Lifeline for Russia

President Boris Yeltsin has appealed to the patriotism and good sense of Russia’s parliamentarians to gain their support for more than a score of proposals to reform a scandalously inefficient tax system, slash the government deficit and arrest a growing financial crisis. Failure of the Communist-dominated Duma to give Yeltsin what he seeks could imperil the extraordinary international loan package agreed to this week under strong urging from the United States.

The International Monetary Fund, the World Bank and the government of Japan are prepared to extend $17.1 billion in new loans to Russia over the next two years, bringing to $22.6 billion the bailout commitments made to Moscow. But the new rescue package will reduce the IMF’s reserves to about $13 billion. That makes it urgent for the U.S. Senate to act promptly on President Clinton’s request for a new $18-billion line of credit for the IMF, the organization dedicated to monetary cooperation and currency stabilization that Washington was instrumental in founding more than 50 years ago.

Word of the agreement with the international lenders gave a big boost to Russia’s shaken financial markets. Stocks, which had lost more than half their value this year, rallied and the government’s borrowing costs fell to about half their level of recent days. But long-term market confidence depends very much on achieving stabilization and implementing fiscal reform. The loans that have been offered Moscow are contingent on progress in these areas.

A key need is to prevent devaluation of the ruble, which would set off a fresh round of inflation, propel millions more Russians into poverty and almost certainly ignite a new political crisis. Yeltsin has already spoken ominously of a possible coup by “extremists” if matters deteriorate further. Any hint that Russia faced a period of prolonged political uncertainty would drive away investors and deepen a dangerous condition in which Russia might not be the only victim.

Conversely, a commitment to reform by the Duma should raise foreign investors’ confidence, strengthen the Russian ruble and give the government a chance to restructure its enormously costly debt. What the international lenders ask is, in fact, what Russia in its own interests should have begun doing long ago. That is the message Yeltsin preached to his parliamentary opponents over tea and cookies in the Kremlin. Whether there will now be unaccustomed political unity could shape Russia’s destiny for some time to come.