Russian Political Tensions Confuse G-7 Aid Options

By , Staff writer of The Christian Science Monitor

THE threat of political instability in Moscow, combined with a recent chill in United States-Russian relations, are complicating international efforts to aid Russia's economic transformation.

The finance ministers of the Group of Seven industrialized nations faced the problem again at a meeting in the German resort of Kronberg over the weekend. G-7 officials say Western aid to Russia, coupled with political will in Moscow, can help pull Russia's economy out of its downward spiral. But at the same time, the G-7 is hesitant to make new aid available to Moscow, citing the uncertainty of Russian economic reform efforts.

The finance ministers, from the US, Germany, Japan, Britain, France, Italy, and Canada, made little progress in resolving this dilemma.

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Meanwhile, Russia's political situation appears set to go from bad to worse, making it harder than ever for reform-minded Russian officials to make headway in financial stabilization.

After the conservative-dominated Russian parliament issued a sweeping amnesty last week, the leaders of last October's failed rebellion against President Boris Yeltsin walked out of prison Saturday. Former Russian Prime Minister Yegor Gaidar, in Bonn to participate in a political seminar, said the amnesty would lead to renewed efforts to oust Mr. Yeltsin and possibly roll back reforms.

At the Kronberg meeting, Russian Economics Minister Aleksandr Shokhin called for ``new approaches'' in international Russian aid efforts. Yet the possibility of heightened political tension in Moscow seems to leave the G-7 less room to maneuver on aid.

Already, US Treasury Secretary Lloyd Bentsen and other officials say more G-7 assistance will be forthcoming only when the Russian government of Prime Minister Viktor Chernomyrdin gives clear signals of its commitment to reform, such as a concerted effort to keep inflation under control. Russian inflation in January was estimated at 22 percent. But German Finance Minister Theo Waigel said there was still flexibility in rescheduling Russia's foreign debt.

Mr. Bentsen called on international financial institutions, such as the International Monetary Fund and the World Bank, to show cautious understanding in their dealings with Russia. ``We want these institutions to be sure that reforms are moving before they lend, so their financial support will be used effectively,'' Bentsen said. However, industrialized nations ``also want the IMF to do all it can to understand the political realities of reform,'' he told a news conference Saturday.

The IMF and Russian officials are negotiating terms for the quick release of a $1.5 billion loan to Moscow and about $4 billion in additional aid later on. The IMF has been reluctant to release the money, saying Moscow should do more to control inflation. Russia says it aims to bring down monthly inflation to about 9 percent by the end of this year.

Although international assistance efforts may be stuck in neutral, US officials want to press ahead with bilateral aid programs, despite a spy scandal involving CIA agent Aldrich Ames, that has dented US-Russian relations.

The scandal has prompted some US lawmakers to call for a cutoff in US assistance to Russia. But Ambassador Thomas Simons, the coordinator of aid programs to the states of the former Soviet Union, said such action would not be in the best interest of the US. ``We should remain engaged and support reform and reformers wherever they are active,'' Ambassador Simons told journalists Friday in Bonn.

Overall US aid this year to the former Soviet Union is worth about $3 billion, including a $2.5 billion financial assistance package, and $400 million to help dismantle nuclear weapons on the territory of the former Soviet Union. About two-thirds of the aid is going to Russia. For the 1995 fiscal year, administration officials are requesting a $1.3 billion package.

Despite the gloomy predictions being made by some Russian reformers about Moscow's political future, Simons sounded guardedly optimistic on the prospects for Russian economic reform. ``The impulse for reform is alive and well,'' he said. ``We have to be patient about the [Russian economic] transformation process.... That's hard for Americans because we are an impatient people by nature.''

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