U.S. will sell, give food to Russia this winter $625 million worth of foodstuffs going

Agriculture

November 07, 1998|By Will Englund | Will Englund,SUN FOREIGN STAFF

MOSCOW -- The United States agreed yesterday to supply Russia with $625 million worth of wheat and other foodstuffs this winter. About half will be donated, and half sold on long-term credit.

The agreement came after a week of negotiations, which began amid a considerable amount of skepticism.

Questions that both Washington and Moscow had to address included these: Does Russia actually need food aid? Is there a way to prevent its being siphoned off by corrupt officials? Does this do any good for anyone besides American farmers?

Answering yes to all of them, negotiators worked out a deal under which proceeds from the sale of commodities here will go to pension funds and other social programs.

Russia agreed to pay back the debt over 20 years, at 2 percent interest.

On a relatively minor scale, then, the United States is once more lending money to Moscow, which has been unable to obtain any credit since defaulting Aug. 17.

Christopher Goldthwaite, general sales manager for the U.S. Department of Agriculture, said last night that assessments by both the American and Russian governments had concluded that Russia does in fact require food aid.

Earlier, the government here had said there was enough grain in reserve from last year to cover the 1998 deficit.

But it is unevenly distributed and subject to restrictions by local governments. American grain, Goldthwaite said, should be targeted on the hardest-hit regions -- the north, the far east, and the larger metropolitan areas.

Americans will be stationed in Russia to monitor the distribution of the food, he said. Russia has agreed to spot checks and will provide information about the food's distribution as a safeguard against abuses.

Much of the food aid provided by the United States in the early 1990s was stolen and sold on the commercial market; Russians complain, moreover, that it came in such a volume that it overwhelmed local producers, driving many out of business.

A possible sticking point remains: Over the next 10 days, Moscow will be nominating local organizations to handle the distribution, and the Americans must agree to the list.

All told, 1.5 million metric tons of wheat will be donated, of which one-third will be distributed free and two-thirds sold by the Russian government. An equal amount of other commodities, including beef, corn and other feed grains, pork and rice, will be sold on credit by the United States. Finally, 100,000 tons of various consumer food items will be donated directly to private organizations for distribution among the needy.

The United States will pay the $260 million freight charges, but won a concession from the Russian negotiators, led by Deputy Prime Minister Gennady Kulik -- the food imports will not be subject to taxes.

The package does not include any poultry. Goldthwaite said the U.S. government is looking at ways to support commercial sales of poultry and other items here.

Pub Date: 11/07/98

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