Just How Much Will Be Enough For The Republics?by
Call it Soviet sticker shock. When International Monetary Fund Executive Director Michel Camdessus announced on Apr. 15 that the price tag for overhauling the former Soviet Union would far exceed the Group of Seven's $24 billion aid and loan package, the timing was unwelcome for the Bush Administration. Facing a recession-wary American public in an election year, the President and Secretary of State James Baker III are scrambling to win congressional support for the U.S.'s $4.35 billion share of the plan. Now comes an IMF saying that the bill for the West could total $145 billion over four years.
The numbers being bandied about have an Alice in Wonderland quality about them. Irritated U.S. officials say a gulf is opening between Western governments and aid officials such as Camdessus and European Bank for Reconstruction & Development President Jacques Attali, who have been tapped to overhaul the former Soviet bloc. In advance of a G-7 meeting in Washington, D. C., on Apr. 26, Camdessus and company are painting a dire economic picture of the former Soviet Union in order to obtain as much funding as possible.
Camdessus is trying to persuade Western leaders to help all 15 of the former Soviet republics. Russia has received the lion's share of pledges so far. But the potential donors--the U.S., Germany, and Japan--are in no rush to pony up more. "Nobody is going to throw a lot of money at these countries right away," says a White House official.
RED HERRING. While IMF experts have recently visited Belarus, Kazakhstan, and Ukraine, so far only Russia has the sort of reform program in place that the IMF would want to pump money into. An IMF-funded program is likely to begin there this summer. Ukraine, the second-largest republic, is now preoccupied with a dangerous display of independence from Russia. While the ex-communist pols currently controlling Ukraine jockey with Moscow over ownership of the Black Sea fleet, they continue to run big budget deficits by heavily underwriting milk, bread, and other foods. "The anti-Russian campaign allows them to divert attention from problems at home," says one State Dept. official.
Even Russia faces problems in keeping to its reform commitments in the months ahead. On the plus side, Russian President Boris Yeltsin did survive a stiff challenge from conservatives in the Russian Congress of People's Deputies. But Yeltsin shows signs of the stop-and-go policies that contributed to the demise of his predecessor Mikhail Gorbachev. The Moscow government missed its first two commitments on a preliminary reform program, worked out with the IMF. It failed to free fuel prices by Apr. 20, and it didn't unify the various exchange rates for the ruble. "I don't see them willing to make the kind of commitments that the international financial organizations expect," says a Western banker.
All this uncertainty gives Western leaders plenty of excuses to delay putting up anything beyond the initial $24 billion--which contained only $4.5 billion in new money. Although the Japanese are considering offering aid to the Asian republics, they are preoccupied with their own bank-capital crisis. The Germans say they are waiting for more detailed reform programs. And while the Russian Republic's clout will probably continue to win it substantial aid, the other republics may wind up with just some crumbs.