However, the fine print of the aid package revealed that much of the money is recycled from pre-existing pledges, and a proposal from the US for a special fund to support privatisation of state-owned enterprises in Russia was rebuffed by other donor countries.
The finance and foreign ministers of the Group of Seven (G7) industrialised nations - Britain, Canada, France, Germany, Italy, Japan and the US - concluded a two-day emergency meeting in Tokyo yesterday, just 10 days before the embattled Mr Yeltsin faces a crucial referendum on his political future in Russia. The meeting was expressly called to boost Mr Yeltsin's chances in the vote, and there was strong pressure to come up with a 'big number' aid package to impress the Russian people.
'A clear political message was sounded at this meeting: that the G7 would collectively support Russia's reform effort and continue to rally behind President Yeltsin and the reformers,' said Kabun Muto, Japan's Foreign Minister.
Boris Fedorov, the Russian Deputy Prime Minister who attended the G7 talks, welcomed the final resolution, calling it 'a major step forward for co- operation between Russia and the major countries of the world'. With some uncertainty about how much new money would actually be forthcoming from the announced package, Mr Fedorov hesitated to get into the numbers game, saying that 'the amount of money is not so important as the real, practical and visible approach of the G7 countries. In that sense we look forward to the future with optimism.'
The G7 ministers reassured Mr Federov and the Russian Foreign Minister, Andrei Kozyrev, that they were ready to back Russia's reforms over the long haul. Those reforms are likely to prove painful for the Russian people and the G7 made clear that it was ready to offset some of the hardships with hard cash.
The package is made up of dollars 14.2bn in International Monetary Fund sta bilisation programmes, designed to cut inflation and stabilise the rouble, dollars 3.9bn in loans from the World Bank and a pledge of dollars 10bn in export credit guarantees. The rest of the package consists of dollars 300m for small businesses and the dollars 15bn in debt rescheduling, agreed in Paris two weeks ago.
Much of the package is conditional on continuing reforms within Russia, and participants at the conference stressed they did not want to see a repeat of last year's G7 aid pledge which amounted to dollars 24bn, but barely half of which has been disbursed because of economic anarchy in Russia. Mr Fedorov welcomed this conditionality as a useful discipline, describing it as 'international assistance . . . to our own efforts in reform'.
However, a proposal by the US delegation for the setting up of a dollars 4bn fund to help privatise some of Russia's large state-owned enterprises found little immediate support from other G7 members. Britain's Chancellor of the Exchequer, Norman Lamont, said the US proposal needed more study, but that it was important: 'once industries have been privatised, reform is irreversible.'
Mr Lamont said it had been an 'historic meeting', and that G7 members had been 'impressed' by the commitment to reform expressed by the Russian delegation. However, questioned on exactly how much money Russia would actually receive as a result of the package, Mr Lamont conceded: 'It is difficult to calculate the amount that might be disbursed over the next 12 months.'
Mr Fedorov welcomed the timing of the package, saying 'with the sit uation we have now in Russia, the need for speedy change is of vital importance'.
Andrei Kozyrev, the Russian Foreign Minister, said he was sure that Mr Yeltsin would win at least half of the votes of those who turn out in the upcoming referendum, which would give him renewed strength to 'streamline reform'.
'It is important that Russian citizens who suffer a lot from the old system which cannot deliver and have not yet started to benefit fully from the reforms . . . should have a clear vision that this programme of co- operation brings fruit to their day-to-day lives,' Mr Kozyrev said.Reuse content