Nations Urged to Keep Tight Reins on Russia Aid : Rescue: Close supervision can prevent squandering of $24-billion plan to bolster market economy, EC official says.

The director of the European Community’s $2.5-billion package of aid projects in Russia said Thursday that the United States and other industrialized nations pledging $24 billion to help Russia can, by careful planning and supervision, prevent the squandering of the funds.

Michael Emerson, the EC’s ambassador here, said there has been only negligible misuse of funds provided under the humanitarian and technical assistance projects that he oversees. If the United States and its partners closely monitor their economic assistance projects, as the EC has done, they need not fear that their assistance will be wasted or have a limited effect, he added.

Washington and its major diplomatic partners announced plans Wednesday to allocate $24 billion to help Russia make the transition to a market-based economy. The United States will contribute $5 billion of this, plus $1.6 billion to help other republics of the former Soviet Union.

The package envisages debt deferrals, loans for buying American grain, grants for buying food and medicine and a fund to stabilize the Russian currency.

The prestigious Nezavisimaya Gazeta newspaper assessed the announcement as a clear sign of Western approval for Yeltsin’s policies and a “sensational success for the Russian government.”

The ultimate effect of the plan, however, will depend on how it is implemented.

“It can be done correctly--if one applies oneself to its organization,” Emerson said.

The European Community is halfway through a $250-million project to help feed Russia. Since December, it has distributed 75,000 tons of meat, milk and butter to Moscow and St. Petersburg, and only a couple of tons have been misappropriated, Emerson said.

The largest incident of theft, he said, was when a ton of frozen beef disappeared from a dock in St. Petersburg, where it was being unloaded.

The key to success, he said, is that the EC’s own employees watch deliveries of food, monitor warehouses where the goods are stored and frequently visit stores where the products are on sale. (The EC sells its food and gives the proceeds to city governments to supplement pensions and assist single parents, handicapped children and families with several children.)

“The word seems to have gotten around that this operation is being quite carefully monitored,” Emerson said.

The EC’s experience has also shown that careful management can ensure that technical assistance is allocated to projects with good chances of success, Emerson said.

But organizers must painstakingly screen applications, carefully check the credentials of their potential partners and have a lot of patience, he said.

“You have got to be prepared to say ‘no’ to badly prepared programs,” he added.

Emerson also said that he feels the Russian government can be trusted to use wisely the $6 billion the United States and its partners have pledged to help stabilize the ruble, Russia’s currency.

“As regards to the bigger stuff, the stabilization funds, the prerequisite is that (the Russian government’s) macro-policies be introduced at the same time,” he said.

Emerson said the Russian government’s strategy for reforming the economy appears to coincide with the “reasonably well-established” guidelines for economic development worked out by the International Monetary Fund.

“The basic policy design is in pretty good shape,” he said. “The questions are not about the conception but the execution and timing--and coordination with the support from the West.”