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Sticking a fork in Yeltsin
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August 28, 1998: 3:56 p.m. ET
Analyst Aslund says Russian leader is "out of it"; expects him gone in a week
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NEW YORK (CNNfn) - For more on Russia's financial and political crisis, Anders Aslund, a Russian analyst at Carnegie Endowment for Peace, appeared on "Trading Places."
Here's a partial transcript.
KITTY PILGRIM, CNNfn ANCHOR, "TRADING PLACES": You are in probably the best position of anyone to have a viewpoint on the current Russian crisis, in that you served as an economic advisor to the Russian government from 1991 to 1994. What is your current assessment of the situation?
ANDERS ASLUND, CARNEGIE ENDOWMENT FOR PEACE: It's about as awful as it could be. What we're seeing now is a twofold financial melt down. The stock market and the bond market have melted down, the currency market has partly melted down, partly been stopped. The government is now clearly turning against the convertibility of the ruble and people know it.
The banks system has collapsed and what we are now expecting is a massive price increase. If this is not stopped very soon, inflation will go up in the hundreds of percent, and output will fall by 10, 20 percent. This is a total meltdown, and the government is turning in absolutely the wrong direction. Now there's talk about de-dollarization, more state intervention, nationalization, and protectionism.
PILGRIM: We heard today certain Communists talking about the nationalization of certain industries that had been privatized or had been in the hands of some private companies. Do you think there will be retrenchment of government control of many industries at this point?
ASLUND: Well, what we are seeing now is a total financial collapse, so they might as well join the government. Chernomyrdin's party is saying very similar things themselves. These people think that what's important is to get a broad political coalition. Russia has a huge budget deficit of about 5 percent of GDP, without any financing whatsoever that they think they shouldn't think of, because that's monetarism and monetarism is by definition wrong. They simply want to dream up money.
PILGRIM: What is your projection for IMF funding and your comment on the firing of Anatoly Chubais today?
ASLUND: Well, Chubais wanted to leave. He realized that he was, that it would be impossible to do anything sensible in the government. Virtually all reformers are either determined to leave or they will be forced to leave. The IMF can't do anything about the situation. It's not a question of considering the situation. The IMF cannot provide the financing that is possible to stabilize the situation today. Russia first must do something about its budget deficit and not say that this is not an important question.
PILGRIM: Boris Yeltsin said today "I am going nowhere." And yet there are repeated rumors that he will be forced to resign or will resign. What's your assessments of President Yeltsin's capabilities at this moment? Do you think he'll stay in power, or not?
ASLUND: Clearly, he's totally out of it. I would be surprised if he's there in one week's time. I will trust Sergei Kerogonov's judgment on it. And if you see the sacking of Sergei Kiriyenko and his governor, these were the last people that supported President Yeltsin. Why should he sack them? It makes no political sense. This is political suicide for no apparent reason. So I can only find medical reasons for this decision.
PILGRIM: What is your assessment of Chernomyrdin?
ASLUND: He is a man who is good at administering the consensus in the old establishment that wants as little reform as they can get away with. And he's not a person who leads from the front. He sits in the middle and manages all the vested interests of the old and new systems. 
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