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Russia: G7 Officials Call For Economic Stabilization Policies

  • Ben Partridge

London, 15 September 1998 (RFE/RL) -- Officials of the G7 industrial countries said yesterday the international community is ready to support reforms in Russia on condition that its new government adopts economic stabilization policies.

The officials from the G7 countries -- Canada, France, Germany, Italy, Japan, the UK and US -- met in London for a day of talks on the financial crisis in Russia. The talks were called by British Prime Minister Tony Blair, whose country holds the G7 presidency, amid rising concern about the turmoil on stock markets and currency exchanges. Some fear the slide in Asia, Latin America and Russia may set off global recession.

The G7 talks come three days after Yevgeny Primakov was sworn in as Russia's new prime minister, ending a standoff between President Yeltsin and the Duma's lower house.

The London discussions brought together officials from the foreign and finance ministries of the seven major industrial nations, as well as representatives of the World Bank, IMF and EBRD.

The G7 officials met first with two senior Russian government representatives who briefed them about the political and economic events leading up to the crisis, and prospects for the future.

Senior British officials, who spoke on condition of anonymity, said the G7 officials emphasized they are looking for assurances from Moscow that the economic reform process -- despite the "very serious setbacks" -- is set to continue.

The G7 officials made clear that "the international community would continue to support reform in Russia provided that reform was moving the economy in the right direction." One British official said: "It is in our interests for reform to succeed."

The British officials noted that the outside world has a range of instruments -- including the IMF, World Bank, EBRD -- that could be used to give further support to economic transition.

The two Russians spent one-and-a-half hours with the G7 officials before leaving them to continue discussions on their own. Their talks were said to be "very open, friendly and candid."

The G7 officials stressed the need for a better social safety net to protect millions of Russians threatened by shortages of food and medicines, and the creation a proper framework for business.

The G7 officials recognized that the "process of economic transformation is a matter for Russians, but welcomed the importance they attach to dialogue over these issues."

British officials will now draft a report on Russia's economic plight, and possible ways to help, for approval by other G7 officials, before it is sent on to G7 heads of state and government. . Newspapers speculated today that Blair will call a G7 summit, to which Moscow would likely be invited, before the end of this month to discuss the Russian crisis, currency instability in Brazil, and the economic slowdown in Japan. But British officials say they "cannot at this stage say if there will be a summit."

Analysts say the timing would be awkward as U.S. President Bill Clinton is embroiled in the Lewinsky scandal at home and German Chancellor Helmut Kohl is about to go into a general election.

What happens now? G7 foreign ministers meet next week in New York in the margins of the U.N. General Assembly session. Then G7 finance ministers and central bank governors will discuss the Russian crisis in Washington on October 3, on the eve of the annual meetings of the IMF and World Bank. The British officials say there was wide agreement today about the events that caused the crisis in Russia but less so on the country's future prospects.