Opposition parties are stalling the passage of these bills creating concern that

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Opposition parties are stalling the passage of these bills, creating concern that could lead to a rise in short-term interest rates. That would hurt bonds, because it raises funding costs for banks and other investors, analysts said. "The big question is whether the LDP and the opposition can compromise on the bills aimed at stabilising the financial sector," said Michael Lockrow, a senior economist at Thomson Global Markets. JAPANESE bonds are likely to stay near record highs this week, and stocks to enjoy mixed fortunes, as investors remain sceptical over the government's progress in shoring up the rickety financial system. "Chaos always helps the oligarchs," he said.Additional reporting by Justin KeayRussia in global financeHow Moscow's market capitalisation compares with other stock markets, in $bn.1 US 11,3092 Japan 2,2173 UK 1,9964 Germany 8245 Australia 6976 France 6747 Switzerland 5758 Canada 5689 Netherlands 46910 Hong Kong 41311 Italy 34512 Spain 29013 Taiwan 28814 Sweden 27315 Brazil 25516 South Africa 23217 China 20618 Mexico 15719 Belgium 13720 India 12821 Russia 12822 Singapore 10623 Denmark 94Source: International Finance Corp.

But President Yeltsin will be under pressure as never before.Deutsche Bank's Cassard reckons that, whatever happens, the power held by the oligarchs the Dart family's lawyer complained about at the White House meeting last Thursday, will increase. But beyond the issue of what happens to Russia and its foreign creditors lies the unresolved issue of how economic policy is going to be made in the country and by whom. Yesterday and today further meetings between officials, Russian bankers, and Western bankers have gone on. Many have been run by Boris Fyodorov, the first vice-minister for economic affairs appointed on Monday who served in the Yeltsin government in its early days and is described by one Western banker who knows him as a "cynically charming fellow".Fyodorov, along with prime minister Kiriyenko and other officials are putting the final touches on plans, due to be announced tomorrow, spelling out what kind of payoff investors holding defaulted treasury bonds can expect. Not even the Russian banker at the centre of the country's elite will predict what is likely to happen politically in Moscow in the near future. "The government realises it is not going to get private foreign money in the near future," said Deutsche's Cassard.

"The issue is whether foreign creditors investors stay out for 18 months or four years.""People in the markets are going to take a haircut," added Morgan's Das. Central bank chief Dubinin sent a "Dear Eddie" letter to Bank of England governor Eddie George and his counterparts in other Western capitals asking for assistance in calming and clarifying the situation.The meeting in Moscow's White House on Thursday evening offered further clarification, if only by way of demonstrating that rescue plans are being made on the hoof.On Friday the government tried to cork another potential leak in the country's dwindling central bank reserves It guaranteed Russian bank deposits There are $25bn in Russian bank deposits. "That's what happens when there's a default." The total value of defaulted treasury, or GKO, bonds is $45bn A third of this bad paper is held by foreigners. If next week or thereafter the Russian man in the street makes a run for his deposits in the hope of converting his rouble savings into dollars, the country could literally go bankrupt.That was the situation going into this weekend. Bankers warned that Russian would never raise a pound from the international community again.On Wednesday the government backed down.