Economy Faces Crash Failing Aid, Report Says

The Russian economy will collapse in 1995 unless it receives billions of dollars in expected international loans, according to a new report by a group of Western and Russian government advisers, which says Western leaders should use the threat to force an end to the war in Chechnya.


Russia's draft 1995 budget relies heavily on foreign loans to bridge the gap between its income and expenditure.


Failure to receive this money would destroy plans for economic stabilization this year and would strengthen conservative forces in the Kremlin, says the report, written by the Russian European Expert Group and obtained Wednesday by The Moscow Times.


"Because Russia has long expected strong financial support from the West in 1995, the economy might, in combination with political uncertainty, collapse in its absence," said Jochen Wermuth, head of the group, which works within the Finance Ministry.


"The president has long been shut off from vital information and he is clearly not informed about the risk of losing Western financial support," he said. "Western statesmen could thus play a role in briefing the president in person."


Analysts say Yeltsin has fallen under the influence of a conservative "party of war" including hawkish members of the government and the president's administration, who are backing the unpopular war in Chechnya and are linked with nationalist economic policies.


Official estimates already put the cost of the war at nearly 1 billion dollars, while independent analysts say it is