MOSCOW (Jul. 24)
Russia has some formidable hurdles to overcome in the months ahead in its pursuit of economic stability, according to a Jewish businessman who serves on President Boris Yeltsin’s council on economic issues.
Mark Masarsky, head of the Moscow-based Russian Gold mining company, said Yeltsin’s recent electoral victory over Communist Party candidate Gennady Zyuganov had done much to instill confidence that the government would continue to pursue economic reforms.
But that confidence, in and of itself, will not be able to solve a series of nagging troubles that threaten the country’s economic foundations, Masarsky said in an interview with Evreyskaya Gazeta, Moscow’s Jewish biweekly newspaper.
Among those troubles, he said, were continued inflation, high numbers of tax dodgers, cutbacks in production and a steadily growing bank crisis.
The new Russian Cabinet, which is due to be announced in early August, will have as its main task the overcoming of these economic problems.
Those expected to take on the task include Alexander Livshitz, a Jew who now serves as Yeltsin’s top economic adviser and who is deemed the likely nominee for first vice premier responsible for economic policy.
Masarsky said one of the main factors contributing to the banking crisis is an unwillingness on the part of many Russians to keep their savings in bank accounts.
In the months before the presidential elections, Russians withdrew some $16 billion to ensure that their savings would not be lost if the Communists won, he said.
Among them were many Russian Jews planning to leave the country in the event of a Communist victory.
Russian citizens do not trust the nation’s bank system, said Masarsky, who added that they keep an estimated $60 billion in Western bank accounts.
While this situation is contributing to the worsening banking crisis, the massive liquidation of bank accounts is also preventing people’s savings from being invested in production, which in turn puts a damper on growth, said the 54-year-old Masarsky.
As a solution, he suggested that the government seek to attract savings and foreign investment by creating a more favorable investment climate for investors.
Despite these daunting problems, Masarsky said that “the worst was left behind” after Zyuganov lost the July 3 presidential runoff.
His victory may well have led to the introduction of “a totalitarian mechanism” into the Russian economy that would have dashed all hopes of economic reform, Masarsky said.