Rich nations bicker over aid for Russia: G7 agrees on helping Yeltsin but disagrees on who should pay what

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The Independent Online
MULTI-BILLION dollar proposals to bail out the Russian economy sloshed around a conference table in Tokyo yesterday, as the world's seven richest nations held emergency talks on how best to support President Boris Yeltsin and his reform policies. But, despite a shared determination to back Russia's reformers, there was simmering resentment that some participants were not prepared to pay their share of the bill.

The foreign and finance ministers of Britain, Canada, France, Germany, Italy, Japan and the US have come to Tokyo to show their support for President Yeltsin in the run-up to the referendum on his rule in 10 days' time.

'Russia is now at a critical juncture,' said the Japanese Prime Minister, Kiichi Miyazawa, opening the meeting. 'It is incumbent on the international community to send a clear message that it expects Russia's reforms to succeed.' The Group of Seven (G7) ministers are expected to announce an aid package of some dollars 30bn (pounds 19.3bn) by the end of their discussions today.

One of the key proposals which emerged from yesterday's discussions was a US plan to set up a dollars 4bn fund to help in the privatisation of large state enterprises in Russia. US officials said the fund could alleviate the problems of large-scale redundancies and cost-cutting measures in the break-up of these inefficient industries.

There was much discussion on the dismantling of nuclear weapons and disposal of nuclear waste. Japanese officials, who were infuriated this month when it was disclosed that the Russian navy had been dumping radioactive waste into the Sea of Japan, underlined the need for international co-ordination of the nuclear clean-up in Russia, which is being attempted by several countries. But the central theme of the talks yesterday was brutally simple: cash, and lots of it.

The US yesterday pledged a further dollars 1.8bn for Russia, on top of the dollars 1.6bn announced last week by President Clinton, while Japan announced its own dollars 1.8bn package as expected. The Chancellor of the Exchequer, Norman Lamont, announced some dollars 600m in export credits and technical assistance, while the EC said it would give dollars 1.6bn.

On top of the bilateral assistance, the participants are discussing multilateral aid from the International Monetary Fund and the World Bank.

Burden-sharing, however, was a hot topic. Germany made clear that it felt it had already paid more than its fair share to Russia. US officials said that Japan should pay more and pointed out that its dollars 1.8bn package mostly consisted of trade insurance, which would have little immediate effect on the Russian economy.

A spokesman for Japan's Ministry of Finance responded angrily, saying: 'We have done our best. I do not think the components of the Japanese package are as miserable as you might think.' He said Japan's contribution should be compared to the amounts pledged - or not yet pledged - by other countries. Japan has gone through political contortions to approve any aid at all to Russia, because of a long-standing policy not to give any assistance until a territorial dispute over the Kurile islands, to the north of Japan, is resolved.

French suggestions that a G7 summit, planned for July in Tokyo, should be brought forward to deal with the Russian crisis, were dismissed by most participants. 'Unless something dramatic happens in the Russian referendum, it does not seem likely that there will be another emergency summit before the planned summit in July,' said a diplomat.

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