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Clinton, Yeltsin Will Focus on Aid At April Summit

But US will be hard pressed to find funds

By Amy KaslowStaff writer of The Christian Science Monitor / March 9, 1993



WASHINGTON

MONEY will be discussed."

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President Clinton's description of his April 3-4 summit with Russian President Boris Yeltsin in Vancouver is clearly an understatement. The question of aid has dominated the agenda of every meeting between United States and Russian leaders since the demise of the Soviet Union.

Moscow persists in its requests for multibillion-dollar assistance from the world's richest countries, which last year offered a package of grants and trade credits worth about $24 billion (of which $17.5 billion has been already received) and some deferral of Russia's $75 billion to $80 billion external debt. And Russia is looking to Washington to reinvigorate international aid.

Mr. Clinton is anxious to demonstrate his support for Mr. Yeltsin, whose reformist government is under constant threat from Russian political forces eager to abandon tough measures to restructure the state-run system into a market economy.

But Clinton's early days in the White House are crucial for passage of his own economic plan, which calls for sacrifice at home.

The president is hard-pressed to promote the $700 million he seeks in humanitarian and economic assistance for the former Soviet republics in fiscal year 1994 (a $300 million increase over the current fiscal year), while he calls for reductions in federally funded domestic programs and added burdens for American taxpayers.

Many US lawmakers assert that the Russian aid flow should stop until Moscow clears up its $400 million-plus arrear on US commodity credit loans for wheat purchases. And there is constant pressure to link aid to conditions such as strict limits on the money supply by eliminating the Russian government's extension of credit to failing enterprises.

But Washington policymakers are ever mindful of the dangers of pushing Russia to restructure too quickly.

Last week they heard from Yegor Gaidar, the former reformist Russian prime minister whose economic shock therapy - including an attempted clamp- down on Russian Central Bank credits - almost caused the Yeltsin government to collapse.

Here to discuss his country's plight, Mr. Gaidar stressed that no amount of US aid can eliminate Russia's political turmoil - "only Russians can," he said.

Nonetheless, on Capitol Hill and with international partners, the White House is quietly promoting the establishment of a safety net to catch the growing numbers of unemployed and pensioners who are part of the Russian economy's free fall. And US agencies are continuing to target technical help and trade financing for Russia's agriculture, energy, and housing sectors as well as to pay for the dismantlement of ex-Soviet nuclear facilities.

But aid cannot solve all Russia's difficulties. With or without it, the Russian standard of living will continue to erode over the next several years, says Norbert Walter, chief economist of Deutsche Bank, Europe's largest commercial bank.

Clinton's proposed increase in US obligations will likely be a token compared to what Yeltsin and his advisers want. Anders Aslund, director of the Stockholm Institute for East European Economics and an adviser to Russia's economic team, estimates that Russia will need an additional $27 billion this year from foreign donors - $3 billion from the US alone - to pay for essential imports and build up financial reserves.

While many experts balk at forwarding more money - especially on the scale Mr. Aslund recommends - others, such as Princeton University Professor of Russian Studies Stephen Cohen, warn that if the US retreats, a much more costly arms race will resume as ex-Soviet hard-liners seize control. Testifying before the House Foreign Affairs Committee, Mr. Cohen called the $3 billion "the cheapest national security we could buy."

If Yeltsin expects difficulty in convincing US lawmakers to ante up aid, he will encounter an even tougher time with his European neighbors, Mr. Walter says.

Noting the severe downturn of European economies and their very gloomy outlook for the next year, he doubts their capacity and their willingness to offer substantial financial transfers.

Japan and Canada, also vexed by political and economic problems, will likely also fail to come forward with funds, Walter says.