A major new Russian request for food aid, announced by U.S. Agriculture Secretary Dan Glickman on September 28, is generating considerable controversy in the United States. U.S. government sources have indicated that Russia may be asking for as much as 5 million tons of additional food supplies from the United States. That would be in addition to some 3.1 million tons of commodities that Russia is still receiving from the United States under a food aid plan agreed to last year. That deal was worth US$1 billion. In addition, Russia is receiving food via a US$500 million aid package granted to Moscow by the European Union (EU) last year. This latest request from Russia reportedly involves 1 million tons of food wheat, 1.5 million tons of feed wheat, 1.5 million tons of corn and 1 million tons of soybeans and soymeal. The package sought by Moscow reportedly includes direct donations of food, as well as low-interest, long-term loans to buy U.S. food.
Last year’s food aid packages between Moscow and both the United States and the EU followed the worst Russian grain harvest in some forty years–estimated at 47.8 million tons. Although the harvest is expected to be up this year to some 60 million tons, that is still well below yearly averages. Russia continues to suffer, moreover, from both last year’s dismal harvest, and from the fact that the ruble’s sharp devaluation has made it difficult for Moscow to pay for food imports.
Despite those circumstances, there is some question as to whether Russia really needs the latest aid package. EU Farm Commissioner Franz Fischler, for example, last week ruled out any new EU food aid. Pointing to Russia’s improved financial situation and this year’s better grain crop, he said that he sees “no reason for a new food aid program.” EU officials have also indicated that they have received no request for food assistance from Moscow (Bridge News, September 28-29).
The Russian food request is likely to come under intense scrutiny in the United States for another obvious reason as well. In testimony before the Senate Finance Committee in Washington on Wednesday, Glickman admitted that the Russian money laundering scandal has raised questions about whether a new aid package makes sense. The Russian corruption issue has likewise raised fresh concerns about whether the current U.S. food aid program to Russia is being properly administered. Glickman says that U.S. officials have closely monitored the program, and that they are satisfied both that food is reaching the needy and that proceeds from the package are being deposited–as planned–into the depleted Russian pension fund. But Congress seems sure to question those assessments. U.S. farmers are one group that is lobbying for the aid plan. They say that the package would help them to deplete stocks and raise falling grain and meat prices (Reuters, September 29).
RUSSIAN MONEY LAUNDERING CONTROVERSY DELAYS DISBURSAL OF IMF CREDIT.