Publication: Monitor Volume: 5 Issue: 59

Some observers are speculating that the NATO bombardment of Serbia and Kosovo could, ironically, facilitate an agreement between Russian and the International Monetary Fund (IMF). The theory is that an IMF agreement would assuage Moscow’s anger over NATO’s action in the former Yugoslavia. This theory was given some indirect evidence yesterday when it was announced that IMF Managing Director Michel Camdessus, with whom Prime Minister Yevgeny Primakov was planning to meet before canceling his trip to Washington, will arrive in Moscow on March 27. In addition, Russian media today reported the comments of U.S. Treasury Secretary Robert Rubin that there was no link between the two sides’ disagreement over Kosovo and Russia’s negotiations with the IMF (Russian agencies, March 25). The Primakov government is hoping to win a pledge of US$5 billion from the IMF, which would be used to pay off Russia’s debts to the Fund.

In the meantime, “Nezavisimaya gazeta” made the opposite case today, saying the IMF might use the “complicated” international atmosphere caused by the Kosovo crisis as a pretext for not reaching an agreement with Russia. The newspaper also warned that Russia’s Central Bank is resorting to “administrative” methods to prevent the ruble from falling against the dollar and that Russia could, by May, run out of the hard currency reserves needed to both prop up the ruble and make payments on its external debt. The paper, it should be noted, is reportedly controlled by the tycoon Boris Berezovsky and has been waging something of a propaganda war against the Primakov government (Nezavisimaya gazeta, March 25). Another newspaper, meanwhile, reported today that there was a “massive increase” in Russia’s money supply in early March, which is threatening to ignite inflation and send the ruble sharply downward (Moscow Times, March 25).

Indeed, despite the short-term optimism of some observers concerning a possible IMF deal, a gloomy note–for the Primakov cabinet, at any rate–was sounded by First Deputy Prime Minister Yuri Maslyukov, who is responsible for the government’s economic policy. He told a Russian weekly that in May or June, “the time allotted to this government will objectively end” because of a sharpening of electoral battles, an upsurge of mud-slinging and a campaign aimed at the cabinet’s “destruction.” Maslyukov said the Primakov government was an interim one which can, at best, only prevent Russian “from sliding into the abyss” without solving “basic issues” (Argumenty i fakty, No. 12, March 1996).