Publication: Monitor Volume: 4 Issue: 159

Clinton’s departure for Moscow came as the world’s leading industrial powers stepped up their pressure on Russia to stay the course of economic reform. In a series of telephone calls among world leaders in recent days the conclusion was the same: Western financial support for Russia would be endangered should there be evidence of backsliding by the Kremlin in the area of economic reform. British Prime Minister Tony Blair, who currently holds the rotating chairmanship of the Group of Eight industrialized nations, conveyed that message to Yeltsin in a twenty-minute telephone conversation yesterday. Blair’s consultations with the Russian leader followed telephone conversations over the weekend with Clinton and the leaders of France, Germany, Italy, Canada and Japan. Blair reportedly “passed on the desire of those nations to help Russia, but made it clear that there was agreement among them that any help must be tied to the economic reform process continuing.” (AP, August 31)

Domestic politics has in some cases joined with economic realities in forcing national leaders into taking a harder line on Russia. Clinton has had to answer charges at home that his administration has been uncritically supportive of Boris Yeltsin, while German Chancellor Helmut Kohl, in the midst of key national elections, has been vulnerable to similar charges. Germany is the largest investor in Russia, and the German government under Kohl has guaranteed some US$30 billion in Russian bank loans. That, and Kohl’s oft-proclaimed close personal friendship with Boris Yeltsin, has led Kohl’s challengers from the Social Democratic Party (SPD) to accuse the German leader of having been too generous toward Yeltsin. “It’s not us who have been sitting in the sauna with Yeltsin,” SPD leader Oskar Lafontaine said last week. Not surprisingly, Kohl has joined other world leaders in demanding that Russia institute reforms mandated by the International Monetary Fund before it can expect to get any additional financial help. (AP, August 30)

Japan and its recently elected prime minister also face dilemmas related to Russia’s economic and political crisis. Keizo Obuchi, who is struggling to deal with Japan’s own deepening economic problems, has made clear his intention to maintain the momentum in Russian-Japanese relations which has led to a significant warming in ties over the past year. The Japanese government, however, has sent mixed signals regarding its willingness to disburse to Russia a US$1.5 billion loan. In February, Japan had agreed to extend the loan in its entirety by the end of 1999. On August 19, though, a Japanese Finance Ministry official said that Tokyo would not release the remainder of the loan unless Moscow fulfilled promises to correct its economic policies. The statement followed a request by then Prime Minister Sergei Kirienko for Japan to disburse a US$300 million tranche of the loan by the end of August, and another US$500 million by the end of this year. (Kyodo, August 10)

On August 26, moreover, Japanese government sources were quoted as saying that Tokyo was reviewing its broader policy of economic cooperation with Russia. The remark came in the wake of Kirienko’s dismissal and amid rumors that Deputy Prime Minister Boris Nemtsov–who has overseen Russian-Japanese economic cooperation–might also be ousted. (Asia Pulse via COMTEX, August 26) Nemtsov has since departed from the Russian government. On August 31, Obuchi reportedly proposed to British Prime Minister Tony Blair that the Group of Eight convene an emergency meeting to discuss the Russian financial crisis and other international economic issues. Blair was said to have suggested a pause in order to see how Russia’s political crisis resolves itself. (Kyodo, August 31)