Donor States Assess Needs Of Ex-Soviet Republics
May meeting set in Lisbon to map permanent reform
AFTER promising fresh money and setting new priorities for assistance, delegates to this week's international conference on aid to the former Soviet republics pledged to reconvene in Europe this spring.Skip to next paragraph
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The conference in Washington considered the urgent, short-term needs of the beleaguered republics, including food, housing, medicine, and energy. When the donors meet again - in Lisbon this May - they will assess more formidable problems of transforming one lumbering communist bloc into 12 vibrant, market-driven economies.
By meeting in Lisbon, the international community recognizes the central role of the European Community (EC) in tackling the most pressing of world concerns. Part of the annual revolving leadership among the EC's 12 member-countries, Portugal assumed the presidency in January and made Lisbon the current capital of the 12-nation community.
Portuguese Foreign Minister Joao Deus Pinheiro, who serves as the president of the EC's ministerial council, will host the May meeting. Unlike the conference this week, the follow-up in Portugal will invite the 12 former Soviet republics to attend.
Mr. Pinheiro explains that the second conference is scheduled four months from now to give the World Bank, the International Monetary Fund (IMF), and the Organization for Economic Cooperation and Development time to prepare economic studies of the 12 republics. IMF director Michel Camdessus will provide assessments of Russia, Ukraine, Belarus, and Moldova by the end of April, says Pinheiro.
The donors' conference also looks to the World Bank and the IMF - the two most important financial organizations that will steer the republics toward macro-economic reforms - to coordinate global assistance in several failing sectors: health care, energy, and transportation.
According to one senior international banking official, the World Bank and the IMF, in turn, hope the international aid conference will "help shore up the reform process." He says that Russia's Jan. 1 move to liberalize prices, which sent them spiraling, also sent shock waves through Russian consumers.
"When you undertake a policy like price reforms, you want to put something on the shelves," says the banking official, who is helping to prepare the economic reports on the republics. Donors, he says, must address food shortages quickly, lest the nascent reforms lose all credibility. "If the reforms fail in the largest successor state, you will have autarky throughout the former Soviet republics," he warns.
The former Soviet Union's annual food import bill averages between $15 billion to $20 billion, he says. The 12 republics waste some 30 percent of their agricultural production due to poor farming, storage, and distribution. As the economy disintegrates further, import needs soar and the ability to pay for them plummets. "All 12 republics must develop the capacity to prioritize their needs for aid and their capacity to distribute it," says the banker.
By the end of 1992, the republics are expected to complete the steps necessary to apply for membership in the IMF and the World Bank. The bank is already setting aside between $2 billion and $3 billion to assist in the July 1992 through July 1993 period.
While that sum is a sizable portion of World Bank annual lending, it pales in comparison with the republics' needs. "No single institution can handle all the needs of the former Soviet Union," says Pinheiro. Indeed, Russia alone is asking for $6 billion in the near term.
Germany is one country that has felt the burden of assistance to the former Soviet empire. The single largest donor to the Soviet central government, Bonn has balked at US requests for more burden-sharing. Sensitive to Germany's resentment, the US placed Germany at the head of the conference table this week. Washington also pledged another $600 million in food credits to the republics.
"What matters is what we get done, not who gets the credit for it," conference host US Secretary of State James Baker III told scores of delegates on Wednesday.
Stressing that he speaks for 12 of the 47 foreign ministers who were at the table, Pinheiro smoothed over differences that threatened to overshadow cooperative efforts. Referring to the post-World War II Marshall Plan, US troops in Western Europe, and high US military spending, he says: "For the last 50 years the US has done a great deal in Europe. That sentiment prevails today."
The collapse of communism, Pinheiro says, "is the result of a victory of an effort after 50 years. Do not disqualify what the US has done. Think of the [US] effort that's been made in financial and technical terms. And look at what the US is doing now, in working to disassemble nuclear capacities." The Portuguese foreign minister says he is not worried about US budgetary constraints and a lingering recession - although they promise to make it difficult for the Bush administration to initiate and gain con gressional approval for large increases in US donations to the republics. "Those who can afford to, will pay more. Thank God Europe is in good shape, economically, to help. So is Japan. So are the [Persian] Gulf states."
Clearly proud of the West's achievements in curbing communism, and the ability of Europe, Japan, and the US to assist in the republics' economic recovery, Pinheiro adds a cautionary note: "They can count on us, so long as we can count on them, so long as they stop making nonsensical investments in their military sector."
The former Soviet military is still a threat, he says - especially if the West fails to provide financial help to house and resettle the now-displaced and disgruntled armed forces.