Russia could lose aid from West if it slows pace of reform, U.S. warns

January 25, 1994|By Mark Matthews | Mark Matthews,Washington Bureau

WASHINGTON -- The Clinton administration warned Russia yesterday that it risked both a loss of large-scale Western aid and a domestic political explosion if it slowed the pace of reform and failed to control inflation.

The warning from Strobe Talbott, the government's point man on the former Soviet Union, followed last week's resignation from the Russian government of two key economic reformers and signs that Prime Minister Viktor Chernomyrdin is sliding back to heavy and inflationary subsidies for state-run monopolies.

It also came as members of Congress from both parties criticized Russian domestic and foreign policies -- a sign that strong bipartisan support for President Clinton's Russian aid programs may be fraying.

Mr. Talbott told a Senate foreign aid subcommittee the United States would only support large-scale economic stabilization programs by the International Monetary Fund "if there are the right policies in place on the part of the Russian government."

"Our support will follow their reform; it cannot be the other way around," he said.

Mr. Talbott acknowledged that market reforms produce "social pain, disruption and fear of the future" that together can "explode into a political backlash against reform."

But uncontrolled inflation, he said, can topple governments, "sometimes with the ugliest and most dangerous of results." And slowing the pace of reform "is likely to prolong and worsen the pain and increase the threat of even more alarming political developments."

He urged Russia to shift subsidies away from state-controlled industries to helping people impoverished and thrown out of work by the shift to free markets.

Mr. Talbott's tough, new tone was a striking shift from the rosier administration view evident as recently as Mr. Clinton's meetings with Russian President Boris N. Yeltsin in Moscow less than two weeks ago.

At that time, officials said Mr. Yeltsin had assured them of his commitment to continued reform.

No sooner had Mr. Clinton returned to Washington, however, than the best-known Russian reformers left the government. Mr. Chernomyrdin declared last week that the "market romanticism is over."

The apparent trend away from reform poses a major challenge both for the administration and for Mr. Talbott personally because of his large role in crafting U.S. policy toward Russia. A longtime Clinton friend, he was recently nominated for the State Department's No. 2 post.

Last week, Yegor Gaidar and Boris Fyodorov, two of the most staunch reformists in Mr. Yeltsin's Cabinet, resigned. Yesterday, after conferring with Mr. Yeltsin, Mr. Chernomyrdin said he has not accepted Mr. Fyodorov's resignation and that he has left it up to the president whether to let him resign.

The resignations clearly have alarmed Congress, which has to vote on maintaining, or increasing, the level of U.S. aid to the former Soviet Union.

Sen. Patrick J. Leahy, D-Vt., a supporter of Russian aid, questioned whether the United States was too closely tied to Mr. Yeltsin and urged the administration to reach out to other "reasonable" sectors in Russian politics, something Mr. Talbott assured him already was happening.

Mr. Leahy, who chairs the powerful foreign aid subcommittee, said: "We must not have a Shah of Iran situation with a country with 20,000 nuclear weapons."

He and Sen. Mitch McConnell, R-Ky, the panel's ranking Republican, raised concerns about a resurgence of Russian nationalism and indications -- flatly denied by Mr. Talbott -- that Mr. Yeltsin had obtained veto power over the expansion of the North Atlantic Treaty Organization.

"It appears as if . . . our foreign policy for that part of the world is essentially what Boris Yeltsin says," Mr. McConnell said.

Dianne Feinstein, D-Calif., faulted the administration for the headlong push for Russian market reforms without consideration of their effects on human beings.

Last fall, the United States committed $2.5 billion toward helping Russia shift parts of its state-controlled economy to the private sector.

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