Talks open today in Paris between Russian government officials and representatives of Western creditor nations known as the Paris Club. They are to discuss the rescheduling of Russia’s foreign debt to Western governments, estimated at around $40 billion. The bulk of the debt dates from the Soviet period. An agreement is expected to be signed on Friday or Saturday in Paris. So far, Russia has reached a series of short-term, stop-gap agreements with the Paris Club; now it is eager to conclude a long-term agreement to settle the issue once and for all. Last year, Russia reached agreement on rescheduling its $25.5 billion debt to the London Club of creditor banks. According to Reuters, the Paris Club is ready to allow Russia up to twenty years to pay its debts, compared with the London Club’s 25 years, and to give Russia six grace years before repayment starts, compared with the London Club’s seven years. This would mean that Russian redemption payments to both the Paris and the London Clubs would start in the same year, 2002.
The Paris Club’s willingness to be generous to Russia is not only a sign of confidence in the progress of Russian economic reform, but is also motivated by the approach of the Russian presidential elections, now less than two months away. Western governments have made no secret of their hope that incumbent President Boris Yeltsin will be reelected on June 16, and are prepared to do anything they can to ease his financial burdens in the hope of boosting his position in the eyes of the electorate. (Interfax, April 19; Reuters, April 24; BBC World Service, April 25)
Russian Presidential Campaign Update.