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. Last Updated: 07/27/2016

U. S. Arm-Twisting in Tokyo

Next week's G-7 summit in Tokyo will probably confirm support for Boris Yeltsin and for Russian reform: but such confirmation will have another price tag from the nearly $44 billion promised to Yeltsin in Vancouver in the spring.

The price will be a large expenditure of United States diplomatic effort to keep its G-7 partners and the international financial institutions behind it in support of the Russian president. For as the months go on, and as the signs of the effects of reform are small, those among the G-7 countries who mutter that Russia is not yet deserving of assistance - the leader here was always Japan - will grow in number.

Signs of improvement there are: inflation is down sharply in June, the ruble has stabilized and industrial production is said to be no longer falling. Privatization continues to progress, the Central Bank has again raised its discount rate, first deputy premier Lobov has been sidelined, first deputy premier Soskovets appears to be a reformer and deputy premier Fyodorov has not resigned.

So all's well? Only up to a point. For while the engines of inflation are working less hard, they are still in place, and can fire up once more: most economists think they will, once fresh demands are put upon them by a president anxious to please, by observance of decisions by parliament to increase social payments of various kinds, by the coming huge financial demands of the harvest and by the continuing huge demands of state industry. The suppression of signs of trouble is not its CURE: and the time of economic troubles is not over.

This is obvious enough to the G-7 officials who make it their business to study Russia. However, the larger calculation made by the United States is that the present government is the best the West is likely to get: that given relief from debt, support for the budget and other assistance it can at least continue to destroy the old system, making it ever-less likely that it will return in either its economic or political form.

The opposing position holds that to give large amounts of money to Russia (and no other former Soviet state is getting large sums: Russia is the favored nation) is to give alcohol to a drunkard trying uncertainly to reform. Japan strongly holds this view and it is gaining ground among the European members of the club.

The focus of the argument has been on the proposed $4 billion fund to assist privatization, a kite which president Clinton flew in Vancouver and which one Japanese cabinet minister described as "nonsense". The latest report from Washington is that the fund may be as much as $2 billion: If so, it represents a good deal of arm-twisting on the part of the United States, since until recently it had been said to be no more than the $500 million put up by the United States itself.

At the same time, the International Monetary Fund and the World Bank are both in the uncomfortable position of being told to disburse large sums over their own doubts that they will be badly managed and even wasted: the longer the political crisis lasts, the deeper these doubts will grow and the greater difficulty the U. S. administration will have in making sure its support line sticks on the multilateral institutions.

The skepticism which is the only reasonable frame of mind in which to approach Russian reform is, however, not a real option for the G-7: These nations do not constitute a debating society, still less an expert institute producing opinions. Once they identified the reform of Russia as supremely important, once they identified the Yeltsin administration as the progenitor of reforms (or at least the bulwark against anti-reformism), they had to commit large sums or not bother.

But the G-7 is less imposing than it looks. It is made up of leaders who are unprecedentedly weak in their own countries, mostly still facing recession or doubtful recoveries, their minds less than usually preoccupied with foreign affairs. Tokyo, at best, will give grudging assent to what has already been announced: But it will not be inspirational, and may be pretty bad.

John Lloyd is Moscow Bureau Chief for the Financial Times.