As aid arrives, Russians scratch their heads and ask, what aid?

April 04, 1993|By Celestine Bohlen | Celestine Bohlen,New York Times News Service

MOSCOW -- From the day the first parcels of relief aid wer unloaded from U.S. military aircraft at Moscow's international airport more than a year ago, Russians have been puzzled by what they see as the West's fumbling attempts to help their beleaguered country.

First, amid a blaze of publicity, came shipments of food, ranging from baby food to U.S. military rations left over from the Persian Gulf war. Then the Group of Seven major industrialized nations produced a $24 billion financial aid package intended to help Russia build a vibrant economy.

Now, after a year of watching a stream of Western consultants troop through Moscow, Russians are asking what happened to the $24 billion promised them last year. Some question whether it ever came at all.

The answer, as Western economists have tried to explain at great length, is "no" and "yes, but. . . ."

The problem was that the $24 billion package never focused adequately on meeting the country's needs, some Russians say. Instead, it consisted of a hodgepodge of old loans, a few give-away programs and new credits made contingent on conditions that proved impossible to meet.

Only about two-thirds of the $24 billion was actually delivered, mostly because loans planned by the International Monetary Fund, the World Bank and the European Bank for Reconstruction and Development were contingent on harsh austerity measures that were not adopted. These included raising interest rates, cutting subsidies to state enterprises and raising prices.

Of the aid that has been disbursed, only a small portion has been in the form of outright give-aways. Last year, Russia received 476,000 tons of food, valued at $700 million, and $200 million worth of medicine donated by public and private sources.

The core of the aid package last year was an $11 billion commitment for credits issued by several Western countries, of which about $8 billion actually was found to have been distributed in 1992.

To many Russians, these credits were not so much aid as business arrangements that helped the lending nations find products for their goods more than it helped Russia pay for them.

Most of these credits were granted to the old Soviet Union. They are distributed not in cash but in the form of food, industrial equipment or other items purchased by Russia from the lending countries on normal commercial terms.

Because of its debt problems, Russia has been unable to obtain commercial bank loans to buy these commodities. In that sense, the credits offered by the West are a boon. But not surprisingly, many Russians are less than grateful for what they see simply as an opportunity to buy things from their benefactors.

"Most of these credits are a prepackaging of old programs, circulated by the lending countries for their own domestic purposes," said Denis Kiselyov, chief of analysis at the World Bank offices in Moscow. "It is very difficult to qualify them as aid."

For instance, $3.5 billion -- the biggest loan in the package -- is a credit from the United States to buy U.S. grain, to be used mostly for livestock feed, as part of a program that has been around for decades.

Use of foreign credits

Other foreign credits have been used to buy machinery, equipment and spare parts. How the money has actually been spent is difficult to track. For the most part, the credits were allocated to Russian industries, just as they were in the days of Gosplan, the state planning agency of the old Soviet state.

This summer, in an effort to introduce market economics into the system, the Russian government required factories receiving the parts or equipment to pay back the foreign credits themselves, with interest.

Mr. Kiselyov said this approach has been resisted by some crucial industries that, through their powerful lobbies, are able to plead for special treatment.

Over the last few years, Russia has been the beneficiary of numerous special aid programs, not all of them included in the $24 billion package. Since 1989, Germany has provided about $48 billion in cash and credit guarantees -- much of it to buy Moscow's acquiescence to the unification of Germany. Most of the aid has been used to build housing for returning Soviet military officers.

The United States is also providing $800 million to help the Russian army dismantle and dispose of its nuclear arsenal.

Meanwhile, private programs have been established, of which the most spectacular is the international Science Foundation, founded by the American financier George Soros, which in the next two months plans to distribute $10 million to 20,000 scientists in Russia and the other former Soviet republics.

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