Russian Trip
Jude Wanniski
December 6, 1991


What seemed a quixotic exercise yesterday -- trying to persuade the Russians not to float the ruble today seems eminently workable. That's because Laurie Hays reports from Moscow in today's Wall Street Journal that Georgy Matykhin, chairman of the Board of the Central Bank of Russia, which takes power over the Soviet Gosbank on January 1, has no intention of floating the ruble, as the Gosbank has been doing in stages with disastrous effects on the population. He says it would be worse than "an atomic bomb," which are my sentiments exactly. He will instead peg the ruble to the dollar at six to one (it's now 100 to one). This is sensational news! I'm almost certainly meeting with Matykhin on Monday and will make my case for a one-to-one ruble and the mechanism to make it happen. The opposition will come from the EBRD, which guides the bureaucrats at Gosbank. It's another pure clash between the forces of Growth and the Forces of Austerity, with Treasury Secretary Nick Brady on the side of you-know-who. I'm trying to encourage Secretary of State Jim Baker to weigh in on the side of Matykhin, as global security interests now outweigh any conceivable interests of Russia's foreign creditors. The EBRD-Brady-David Mulford effort, at bottom, is to persuade Moscow to repudiate its debt to its people in favor of paying the foreign banks. If Brady succeeds, of course, nobody gets paid in the chaos and cataclysm that would follow.