Western Reappraisal of Russia

April 24, 1994

The controversial $1.5 billion loan extended to Russia by the International Monetary Fund reflects a remarkable turnabout in Western assessments of Prime Minister Viktor S. Chernomyrdin.

Only four months ago, he was widely considered an enemy of economy reform, an ally of old-line Communist forces opposed to President Boris Yeltsin. But today, within the Clinton administration and world financial institutions, he is seen as crucial to a successful transformation of the Russian economy into a system compatible with the West.

Two men are key to this reappraisal: Vice President Al Gore and Michel Camdessus, the former governor of the Bank of France who is managing director of the IMF.

Mr. Gore began working with Mr. Chernomyrdin during his three-day visit to Moscow last December. Since then they have found it possible to cooperate on a number of issues -- a joint space station project, environmental initiatives, nuclear power safety, defense conversion, science and technology and trade and investment. Says one administration official: "Chernomyrdin might be just the right person for Russia. He comes from the industrial sector, which must be reformed."

Mr. Camdessus spent long, long hours with the Russian prime minister during his visit to Moscow in March and emerged convinced that Mr. Chernomyrdin was capable of bringing the government, the parliament and the central bank in line with IMF requirements. In defending his decision to risk concentrating so many IMF resources and so much prestige on Russia, he said "it's because we have observed Russia is doing everything possible to continue stabilization and structural reform."

With the new IMF financial transfusion in place, Russia is now in a much better position to refinance its debts with the West and to attract investments essential to its well-being. Step by step, it is integrating with the world economy. If it can achieve the kind of progress already seen in Eastern Europe and the Baltics, this will be important to its internal stability and its relations with its old Soviet partners and the rest of the world.

But the transformation will not be easy. Mr. Chernomyrdin will have to put an end to the vast public subsidies to the state industrial sector from which he came. He will have to stop the central bank from printing money, curtail chronic budget deficits, fight inflation, battle protectionism and accept the political heat of massive job dislocation.

Such austerity seemed unlikely last January when the most fervent reformers in the Moscow regime lost their jobs and the prime minister was seen as a force for regression. But since then, his policies have raised hopes there will be no return to the old Communist command economy. He is the successor of choice as power ebbs from Mr. Yeltsin.

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