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Russia: Delegation On The Defensive In U.S.

  • Robert Lyle

With Italian prosectors saying they have found links between Russian organized crime gangs and the movement of some huge amounts of money through bank accounts in New York discovered recently, Russian financial officials felt on the defensive as they met with World Bank and International Monetary Fund officials in Washington. RFE/RL's Robert Lyle reports.

Washington, 29 September 1999 (RFE/RL) - Russian First Deputy Prime Minister Viktor Khristenko and Central Bank governor Viktor Gerashchenko led a senior level delegation to three days of intensive discussions with IMF and World Bank leaders ahead of Tuesday's formal opening of the IMF/World Bank annual meetings.

After the G-7 group of major industrial nation's finance ministers on the weekend said Russia would need to meet some additional reform requirements before any further disbursement of IMF loans, Gerashchenko responded that Russia was being treated unfairly.

In fact, however, as U.S. Treasury Secretary Larry Summers explained, the demands for implementing certain reforms and safeguards on the Russian loan were not new. They had already been made conditions by the IMF when it approved the latest $4.5 Billion loan program this summer.

Still, Russian officials said their discussions with IMF officials had been difficult, although they remained hopeful the next drawing of the loan would be made available by the end of October.

All of the loan disbursements are being kept within the IMF to repay previous Russian loans as they become due.

Khristenko, who led the delegation, flew home to Moscow Sunday night, as did several other senior officials. Gerashchenko remained in Washington, but cancelled his scheduled address before the annual meetings.

Sources on the Russian delegation said the cancellation was for technical reasons only and that the text of his speech would be released at some time. RFE/RL obtained a copy of the draft speech -- in the Russian language -- which did not appear to contain any direct references to the controversies.

The speech said those who had fears about Russia after the 1998 crisis had been proved overly concerned and that time has proven the decision to devalue the ruble was the right thing to have done.

The speech, originally written for Khristenko, went on to say that Russia will achieve its budgetary targets this year and that it will successfully fulfill the current IMF loan program.

IMF Managing Director Michel Camdessus strongly defended the fund's work with Russia, saying that the loan program is "on track" and that Moscow will advance in both structural reforms and improving its governance:

"Amidst all the recent controversy, we should not lose sight of the real progress that has been achieved during seven years of endless efforts to assist Russia in its journey toward a market economy. Nor should we ignore the fundamental decision, on which Russia has not wavered, to seek to develop a modern market economy and integrate itself into the international community."

Camdessus used his opening speech to the meetings to say that the fund could not, in good conscience, simply cut Russia off:

"It would be the height of irresponsibility to turn our backs on this great nation. We will not do that."

Part of that continued work with Russia, IMF officials emphasize, is the program of stepped up audits and more frequent monitoring of central bank handling of funds. So far, the IMF says, there has been no evidence that any of its loans were misappropriated, although investigations, in cooperation with U.S., Swiss and British authorities are continuing.