Publication: Monitor Volume: 3 Issue: 122

Suggestions that Russia would receive an economic payoff at this year’s Group of Seven (G-7) summit in return for acquiescence to NATO’s enlargement proved groundless. The Russian side came away with words of praise from its fellow-summiteers, but little in the way of concrete concessions. There was apparently no progress on the crucial question of Russian entry into the World Trade Organization: the other countries again refused to reclassify Russia as a "market economy."

The group’s seven leaders did seem to accept Yeltsin’s assurance that "Our life is becoming ever brighter and more colorful." A G-7 statement, issued on 21 June after the finance ministers’ meeting, effused that "Our governments welcome the new round of Russian economic reform launched this year to promote sustainable growth." Yeltsin himself was excluded from the June 21 leaders’ meeting devoted to financial issues, during which time he addressed a group of U.S. businessmen in the unlikely setting of the Denver Museum of Natural history. (Russian news agencies, June 22)

At the conclusion of the three-day meeting, Deputy Presidential Chief of Staff and former Russian finance minister Aleksandr Livshits said that Russia had "won the maximum it set out to achieve at the summit… [and] perhaps a bit more." But there seemed little reason for such enthusiasm. The only two concrete results which First Deputy Prime Minister Anatoly Chubais was able to present to Russian television viewers were Russia’s accession to the Paris Club as a creditor and the successful placement of $2 billion of Eurobonds on the world financial markets. (NTV, June 22) The Eurobond placement had no direct connection to the Denver summit, and the fact that the money will be used to pay off pension and wage arrears, rather than investing in capital projects, means that the loan is an achievement of dubious economic merit, and merely serves to buy the government a few more months.

Entry into the Paris Club as a creditor, something which Yeltsin had requested at the Helsinki summit in March, will increase Russia’s chances of recovering some of the $150 billion the country is owed by third world debtors. The list of debtors is led by Cuba, which holds 18 percent of the debt, followed by Mongolia and Vietnam (11 percent each), India (9 percent) and Syria (8 percent). (RIA Novosti, May 24) One of the conditions of Russia’s accession to the Paris Club is agreement to write off from 25-75 percent of the nominal value of the debt it is owed. This will no doubt attract criticism from Chubais’s Communist opponents. However, the current price of the debt on secondary markets is from 4 to 15 percent of the nominal value, so the write-off is a logical move. Even so, the chances of Russia getting any money back, except possibly from India, are slim to zero – even with the help of the Paris Club. But the Russian delegation had to be given something to bring back from its pilgrimage to the Mile High City.

Another Yeltsin Missile Pledge Misfires?