September will be the last such cash infusion, he said. "Now another trillion is being demanded," Mr. Yeltsin said. "I don't want to deceive you. There will not be another trillion. "If we allow that, there would be hyperinflation. I call on you to accept this with understanding." Mr. Yeltsin's effort to cut off the credit puts him on a collision course with Central Bank Director Viktor Gerashchenko, who answers only to parliament. Mr. Yeltsin and parliament Speaker Ruslan Khasbulatov are expected to clash during the Congress of People's Deputies, which opens Dec. 1. It was called into session by parliament this month despite the objections of Mr. Yeltsin, who wanted the meeting delayed until spring. A continuation of Mr. Gerashchenko's policy of pouring money into mammoth industrial plants would wreck Russia's ability to comply with guidelines that the International Monetary Fund set as conditions for aid. A proposed $24 billion aid package from Western governments, including the United States, is being coordinated by the IMF; $1 billion has been issued. But former President Jimmy Carter, who will report to President-elect Bill Clinton, predicted in Moscow yesterday that "direct [U.S.] financial aid other than food . . . will likely be minimal." "Our country's budget has been almost destroyed in the last 12 years. We have an extremely high deficit," he said at a news conference. "I think we have to be cautious in the level of foreign aid." Mr. Volsky, a former metallurgical engineer, wants a reprieve on the move to a free market. He favors a continuation of central regulation of supplies and prices for at least two more years. "These measures are unacceptable," Mr. Yeltsin said yesterday. "Not because of ideological principles. They are simply impossible." Because the Civic Union controls at least a third of the votes in parliament and the larger Congress of People's Deputies, Mr. Yeltsin has tried for the past month to gauge its strength and win its support. He has sent Mr. Gaidar on trips around the country to speak to industrial directors, who are known as "Red Barons." This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM