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Russia: Top-Level IMF Talks Resuming In Moscow

Moscow, 26 March 1999 (RFE/RL) -- International Monetary Fund (IMF) Managing Director Michel Camdessus will arrive in Moscow over the weekend to hold talks with Russian Prime Minister Yevgeny Primakov that are critical to Russia's economy.

Primakov's spokeswoman, Tatyana Aristarkhova, said yesterday that Camdessus will arrive tomorrow and remain in Moscow until Monday. The IMF's Moscow office today confirmed these dates to RFE/RL.

Rumors about Camdessus' imminent arrival had circulated in Moscow since Wednesday (March 24) night. Official confirmation that he would indeed travel to Moscow came as Russia, which had initially reacted with fury to the start of NATO air strikes on Yugoslavia, made timid attempts yesterday to tone down its rhetoric. But protesters shouting "fascists" nonetheless pelted the U.S. embassy in Moscow with ink, smashed some of its windows and burned the American flag.

Also yesterday, President Boris Yeltsin said his country has what he called "a number of extreme measures in store" to counter NATO's bombing of Yugoslavia. But speaking on Russian television after meeting top ministers in the Kremlin, Yeltsin added that the government had "for the moment decided not to use them..." Yeltsin also said that, "morally, we are above America."

Foreign Minister Igor Ivanov stipulated, however, that "there is no question of using force in response to force." In the same mode, Primakov told a government meeting yesterday that Russia would not allow its indignation over the strikes to alter its economic policy and seriously damage its economic relations with Western countries.

The fate of the IMF talks -- and of the IMF loans that Russia urgently needs, in order to avoid defaulting on its huge foreign debt -- was put in question earlier this week. In mid-flight over the Atlantic, Primakov abruptly canceled a visit to the U. S. after Vice President Al Gore told him that NATO air strikes against Serbia were unavoidable.

Primakov's decision to turn his plane around was widely praised across Russia's political spectrum. As he landed in Moscow, the Prime Minister said that Russia "is not trading its principles" for economic reasons.

The Russian government has been in protracted, difficult talks with the IMF for months over the refinancing of some $4.8 billion it is due to pay back to the Fund. Analysts say that Russia has so far failed to come up with any convincing program to revive its economy that could persuade the Fund to refinance.

According to most analysts, given Russia's economic weakness, an agreement with the IMF would have to reflect largely political concerns. But after Russia described the NATO strikes as an "aggression" and froze its relations with the Alliance, observers now say that the worsening of relations between Russia and NATO might mean that an agreement with the IMF was getting out of Russia's reach.

Some liberal-minded Russian politicians and analysts do not rule out that, in aborting the Washington visit, Primakov was pursuing goals other than simply expressing Russia's outrage at NATO's decision. Yabloko party leader Grigory Yavlinsky called Primakov's decision an old-fashioned Cold War-style move, and said Primakov knew before his departure that NATO was about to act militarily in Yugoslavia.

Aleksei Ulyukaev, deputy director of the Moscow Institute of the Economy in Transition headed by economist Yegor Gaidar, said in an article published by the daily Segodnya that Primakov's moves could be considered what he called a "bluff." According to Ulyukaev, Primakov knew that the impasse in the IMF talks was greater than expected, and that it was highly unlikely the two sides could reach an accord in Washington. The daily Kommersant wrote that, just before the prime minister's trip, Russia's internal political situation was such that a failure in Washington could have spelled the end of Primakov's government. In the paper's words: "If Primakov came back from Washington with empty hands --without an IMF loan or at least the sure promise of its release-- Boris Yeltsin would have soon fired him."

Still, none of this has changed Russia's basic economic situation. The daily Vremya-MN wrote that "the assault on the IMF does not mean that a coherent economic program has appeared."

But the absence of a coherent economic program does not seem to concern First Deputy Prime Minister Yuri Maslyukov, who oversees Russia's relations with the IMF. This week, Maslyukov reiterated his belief that a loan agreement between Russia and the Fund would be reached by early May. And an analyst close to Primakov, Sergei Karaganov, head of the Council for Defense and Foreign Policy, argued that Russia's outrage over Kosovo will encourage the U.S., in his phrase, "to sweeten the pill for Russia" and encourage the IMF to conclude an agreement.

Does this suggest that Russia is, in effect, holding the IMF hostage to the Kosovo crisis? Eric Kraus, an analyst with Dresdner Bank in Moscow, told RFE/RL that such a formulation would, in his words, "oversimplify the situation." According to Kraus, "it is unlikely that Camdessus would come to Moscow, if he felt that an agreement was completely unrealizable."

But, Kraus added, there is one factor that could make it impossible to reach any agreement with the IMF. That would be Russia's supplying arms to Yugoslavia. If this occurred, Kraus said, "chances [of an accord] would be nil."

Russian government officials yesterday appeared evasive about the possibility of Russia breaking the United Nations' embargo on arms to Yugoslavia. Foreign minister Ivanov said that "we will not brandish weapons, but we aren't going to sit with our arms folded." Hard-line lawmakers called for immediate supplies of arms to Yugoslavia. Interior Minister Sergei Stepashin suggested that Moscow may provide weapons, but also stressed that Russia must maintain good relations with Europe.

Primakov himself said in an interview with NTV commercial television last night that "nothing could not be ruled out."