Install

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

. Last Updated: 07/27/2016

White House Mulls Putting Brakes on Loan Programs




WASHINGTON -- The Clinton administration is quietly reassessing whether to slow two major loan programs to Moscow as the war in Chechnya accelerates and the two leading candidates for the Republican presidential nomination call for a cutoff of aid to Russia.


In public, White House officials have said that they continue to favor modest economic support for President Boris Yeltsin's government and that termination of the aid could further destabilize Russia before parliamentary and presidential elections here. Sandy Berger, the national security adviser, reiterated that position Monday when he told reporters that, despite the military offensive in Chechnya, it would not "make sense for us to affect" a forthcoming loan from the International Monetary Fund, "assuming the economic and transparency criteria are met."


But within the administration, divisions on the question are growing; advocates of both views say there is a movement to go slow on two major loans - one from the International Monetary Fund and another from the Export-Import Bank of the United States.


"There has been a debate brewing in our government over engagement versus disengagement for a year now," one senior administration official said Thursday. "But in recent weeks it has gotten much more intense, and there are some strong voices for disengagement."


The first issue is whether the United States should allow the International Monetary Fund to release a long-delayed payment of $640 million to keep Russia from defaulting on past monetary fund loans. The money, part of a $4.5 billion program, would actually never enter Russia; it would simply be transferred from one IMF account to another.


But its delivery would take economic pressure off the Central Bank, which officials in several departments of the administration fear could send a political message that Moscow will not have to pay a price for its continued military action in Chechnya.


Vice President Al Gore's staff appears increasingly worried about his vulnerability on these issues, especially because Governor George W. Bush of Texas, the Republican front-runner, had said he would call for a complete cutoff of the aid to Russia in a policy speech he was expected to deliver late Friday. And Senator John McCain of Arizona, Bush's leading challenger for the nomination, has already opposed the loan while the war in Chechnya continues.


An even bigger issue is the Export-Import Bank loan, a half a billion dollars for the export of U.S.-made oil equipment to Russia. Unlike the monetary fund loan, this money would come directly from an agency of the U.S. government.


There are two Export-Import Bank loans pending, both of which have received preliminary approval from the bank's board of directors and were referred to Congress for a 30-day review period, now complete.


One of the deals involves $203 million in financing for the sale of equipment and services to upgrade the Ryazan Oil Refinery, a subsidiary of the Tyumen Oil Co., or TNK. The second is $292 million in financing for exports to rehabilitate the Samotlor oil field, also a TNK asset.