West uses aid to campaign for Yeltsin Assistance to hinge on leader's victory

April 16, 1993|By John E. Woodruff | John E. Woodruff,Tokyo Bureau

TOKYO -- No one made any bones about it.

A week and a half before election day, the foreign and finance ministers of the West's seven major industrial countries, politicians all, convened here this week to do what politicians do best -- run a campaign rally, raise money, praise the candidate, denounce the opposition and court votes.

Russian votes.

The point of the two-day exercise, Secretary of State Warren M. Christopher said yesterday, was to "let the people of Russia see" that the industrialized democracies "are prepared to act tangibly as well as in words" to show their support for President Boris N. Yeltsin. Mr. Yeltsin and his free-market reforms are the two key questions on the ballot in an April 25 referendum.

By the time they left Tokyo yesterday, the Group of Seven (G-7) ministers had pumped up the "act tangibly" part to $43.4 billion, though most of that had been pledged long before this week's meeting.

They had also pumped out a stream of campaign rhetoric that made it sound as though rejecting Mr. Yeltsin would be only slightly less dangerous than steering the planet straight into the sun.

"The stakes simply could not be higher," Mr. Christopher said at one point. Without Mr. Yeltsin to keep Russian reform on track, "the world would be a vastly more dangerous place."

But beneath the show of enthusiasm for Mr. Yeltsin was a growing undertone of frustration with what Kabun Muto, Japan's foreign minister, called "the complexity and difficulty of the task of assisting Russia."

A typical source of that frustration was a pledge of $6 billion the West made a year ago to help stabilize the Russian economy. But the Russian central bank started printing rubles much faster about the same time, creating an inflation that undercut stability and the conditions needed to use the $6 billion. Yesterday it got folded into the $43.4 billion.

This time, British Foreign Secretary Douglas Hurd vowed, the ministers were "getting away from just building up the big headline number of dollars that always then seems to disappear" and were putting together a practical and accountable plan. "Visibility" of the flow of funds was what minister after minister said was needed.

Still, the big headline number was prominently put forth with the final communique. And still there was the sense of haste and political theater that emerged from any analysis of its parts.

The biggest single chunk, $15 billion, consists of debt payments deferred last month by the Paris Club of countries to which Russia owes money, much of it left over from the former Soviet Union.

The second-biggest chunk, $10 billion, consists of loans and loan insurance by member countries' export-import banks, to help their own companies sell Russia machinery and technology.

Most of that $10 billion is aimed at getting oil and gas fields back in production.

That way, several ministers pointed out, Russia can earn foreign currency by exporting energy.

The remaining $18.4 billion is a mixed bag of newly and previously pledged assistance through the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development.

Boris Fyodorov, Russia's deputy prime minister, who joined the meeting during its second day, pointed to several elements he said were new. Chief among them is a $3 billion special fund at the IMF to support reform in countries moving from communism to market economies.

At a news conference after the meeting ended, he also spoke out in support of President Clinton's 11th-hour proposal of a $4 billion fund for lending money for the privatization of state enterprises and the dismantling of nuclear weapons.

Delegates sent the president's plan to a working-level committee, but Mr. Fyodorov said he hopes it would win approval when the G-7 heads of government meet here in July.

Mr. Christopher said the United States would go ahead with its $500 million contribution to that plan even if it is not matched by $1.5 billion from the other G-7 governments and $2 billion from the World Bank and IMF, as the president proposed.

The ad-hoc character of the funding was clearest in one of its most critical goals -- the denuclearization of Russia and three other former Soviet republics that have missiles and warheads.

The United States added $400 million to its previous pledges for that purpose, bringing its total to $1.2 billion, but not all the money going into that work will be coordinated.

France, for example, has its own $74 million program relying on French technology.

Similarly, the U.S. pledge of $1.8 billion on top of the $1.6 billion the president promised Mr. Yeltsin at their Vancouver summit two weeks ago includes $1.3 billion in grants for projects that are yet to be identified.

Priority will go to oil and gas fields, privatization of state enterprises and housing for Russian soldiers returning from East European countries, U.S. sources said.

Lest any Russian voter miss the point, the ministers punctuated their remarks for two days with the word "conditionality" -- a warning that if the April 25 referendum goes against Mr. Yeltsin and reform, most of the $43.4 billion may never get to Russia.

The Russians also may never see much of the money if they keep Mr. Yeltsin and reform, for there is an additional "conditionality."

Most of the promises are good only if Russia does what it has not been able to manage for two years -- get a grip on an inflation that has run as high as 25 percent a month.

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