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Major urges realism on G7 loans to Russia

JOHN MAJOR warned yesterday that the West must not set terms for aid to Moscow that could not be met, while the Russian President, Boris Yeltsin, said he would not beg for help.

After a meeting in London between officials of the European Community and Japan, the Prime Minister said it was vital 'that the terms are not so severe that they are politically undeliverable in Russia'. The issue will be discussed at a meeting of the world's seven largest industrialised countries this week in Munich, but there are signs of growing dissension over the terms.

Mr Yeltsin, speaking in Moscow yesterday ahead of talks with the Group of Seven leaders, showed irritation over Western demands attached to promised new loans totalling dollars 24bn ( pounds 12.5bn). He insisted he would not be forced into making political or economic concessions: 'This is a normal credit and you cannot force us to our knees. Russia is a great country. It will not permit such a thing.' He also said he wanted a two-year moratorium on interest payments on the foreign debt of the former Soviet Union, now estimated at dollars 74bn.

As well as the West's demands that aid be tied to economic reform, Japan continues to insist on a resolution of the long-running dispute over the Kurile Islands, which Russia has occupied since the Second World War. Mr Yeltsin said on Friday there could be no political deals until Japan showed a willingness to co-operate on economic aid. The Japanese Prime Minister, Kiichi Miyazawa, noted yesterday that Japan already provided dollars 2.65bn aid to Russia. 'If President Yeltsin does not know of this, there must be something very strange,' he said.

Russian calls for assistance come at a time when the world's wealthiest countries are feeling the effects of economic slowdown, and this theme will dominate the Munich meeting. Mr Major said he hoped world trade talks could be given a boost, and that a successful resolution was vital for the world economy. He said this at last year's G7 summit as well.