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Western Press Review: IMF Braces Russian Economy -- Maybe

  • Don Hill



Prague, 22 July 1998 (RFE/RL) -- The message from Russia to the IMF was simple: To keep Russia green, not red, send money. Now that the IMF has decided to comply, Western press commentators are expressing second thoughts.

NEW YORK TIMES: It is far from clear whether the Kremlin can carry out the reforms

The IMF is taking a gamble, The New York Times says today in an editorial. The paper says: "The collapse of the Russian economy is an unnerving prospect, so it was prudent of the International Monetary Fund to release $4.8 billion from its new $11.2 billion dollar Russian bailout package. But it is far from clear that the Kremlin can carry out the reforms needed to make the Russian economy more stable."

The newspaper says: "President Yeltsin has imposed by decree some parts of the tax package that did not win parliamentary approval. That is an encouraging sign of his determination to make the needed changes, but governance by decree is undemocratic and ultimately self-defeating."

There's at least one other danger in the IMF gamble, the editorial notes. It says: "The risk is that the cost of the dollar borrowing will soar if the government is eventually forced to devalue the ruble. It may be a necessary gamble, but it is also one that could backfire. (The IMF) is gambling in another way. With its latest commitment to Russia, its own lending reserves are dangerously low if another crisis develops suddenly."

DIE WELT: The gravity of the current situation forced the Duma to co-operate

Commentator Manfred Quiring writes today in the German newspaper, Die Welt that the West may be throwing good money after bad. He writes: "One could almost sense the sigh of relief from the current Russian leadership as it received the green light from the directors of the International Monetary Fund (IMF) for a credit package of $11.2 billion. All those involved hope this new cash boost will give Russia time to breath and to stabilize its capital and currency markets."

He says: "When one looks back a few months on the Duma's confrontational reaction to the nomination of Sergey Kiriyenko, it behaved fairly over the IMF credit demands." And adds: "It is quite certain that the gravity of the current situation forced the Duma to co-operate. It would not, however, be surprising if a number of personnel changes are already being argued out behind the scenes."

The writer says: "You do not have to be a pessimist to recognize that Russia's current crisis is being kept alive by its debts. As Russian politicians frantically try to purvey the impression of optimism, they are receiving unexpected criticism from the IMF."

LOS ANGELES TIMES: The West has harmed Russia by ponying up

Peter Reddaway is a professor of political science at George Washington University. Dmitri Glinski is a research scholar there. They are co-authors of the book, Yeltsinism: The Tragedy of Russia's Reforms, due out in 1999. They write today in a commentary published by the Los Angeles Times that bailing Russia out only exacerbates the problem.

The authors say: "For the sixth time in six years, the West has agreed to prop up the Kremlin with thousands of millions of dollars. Each time, it would have been wiser to refuse. That would have helped Russia by strengthening the government's incentive to combat corruption and focus on real, not phony economic reform. But each time t. The Kremlin thus has been able to go on feeding the country's crony capitalism and neglecting the rule of law. Each year, the amount of money lent by the International Monetary Fund has been larger than the year before. Each year, bad things have followed the loans, in politics as well as economics."

The writers ask: "Why do we believe the new loan package will postpone a far bigger crisis only for a matter of months?" And answer: "Because the crisis is ultimately more political than economic. The Kremlin is locked into patterns of behavior it cannot change."

The authors raise a final question: "What would have happened if the West had denied Yeltsin his new loans?" And answer: "The West would have saved the money and not fed Russian corruption. It would have shown its loss of confidence in Yeltsin, thus pleasing ordinary Russians and helping their rulers to sober up and take full responsibility for their rule. (Also) Groups of oligarchs, parliamentarians and organized labor would have put mounting pressure on Yeltsin to resign and perhaps succeeded. If so, three months later the voters would have elected a new president, who would have appointed a new prime minister, who would have had new ideas for reforms. Finally, the rising tensions and even hostility between Westerners and many Russians would have been somewhat mitigated. By not encouraging this course, the West has probably erred."

NEW YORK TIMES: The IMF reflected some of the skepticism

From Moscow, New York Times correspondent Michael Wines writes in a news analysis that financial analysts there consider the Russian government's early actions to be significant, "but some of them noted that Russia had promised similar reforms before and failed to deliver." He continued: "The experts wondered why the new set of promises should be different."

Wines writes: "Even Deputy Finance Minister Mikhail Kasynov said Tuesday that Russia basically had until year's end to install real reforms. The IMF reflected some of the skepticism Monday, when it decided to extend an initial $4.8 billion in loans instead of the $5.6 billion that had been tentatively agreed on. The fund's action, part of a loan package totaling $11.2 billion, was widely viewed as a warning signal to the Russian Parliament that it had to put its stamp on fiscal changes or see the international money pipeline dry up."
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