For years, U.S. President Bill Clinton's political opponents have been accusing him of being economically indulgent with Russia, especially considering the rampant corruption there. Now Clinton looks as though he may be getting stern with Moscow. RFE/RL's Andrew F. Tully reports on Clinton's decision to withhold loan guarantees for a Russian oil company.
Washington, 23 December 1999 (RFE/RL)) -- The administration of U.S. President Bill Clinton appears to be giving in to pressure from its critics to treat Russia more harshly.
On Tuesday, Secretary of State Madeleine Albright refused to allow the U.S. Export-Import Bank, known as the Ex-Im Bank, to approve loan guarantees worth nearly $500 million for goods and services to be bought by the Russian oil company Tyumen, also known as TNK.
The department said it was invoking a little-used law that allows it to veto Ex-Im Bank transactions to protect the U.S. national interest. It noted that Western oil companies, most prominently the British-U.S. concern BP Amoco, complained that Tyumen had cheated them in buying a rich Siberian oil field at a highly discounted price.
On Wednesday, however, BP Amoco and Tyumen struck a deal in Moscow under which BP Amoco withdrew its objections to the loan guarantees. But State Department spokesman James Foley said the Clinton administration is not yet satisfied.
"We believe that the announced agreement between BP Amoco and TNK could be a good sign regarding shareholder and creditor rights, but that needs to be examined, it needs to be looked into. And I would point out to you that there are other shareholders and creditors involved, and we believe it remains appropriate that the loan guarantees not proceed at this time."
The Ex-Im Bank was ready to guarantee the loans, which would have allowed Tyumen to buy equipment and services from two American companies to develop the Chernogorneft oil field. The Ex-Im Bank said it was confident that Tyumen would be able to pay back the loans.
The State Department's objection was that it did not want to grant the benefit to the Russian oil company until it was satisfied that Tyumen was conducting business ethically.
The Ex-Im Bank was created 65 years ago to provide funding and other financial assistance to promote U.S. exports. The bank guarantees the repayment of loans and sometimes makes direct loans to foreign buyers of American goods and services.
Therefore, the direct beneficiary of any loan guarantees involving Tyumen was not the Russian company but the Halliburton Company and ABB Lummus Global, American concerns that would sell equipment and services to Tyumen.
But Tyumen and other Russian companies needing U.S. investors ultimately would be hurt if the delay of the Tyumen loan guarantees were to create an atmosphere discouraging further investment by American entrepreneurs.
Denying the loan guarantees was the first overt act by the Clinton administration against Russian business. For years, the president's opponents have complained that he has given economic assistance and encouragement to Moscow with little to show in return. They also have accused him of ignoring rampant corruption in Russia.
Even American political leaders who ordinarily support Clinton have demanded that he act against Russia in the Tyumen case.
Until now, the Clinton administration has defended its policy of "engagement" with Russia and urged its critics not to be impatient with a country emerging from seven decades of communist rule.
Then there is also the issue of Chechnya.
On Tuesday, both the White House and the State Department were emphatic when they said Russia's military campaign in the breakaway republic did not prompt its decision to withhold the loan guarantees.
And while the U.S. has been less vocally critical of the fighting in Chechnya than its European allies have been, some analysts say Chechnya cannot be ignored as an element in Clinton's decision on the Ex-Im Bank guarantees. Already, the Russian media have linked Tyumen with Chechnya.
James Lindsay is a senior fellow on foreign policy at the Brookings Institution, a Washington think tank. He told our correspondent that Chechnya cannot be excluded from any equation today involving Russia and the United States.
"You can't make a decision about taking this rather unusual step vis a vis the Ex-Im Bank without considering the broader tapestry within which the decision is embedded. I'm sure that there are arguments for doing this based solely on the merits of the case at hand, but it was taking place in the broader concern over Chechnya."
Indeed, Lindsay says the sudden Western press interest in the Tuymen case is generated by demands in some quarters that Russia be punished for the Chechnya campaign.
"The fact is that Chechnya is happening, and everything in U.S.-Russian relations is being seen through that prism. And clearly -- let me put it this way: If Chechnya didn't exist and this decision had been made, nobody in the media would have covered it."
The Western media are covering it now, however. And Tyumen has begun to reach an accommodation with its former business rivals. If the Clinton administration continues to withhold the loan guarantees, suspicion may grow that Chechnya is driving the economic relationship between Washington and Moscow.