G8 Summit: Yeltsin flits across the world stage

BORIS YELTSIN is due to fly into Cologne tomorrow on a mission to re-establish his credentials as an active and dominant world leader, amid simmering resentment over Kosovo and a new financial scandal at home.

If all goes to plan, Mr Yeltsin - under the watchful eye of his long- suffering doctors - will spend less than a day at the G8 summit, his first foreign trip since he appeared looking ill and disorientated at King Hussein's funeral in Jordan in February.

Although there is no concrete proposal for fresh Western aid for Russia on the table, the summit may offer technical economic assistance - task forces of experts, for example - and will press Moscow to push through structural reforms to trigger already negotiated International Monetary Fund and World Bank loans.

"Russia might like the G8 to say we will forgive your debt and get you out of the hole you are in but the summit's message will be that they should get with the IMF programme," said one Western source. "No one is talking about debt forgiveness at this point."

But the relationship with the West has been soured by Kosovo, economic disagreements, and unanswered questions over some of the Russian government's murkier past dealings.

Among these are the fate of the final multi-billion dollar tranche of the IMF's previous rescue package, and the channelling of hard currency reserves through an offshore Jersey-based offshore management company, Fimaco. The IMF is believed to be studying a report into both these issues by PricewaterhouseCoopers.

And a new scandal is unravelling, which raises further serious questions about the Yeltsin administration. According to an auditors' investigation, nearly $488m was lavished on restoring Mr Yeltsin's Kremlin residence at a time when the Russian government was struggling to pay wages and to defend a toppling rouble.

At the same time, hundreds of historical artefacts - including Stalin's and Beria's office furniture and Tsarist-era chandeliers - were quietly sold off to private individuals for rock bottom prices, the Moscow Times reported yesterday.

It said an investigation by the State Audit Chamber, a parliamentary financial watchdog group, had found that there was no criminal wrong-doing.

There was, however, "plenty of evidence of the irrational usage of budget funds and of state property", the chamber's deputy head, Yuro Boldyrev, told the newspaper. The chamber's inquiry coincided with a separate investigation by the Russian prosecutor-general's office into claims that senior Kremlin officials took kickbacks in return for awarding lucrative building contracts.

That investigation - the source of a national scandal which is strongly suspected of being a factor in Mr Yeltsin's decision to sack the last government - led to a clash between the chief prosecutor, Yuri Skuratov, and the Kremlin. The latter - having leaked a video showing Mr Skuratov having sex with prostitutes - demanded that the prosecutor be sacked.

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