Meeting less than a week after new political turmoil erupted in Moscow, the finance ministers of the leading industrial democracies renewed their commitment Saturday to help bail Russia out of its economic morass. But they offered no new funding for Boris N. Yeltsin’s government nor an acceleration of their already pledged multibillion-dollar assistance.
In a written statement issued after the session, at which they were joined by Russian Finance Minister Boris G. Fyodorov, the Group of Seven said the ministers had “expressed their very strong hope that the latest developments will help Russia achieve a decisive breakthrough onto the path of market reform.”
And, they said, Fyodorov had “underscored the unwavering commitment of President Yeltsin’s government to pursue the path of democracy and market reform.”
In addition to pressing for renewed Russian aid, the Group of Seven finance ministers agreed that stability in the Middle East, in the wake of the accord reached by Israel and the Palestine Liberation Organization, demands a quick infusion of resources to the region, Treasury Secretary Lloyd Bentsen said.
The Group of Seven, made up of Britain, Canada, France, Germany, Italy, Japan and the United States, has spearheaded the international effort to provide funding for Russia’s agonized transformation to a capitalist economy.
When they met in Tokyo last April, the seven put together a package for Russia valued at $28 billion to $43 billion. It included World Bank loans, assistance from the International Monetary Fund to help rein in Russian inflation, funding to help stabilize the Russian ruble, loans and credits to help private agriculture and energy production, and a rescheduling of Russia’s staggering foreign debt.
Bentsen said Fyodorov reported that a new cooperation is emerging in Moscow between Yeltsin and the Russian central bank, which has been a thorn in Yeltsin’s side. In addition, the fact that Yegor T. Gaidar, one of the architects of free-market activities, had rejoined the government clearly pleased Bentsen and his colleagues.
Another senior Treasury official, speaking on condition of anonymity, said Fyodorov “indicated there are a number of steps” under way in Russia, including scaling back grain subsidies and certain income tax measures, that will help Yeltsin make economic progress.
The new political turmoil last week began when Yeltsin dismissed the Congress of People’s Deputies. Opposition leaders in the Parliament, led by Vice President Alexander V. Rutskoi, whom the rebellious Parliament declared “acting president,” pronounced Yeltsin’s action invalid.
But the dissidents appeared increasingly isolated as key ministries, the military and other elements of government stood behind Yeltsin, who scheduled parliamentary elections for December.
The senior Treasury official said that although the IMF assistance is stalled by delays in establishing economic reform, individual nations may end up speeding up their aid. And he reported that 81% of the $1.8-billion program President Clinton presented to Yeltsin last April has been delivered.
The session Saturday preceded the annual meetings this week of the World Bank and International Monetary Fund.
The Moscow crisis gave a point of focus to the Group of Seven ministers’ meeting Saturday and, perhaps, could be a distraction to the international gathering this week in Washington.
Ivan Szabo, chairman of the International Monetary Fund’s policy-making interim committee, said Saturday that it is possible that conditions for the IMF assistance--$1.5 billion has been handed over, but another $1.5 billion has been delayed--will be eased to provide a boost to Yeltsin. Szabo is also finance minister of Hungary, one of the Eastern European nations that stand to benefit if Russia receives an infusion of Western cash with which to expand its international trade.
At the same time as representatives of international funds were giving new consideration last week to Russia’s continuing needs, the U.S. Senate approved a foreign aid bill that includes $2.5 billion in economic assistance for Russia and the other states of the former Soviet Union.
The increased attention paid by the Group of Seven to the needs of the Palestinians living in the West Bank and Gaza Strip is the direct result of the agreement signed by Israeli Prime Minister Yitzhak Rabin and Yasser Arafat, chairman of the Palestine Liberation Organization, at the White House on Sept. 13. The agreement sets a framework for peace talks and the establishment of limited Palestinian authority in the West Bank town of Jericho and in the Gaza Strip.
Israeli officials are beginning to press for international assistance for the territories, and the United States is convening a meeting of major donor nations next week to coordinate such aid.
The World Bank and International Monetary Fund meetings are taking place as finance ministers and central bank governors struggle to find ways to pull the global economy out of the dogged recession that has put 24 million people out of work in the seven nations and proved nearly resistant to the conventional medicine of lowered interest rates.