Group of 7 endorses reforms

September 26, 1993|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau

WASHINGTON -- The world's seven richest nations sent a ringing endorsement of Russia's economic reforms to President Boris N. Yeltsin yesterday but withheld any joint pledge to accelerate financial assistance to Russia.

Global unemployment and trade protectionism also were addressed by the nations' finance ministers and central bank presidents. But it was the political standoff between Mr. Yeltsin and Russia's hard-line legislators that was at the top of the agenda.

In a joint statement issued at the end of their meeting, the so-called Group of Seven nations (G-7) expressed "their very strong hope that the latest developments will help Russia achieve a decisive breakthrough onto the path of market reform."

The G-7 officials also praised Mr. Yeltsin's commitment to Western, market-oriented reform, saying this course is "the right one for creating a better future for Russia's people and for integrating Russia into the world economy."

Russian Finance Minister Boris Fyodorov flew in from Moscow to attend the session and afterward received the personal endorsement of U.S. Treasury Secretary Lloyd Bentsen.

"He is a man who knows what needs to be done. And he knows how to do it. I hope the recent political development will create new momentum for reform," Mr. Bentsen said.

The G-7 finance officials expressed their continued commitment to a $44 billion aid package for Russia in April. But at the same time, the officials urged the Russian government to "take the measures necessary for it to be fully effective."

The International Monetary Fund, which controls the biggest part of the assistance, has stopped funds flowing because Russia failed to meet its commitments for getting inflation under control and reducing its budget deficit.

Given the current political crisis in Moscow, there had been some suggestions that the G-7 might decide to accelerate their contributions to show support for Mr. Yeltsin. The G-7 communique withheld such a pledge, but individual countries could accelerate financial aid in coming months.

Mr. Fyodorov told the ministers of "new measures" the Russian leadership was taking to get its credit flows under control and lower its deficit. He also said the central bank, which in the early days of the reforms continued to issue vast amounts of credit, fueling inflation and boosting the deficit, was now being more cooperative.

One U.S. official at the meeting said: "I think there is a general sense among G-7 officials that . . . it would only be appropriate to provide further stabilization support after measures have been implemented and have taken effect to bring the growth of credit under control, a reduction in the budget deficit and improvement of the central bank's performance." On the global economic front, the finance ministers agreed that the world economy needed more stimulation to create jobs in the face of an estimated record world unemployment total of 34 million next year.

"The name of the game is jobs," said Mr. Bentsen, "more of them and higher paying."

The finance ministers of the United States, Canada, Japan, Germany, France, Italy and Britain agreed that while they were moving in the "right direction" with pro-growth policies, each country needed to stimulate expansion more vigorously. Mr. Bentsen said there was "a convergence of objectives with the understanding that it is important for each of us to do what we can to encourage growth and that we all benefit by it."

Mr. Bentsen listed these priorities:

* For the United States -- pass health care reform for further deficit reduction in the medium term.

* For Japan -- deregulation and tax reform to boost consumer growth.

* For Europe -- lower interest rates as inflation is brought under control and budget deficits trimmed.

* For Canada -- the deficit eliminated in five years.

The ministers also stressed the necessity of completing the Uruguay Round of free trade talks under the General Agreement on Tariffs and Trade by year's end, to boost international trade and growth. As part of the pro-growth effort, President Clinton will host an international jobs conference here in November.

In a third initiative, they agreed that aid funds must "flow quickly" to the Middle East to stabilize the area in the wake of the Israeli-Palestinian peace agreement. Said Mr. Bentsen: "You can't have lasting peace . . . without a stable economic climate that will provide jobs."

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