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Russia: Analysis From Washington -- Undoing An Old deal?

  • Paul Goble



Washington, 21 July 200 (RFE/RL) -- The Russian government's drive to get foreign governments to write off a portion of its Soviet-era debt appears likely to exacerbate Moscow's relations with the West and perhaps even more with the former Soviet republics.

Writing in London's Financial Times on Thursday, Russian Prime Minister Mikhail Kasyanov urged the Paris club of Western government lenders to forgive more than a third of Moscow's $42 billion in Soviet-era debts. He said such debt forgiveness was needed to guarantee the success of his goverenment's new economic program.

That argument has not yet impressed most Western governments, including those which have been sympathetic to rescheduling some or all of these obligations.

German Chancellor Gerhard Shroeder, for example, said this week that Berlin is not prepared to write off any of the debt. The Canadian government has been equally adamant. And U.S. lawmakers have rejected the idea noting that Moscow is pursuing an expensive military campaign in Chechnya and sending aid to Yugoslavia's Slobodan Milosevic rather than meeting its financial responsibilities.

On the one hand, Western officials point out that Moscow currently is enjoying unprecedented earnings from the export of high-priced oil and gas and therefore should be able to pay. And on the other, they argue that Moscow must meet these obligations as a precondition to its integration into the international community.

But whatever negative consequences Moscow's effort may have for that country's ties with the major powers -- and these may be on public view at the G-7 plus Russia sessions on Okinawa this week -- its most serious impact may be on the relations between Moscow and the former Soviet republics.

That is because the Russian Federation assumed total responsibility for the Soviet-era debt in exchange for agreements by the other post-Soviet states to drop claims to Soviet diplomatic and other property abroad. Indeed, that exchange was an important aspect of arrangements which allowed the Russian Federation to be legally recognized as the successor state to the USSR.

Having in almost all cases given up such claims, the non-Russian countries often found themselves without the funds to lease or purchase their own diplomatic missions even as Russian Federation diplomats continued to occupy Soviet embassies and consulates around the world.

A few of these countries nonetheless have raised certain limited claims. Ukraine has continued to seek talks with Moscow about 36 parcels of land abroad, but the Russian government has been willing to discuss only ten. And politicians in all three formerly occupied Baltic states have argued that Russia should as the officially designated successor state assume responsibility for the damages the Soviet government inflicted on them.

Moscow's efforts to secure additional debt forgiveness from the West seem certain to cause more people there to consider making claims against Moscow. Moreover, Russia's efforts to avoid paying on the obligations it had accepted are likely to lead many to question Moscow's reliability as a partner on other issues as well.

At the same time, these countries will be following closely the response of the Western creditor nations to Russia's request. If the Western governments involved insist that Moscow pay its obligations, governments there will likely see such actions as an indication that the West wants to treat everyone equally. That will give them new confidence that these states will support their rights as well.

But if Western governments should accede to Russian requests for debt relief, at least some non-Russian regimes are likely to conclude that the West is prepared to defer to Moscow's interests at the expense of those countries located around Russia's borders.

And should the governments of these countries reach that conclusion, they almost certainly would strike a less cooperative posture toward Russia and toward the West as well.
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