Russia Needs $20 Billion in ‘92, U.S. Adviser Says : Foreign aid: It deserves the huge sum for ending communism with bold steps, economist asserts.

Russia will need as much as $20 billion in foreign assistance this year alone to support its efforts to transform the disintegrating, centrally planned, state-owned economy inherited from the Soviet Union, the government’s leading Western adviser said Wednesday.

Jeffrey Sachs, a Harvard University economist who helped design Moscow’s economic strategy, argued that Russia deserves such massive Western support for ending decades of socialism with bold steps--such as this month’s huge increases in consumer prices--that he praised as already showing results.

Seeking to rally Western donors before next week’s meeting in Washington on aid to Russia and the other former Soviet republics, Sachs contended, in effect, that Russian Federation President Boris N. Yeltsin’s government is honoring its half of an implied bargain to develop a democratic society and free-market economy.

“The West should have empathy and not just preach, but send money,” Sachs told a press conference. “This is a pivotal moment for this country.”

Sachs estimated that Russia, home to about half of the old Soviet Union’s 295 million people, needs about $6 billion in emergency humanitarian assistance, mostly food and medicine, about $6 billion in loans to finance its imports and $5 billion for an economic stabilization fund that will allow Moscow to make its currency convertible.

Altogether, the package would range from $15 billion to $20 billion this year, he said, and perhaps nearly as much next year and in 1994 as Russia moves from stabilizing its collapsing economic to full-scale restructuring. The West should also defer Russia’s payments on the Soviet Union’s foreign debts, estimated at $80 billion, and the interest due on them, Sachs said.

The needs of other former Soviet republics--among them, Ukraine, the Baltic states of Estonia, Latvia and Lithuania and the five Central Asian republics--could be equally large, according to other Western economists here.

“Sachs is desperate for assistance because this program could be scrapped, if popular unrest grows,” another Western adviser here said. “Discontent is growing; Yeltsin is being told some very ugly things to his face on the street; the Parliament is opposed, and Russia’s partners in the Commonwealth (of Independent States) are starting to break away. . . .

“Yeltsin needs a success, big and flashy but still very substantial, to make a go of this reform program. That’s why Sachs is out with his begging bowl. We are at a very critical juncture, politically as well as economically, and I am not sure we are going to make it.”

Plunging deep into Russian domestic politics, Sachs defended Yeltsin and his chief economic adviser, Deputy Prime Minister Yegor T. Gaidar, from mounting criticism of the program and the hardships involved. He attacked the Russian Central Bank for the soaring inflation. “It’s no use complaining to Mr. Gaidar that the ruble won’t buy anything--complain to the Central Bank that printed all those rubles,” Sachs said.

Together with the old Soviet State Bank, the Russian Central Bank had provided billions of rubles in low-interest credits last year to enterprises and to the central and republic governments themselves, Sachs said, and this had led to hyper-inflation that is now running “at an annual rate of thousands of percent. The world is waiting to see whether the Russian Central Bank will halt the expansion of the money supply. . . .

But Sachs’ defense of Yeltsin and his program seems unlikely to help Yeltsin much at home. Visiting St. Petersburg, Yeltsin encountered protest after protest from workers who complained not only about the tripling of prices for food and other essential consumer products this month but also over the failure of the measure to fill store shelves as they expected.

“I have nothing to offer as consolation,” Yeltsin told one group of angry shoppers. “The fall into the economic abyss will continue at least until this autumn, but then prices will start going down.”

“What are we going to eat?” a woman asked.

“You can slice me up, but that won’t last you for long,” Yeltsin replied with grim humor.

But Sachs contended that the economy had already begun to improve with more meat, cheese and eggs available on the market, although at higher prices, and he said that prices should stabilize in February or March, if the Russian legislature approves a balanced budget and the Central Bank restricts credits tightly.

Meantime, worker discontent is growing, with coal miners, among Yeltsin’s earliest and strongest supporters, beginning to strike. In Russia’s Far North, the Vorkuta mines are preparing to strike; and in Siberia’s Kuzbass coal field, wildcat strikes are now occurring daily. In the huge Karaganda coal field of Kazakhstan in Central Asia, 15 of 26 mines were reported closed on Wednesday.

Yeltsin also appears likely to come under sharp criticism when he addresses the Russian legislature this week. Ruslan Khasbulatov, the body’s chairman and a leading economist himself, has denounced the reform program, and other deputies are said to be preparing a full-scale attack on the government, which Yeltsin heads as prime minister as well as president.

Meanwhile, Yeltsin and other leaders of the Commonwealth of Independent States, which groups 11 former Soviet republics, scheduled a hurried summit here today, with economic reform and the division of the armed forces of the old Soviet Union believed to be the principal items on the agenda.

Russian Television reported Wednesday evening that Moscow is preparing to introduce the “Russian ruble” to replace the old Soviet ruble, leaving the larger republics holding billions in worthless rubles and leaving the smaller republics without a viable currency. “We would not introduce a Russian currency, if some of the republics were not trying to outstrip us,” Yeltsin said in St. Petersburg.