On the brink: bread lines in Moscow Soviet Union reported nearing bankruptcy

MOSCOW -- The Soviet Union marched still closer to !c complete economic collapse yesterday as bread lines grew longer and the government reportedly edged toward bankruptcy.

The situation is so serious, the head of the Russian KGB said, that rioting could erupt across Russia within weeks.


"A revolt would be most likely in December," Maj. Gen. Viktor Ivanenko told the weekly newspaper Argumenti i Fakti. "The main danger today is a series of directed social explosions. The people are exasperated, rumors are flying around about prices being freed very soon."

The mayor of Moscow announced a coupon rationing system on the most basic foods -- bread, meat, butter and eggs -- calling it an interim measure to "create some stability in regard to prices," according to the New York Times.


Last week, Russian President Boris N. Yeltsin said he was about to begin a series of tough economic reforms that would, at first, make life even harder for the average person.

While the shortage of bread has frightened Russians, so has the prospect of rising prices. Mr. Yeltsin said he would free prices from state controls by the end of the year. When that happens, some prices are expected to quadruple. One newspaper, Kommersant, predicted that each person would have to earn 680 rubles a month to subsist. The average wage now is about 400 rubles a month.

Meanwhile, within a few days the Soviet Union may run out of hard currency to pay its foreign debt, the Interfax news agency reported yesterday, quoting the chairman of the board of the government bank.

Anatoly Nosko, chairman of the Vneshekonombank, told the council running the Soviet government that the country faces a shortfall of $1.7 billion.

Rumors of a shortage of dollars have created long lines at the NTC government-run bank as foreigners have tried to withdraw their dollars. For the last three business days, the bank has run out of dollars by midmorning.

The ruble becomes more worthless every day. At a currency auction yesterday, the ruble was quoted at 110 to the dollar. A week ago, it was 70.3.

Bread lines, which for some Russians summon memories of the deepest privations of World War II, have been forming with increasing regularity.

Yesterday, long lines of cold people stood outside five stores in a southwest Moscow neighborhood. There had been no bread in the morning, and by late afternoon one line stretched 100 yards -- still waiting for a delivery truck.


Yelena Ignatova, manager of the store, complained that she has to depend on one main supplier for bread. "If they deliver 250 kilograms and I need 300 kilograms," she said, "there's nothing I can do about it."

Part of the reason for the lines is that people fearful of going hungry over the winter are buying extra bread and drying it. The city usually consumes 180 tons of bread a day, but this week it has risen to more than 250 tons, city officials say.

Another problem is old machinery. Mrs. Ignatova, for example, gets her bread from Bread Factory No. 5. The red brick factory, and much of its machinery, dates from 1931.

At the same time, only 157 million tons of grain has been harvested this year -- a drop of 62 million tons from last year.

On nearly every street, there are lines of people waiting to buy something. Despite the warnings of the KGB, and despite the panic-induced hoarding, the lines remain patient.

Within a few days, Mr. Yeltsin is expected to issue decrees that will speed Russia toward a market economy. He is expected to lift bans on middlemen and make it possible for enterprises to engage in foreign trade and even set up dollar-based bank accounts.


All this is directed toward establishing a market economy -- and the market economy will save them, many Russians believe.

But yesterday, U.S. Deputy Defense Secretary Donald Atwood Jr. concluded a tour of defense plants. With executives from U.S. companies such as Kellogg, General Motors and Boeing in tow, he was trying to assess how quickly plants that had been turning out tanks could turn out refrigerators, or when those that had been making machine guns could make tape recorders.

Sitting at a news conference, Mr. Atwood was extremely polite -- and extremely vague. When pressed, he said the Soviet Union faced certain "impediments" in reaching a market economy.

Soviets have to get over their hostility toward businesses that want to make a profit, he said.