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. Last Updated: 07/27/2016

U.S. Officials Reject Softer Line on Aid

High-level U.S. officials on Wednesday tried to put to rest suggestions that they would be pushing for easier conditions on the release of Western aid to Russia following the victory of opponents of reform in the December parliamentary elections.


"The aid will follow the progress on reforms," Treasury Secretary Lloyd Bentsen said in an interview on the eve of the summit between Presidents Bill Clinton and Boris Yeltsin. "They have to stabilize the economy and they have to stabilize the currency."


Despite growing opposition to reforms, expressed in the strong showing of communists and ultranationalists in the elections, Bentsen said that Russians were suffering most from too little reform.


"The cruelest social damage of all is inflation, " he said in an interview with CNN. Inflation, running at about 12 percent monthly is the result of "not enough reform," he said.


More than $14 billion in long-term, low-interest loans from the International Monetary Fund and the World Bank are being withheld until Russia prepares a 1994 spending plan that will significantly reduce inflation and the budget deficit.


Russia has yet to provide the IMF with a 1994 budget.


Since the elections, some U.S. officials have complained that the IMF and World Bank conditions are too tough on Russia and should be eased.


A report released Monday by a bipartisan panel of U.S. politicians labeled the aid effort to Russia "timid , conventional and insufficient," and said that America should provide more money and relax loan terms, according to The Washington Post.


Moscow ambassadors from the Group of Seven leading industrialized nations, at a meeting of a newly formed agency designed to speed aid to Russia, agreed that the West should not release the loans before a credible economic reform plan has been put forward.


"There was a consensus at the meeting that it is not a question of too much reform, but maybe not enough," said a diplomat who attended the meeting of the Support and Implementation Group.


Finance Minister Boris Fyodorov, who attended the meeting, also urged the G-7 ambassadors to stay the course.


"He said reformers are feeling undermined by talk about backing off the shock," one of the U.S. delegates at the meeting said.


Reformers such as Fyodorov and privatization minister Anatoly Chubais are facing possible demotion in an upcoming cabinet reshuffle.


Bentsen said he hoped that Yeltsin would leave strong advocates of reform in the top ranks of the new government.


While Clinton is unlikely to propose any new aid proposals at his summit with Yeltsin, he will be bringing promises that the West will speed up aid already pledged and direct more funds toward those Russians who have been the hardest hit by reform. But the effort to speed aid will probably be more a matter of politics, one European diplomat familiar with the U.S. proposals suggested.


"There's a widespread wish to do something," he said. The plans to speed aid will "mainly involve keeping up the political momentum behind it."


U.S. officials contend that money for social spending will have to come principally from a redirection of Russian budget funds, and not from the West.


A $500 million plan for the West to finance a social safety net has been held up by disagreement over which programs should be funded and by Russian reluctance to borrow for social spending.