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Chernomyrdin Joins The G-7 Summit

Lyon, France, June 28 (RFE/RL) -- Russian Prime Minister Viktor Chernomyrdin joins the leaders of the G-7 group of major industrial democracies in Lyon, France today, determined to build on Moscow's relations with the richest nations and expand Russia's integration into the global economy.

Chernomyrdin is substituting for President Boris Yeltsin, but he is no stand-in at this meeting of the leadership of the U.S., Germany, Japan, France, Great Britain, Italy and Canada.

Through a series of bilateral committees with almost all of the G-7 nations, Chernomyrdin has been working closely with each to strengthen trade, economic, defense and political ties.

Chernomyrdin will join the seven heads of state formally for two hours of face-to-face discussions, followed by a formal working dinner.

The terrorist bombing in Saudia Arabia pushed international terrorism to the front of the summit agenda, and while the other seven want to take up the subject with Chernomyrdin and get Russia's input and participation in any joint undertakings, the western leaders also want to concentrate on Moscow's economic situation.

First, of course, the western leaders want to receive assurances from Chernomyrdin that, despite some rash campaign promises by Yeltsin, the government will stick to its committments of continued financial stabilization and advancement on institutional reforms.

At the same time, Chernomyrdin expects to tell the western seven that no matter who wins next week's run-off presidential election, Moscow faces continued difficult times ahead.

He's sure to bring up the comments of Economy Minister Yevgeny Yasin earlier this week that Russia's economy is continuing to contract and that he is concerned that the stabilization Russia has achieved so far is not bringing economic revival.

Yasin said Russian statistics show that gross domestic product (GDP), a basic measure of the economy, contracted by three percent in May, and that industrial production had fallen by four percent.

World Bank, International Monetary Fund (IMF) and other western experts are beginning to dispute those figures, however. For example, the IMF says that instead of contracting, real GDP in Russia had actually grown by one percent. It's a very small improvement after drops of over 20 percent since the start of 1994, officials acknowledge, but say it indicates the Russian economy is beginning to move in the right direction.

Similarly, while Moscow claims industrial output has fallen by four percent this year, the World Bank and others say privately that the Russian figures give far too much weight to the old, faltering state enterprises, while ignoring the burgeoning private hidden economy. They say that when the hidden economy is factored in, the decline in output is cut nearly in half, and improving every month instead of declining.

Still, Russia has a number of serious economic problems, and Chernomyrdin knows that while the G-7 summit is not a meeting of the so-called Paris Club of official creditors, the other seven are leading members and it cannot hurt to reiterate Russia's needs. Moscow won a rescheduling of its 38,000 million dollars in foreign debt in the spring, may need further understanding in future.

On the other side of the ledger, Moscow is seeking to become a member of the Club itself so that it can get support for dealing with the estimated 140,000 million dollars it is owed by others.

Russia has had to assume all of the ex-USSR's debts, but so far has been unable to collect much of the money owed to it. Moscow would also like to become a full member of the G-7, but the U.S. and others have said Russia is not yet ready. A spokesman for Japanese Prime Minister Ryutaro Hashimoto only yesterday said Russia is not integrated into the world economy, so wouldn't yet fit in a group focusing on coordinating economic interactions. He suggested Russia should first become a member of the World Trade Organization (WTO) "at an appropriate time."