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. Last Updated: 07/27/2016

A Glimmer Of Hope in New Aid Plan

By the criteria that matter, last year's $24-billion aid package from the rich nations to Russia can only be judged as a failure.


As we reported in our three-part series on the Western aid effort, not only were large portions of the package not delivered, but donor nations and their international financial agents were too cautious, too inflexible and had too much of their self-interests in mind in their aid programs.


Despite their efforts, they failed last year to anchor permanently the economic reform process in the body politic.


Now, there is a glimmer of hope. The new G-7 aid package announced this week comes with far more flexible conditions for the release of billions of dollars into the Russian economy from the International Monetary Fund and the World Bank.


But this is only a glimmer. It remains to be seen if the world financial institutions are able to adapt to Russia's needs.


"Their conditions earlier were simply unreasonably tough", said U. S. Secretary of State Warren Christopher.


A relaxation of the rules makes sense in Russia's case. The country needs an infusion of foreign capital -- to small business owners, to the oil industry and to the Russian budget -- to achieve the political strength and economic conditions required to carry on with reforms.


Even if this money were wasted, even if President Boris Yeltsin is ousted from power, the Western powers must have made a real effort to help Russia make its change. The promise to the world of a stable Russia versus the danger of it slipping back toward communism, justifies the risk by any standard.


But within the new G-7 package there are remnants of the failures of last year's aid package. About $10 billion of the new program, or half of the new money, includes "tied credits", in which the donor nations specify where the money should be spent (usually in the donor country) and for what products.


This is a repeat of the self-interest and paternalism within the Western aid program: We know best what is good for you; you can't make decisions on your own.


There is also a need to re-examine the use of the money still being disbursed under last year's programs. As a World Bank study has found, the huge amounts allocated for technical assistance programs, which went mostly to Western investment bankers, accountants, and consultants, are not well coordinated and not well linked to Russia's reform priorities.


As Russia adapts to a new economic system, so must the West adapt to new ways to help Russia make that