Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Kremlin Lobbies for More Aid

Worried that the global economic turmoil could overwhelm its financial system, Russia is quietly seeking U.S. support for an expanded program of Western assistance, government officials and private bankers said.

The purpose of the aid would be to strengthen confidence in Russia's Central Bank, which has been using up its reserves in an anxious effort to prop up the ruble.

Sergei Alexashenko, the deputy head of the Central Bank, and Sergei Vasilyev, the deputy head of the presidential administration, have been sent to Washington to meet with officials from the U.S. Treasury Department and the International Monetary Fund.

Their goal is to explore whether the West can make more aid available to bolster the credibility of Russia's financial system and discourage any perception that it may be too weak to cope with the crisis on the world markets. In effect, the Russians are seeking a kind of insurance policy.

U.S. officials declined to comment on the sensitive discussions. But the United States has generally taken the stance that the Russian request should be handled by the IMF, which would be a likely vehicle for any further assistance.

But Russia's relationship with the IMF is complex. The IMF has suspended its dollars 10 billion loan to Russia because of the Yeltsin government's failure to crack down on tax evaders. The loan was given to Russia in 1996 to help it carry forward its free-market reforms.

Russian and IMF officials have been engaged in intensive talks over steps Moscow can take so that the disbursements can be restarted. And the Central Bank's concern over the global economic turmoil adds a critical new dimension to the high-stakes deliberations.

Prompted by the crisis that has rippled through Asia, foreign investors have been fleeing from emerging markets. They have already moved to withdraw some dollars 4 billion from the Russian treasury-bill market, Central Bank officials said.

Russian officials and private bankers fear that investors may unload billions more, putting further strain on the ruble and heightening concerns about Russia's financial system among Russians and foreigners.

"The Central Bank's reserves are enough to take care of foreign investors," said Pavel Teplukhin, the chief economist for Troika Dialog, an investment bank. "But I am afraid that if Russian investors start panicking and buying dollars, the Central Bank reserves will not be sufficient."

Teplukhin said the West could ease the crisis by promising to lend up to dollars 5 billion to the Central Bank, though other experts said billions more might be needed.