RUSSIA SEEKS DEBT-FOR-EQUITY SWAP.

The presidium of the CIS Interstate Economic Committee (IEC) held a special session yesterday in Moscow at the deputy prime minister level. The meeting participants discussed energy supplies to member states for the current winter. In a message to the session, Russian prime minister Viktor Chernomyrdin said that the aggregate arrears of CIS member countries to Russia for energy resources now exceeds 15 trillion rubles. Chernomyrdin called for settling the debts mainly by converting them into Russian equity in fuel and power enterprises in CIS countries. He complained that the governments of certain member countries are blocking this type of debt settlement, even in cases where enterprise directors are willing to cede their assets to Russia.

Russian Deputy Prime Minister Aleksei Bolshakov and the permanent representative to the IEC, Aleksandr Smirnov, announced that Russia’s 1996 budget set aside only 200 billion rubles for crediting CIS countries. This sum is far less than that of previous years and is intended only for financing purchases of Russian processed goods, not raw materials or fuels. Russia’s calls for more effective debt collection reportedly found favor only with Turkmenistan, a deeply impoverished country that has nevertheless become an unwilling creditor to CIS countries which import Turkmen gas. (14)

Despite its leverage, Moscow has thus far been unable to use CIS bodies for imposing effective settlement on its own terms. Debt-for-equity swaps of the kind Russia proposed could pave the way toward Russian control of the economies of CIS member countries. Although Russian oil and gas exports, which represent the lion’s share of Russian energy exports to CIS countries, have been declining in the last few years due to the latters’ industrial recession and conservation measures, their dollar-denominated value has risen due to price increases.

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