Yeltsin: Munching in Munich

July 07, 1992

Russian President Boris N. Yeltsin may not yet be the eighth member of the Group of Seven, but he figures to upstage his hosts at this week's economic summit in Munich. On the eve of the meeting of leaders from the world's richest democracies, he pressured the International Monetary Fund to open the door to a $24 billion economic support package. Then, with that in hand, he arranged to arrive in Munich early enough to wangle an invitation to dinner tonight ahead of his scheduled post-summit lunch tomorrow.

This is classic Moscow diplomacy, no matter who resides in the Kremlin. But Mr. Yeltsin is unlikely to find his dinner partners out of sorts. A year ago, they grudgingly admitted Soviet President Mikhail S. Gorbachev to their circle only after regular business was over, listened to one of his monologues and sent him home empty-handed. Six weeks later, he was the target of a coup. This time Mr. Yeltsin, bearing the IMF seal of approval, will get a moratorium on debt repayments and the promise of lots more to come in the fall. It may be the highlight of a pretty fruitless summit.

Under the $24 billion bailout announced two months ago by President Bush and German Chancellor Helmut Kohl, Russia is to get $11 billion in bilateral aid; $6 billion in ruble stabilization funds managed by the IMF; $4.5 billion from the international banks, including $1 billion approved after a Yeltsin Brazil-style tirade against the IMF, and $2.5 billion in debt relief.

Mr. Yeltsin has gone so far as to warn of "chaos" if the free world powers do not come to his aid. His foreign minister, much to Mr. Yeltsin's professed anger, has even talked of another coup. The result is strong incentive for the Group of Seven to show, with economic largess for Russia and increasing toughness toward Serbia, that it is determined to stabilize a newly re-tribalized Europe.

The agreement between the IMF and Russia, after weeks of rancorous negotiations, leaves much in doubt, much in question. The IMF accepted an inflation target of 7 percent a month, which is just awful, rather than 3 percent, in recognition of realities, not principles. In return, Mr. Yeltsin agreed to tighten fiscal and monetary policy even though some of his advisers, including American economists, clearly hope he will ignore IMF caution in favor of a Poland-style plunge to free-market reforms. The real upshot is that Mr. Yeltsin may have got what he needed in Munich -- not only for tonight's dinner but for tomorrow's dessert.

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