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. Last Updated: 07/27/2016

Russia Turmoil Vexes World Finance Chiefs

PARIS -- The world's economic powers expressed concern about political uncertainty in Russia and the removal of leading reformers from government, German Finance Minister Theo Waigel said.


Speaking after finance ministers and central bankers of the Group of Seven leading industrialized nations met Saturday in Paris, Waigel told reporters: "We are worried about the political uncertainty and the [impact this could have on International Monetary Fund] requirements."


In a warning to the Kremlin not to depart from economic reforms, Waigel said Moscow would only receive the funding and debt rescheduling it required if it stuck to the terms of its agreement with the IMF.


Western governments are concerned about renewed fighting in Chechnya and the strong vote for Communist and ultra-nationalist parties in parliamentary elections last month as well as the removal of key pro-Western liberal ministers from President Boris Yeltsin's administration.


Waigel singled out the sacking this week of first-deputy prime minister Anatoly Chubais, architect of Russia's privatization program.


"The reform policy has borne fruit. We are however concerned about the departure of reform politicians from the government, in particular the departure of Chubais," he said in a statement to the meeting made available to reporters.


French Finance Minster Jean Arthuis, who chaired the talks, said the G-7 welcomed the "significant results" Russia had achieved under its 1995 economic reform program and urged it to move quickly to finalize agreement on an extended IMF accord.


"We noted that an ambitious extended agreement would provide the basis for a full rescheduling designed to deal with Russia's medium-term debt problems," he said.


Political turmoil in Moscow has forced the Paris Club of western creditor nations to postpone planned talks on a major long-term debt rescheduling accord.


An international financial source said the talks, the first round of which were held late last year, would be postponed until Russia was in a better position to reach an agreement with the IMF on economic reform.


Russia announced that it had reached an agreement to hold talks on a long-term debt accord at the last G-7 meeting in Washington in October.


Waigel praised the stabilization of the Russian economy, the easing of inflation, the stability of the ruble and a current-account surplus due to markedly higher exports.


Doubts about the continuation of reform policies have been fuelled by the departure of foreign minister Andrei Kozyrev, who was favored by the West, and his replacement by former intelligence chief and Soviet-era Middle East envoy Yevgeny Primakov last week.


The political instability has been compounded by Yeltsin's uncertain health and erratic behavior before his expected announcement next month of whether he will seek a second term.


On Friday, the president denounced journalists, railed at sacked ministers, fumbled answers and had to be prompted in a combative, but shaky, performance after a summit of leaders of the Commonwealth of Independent States.