Soviet Union and West Set out on Unprecedented Financial Path

By Sheila Tefft, writer of The Christian Science Monitor | The Christian Science Monitor, October 15, 1991 | Go to article overview
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Soviet Union and West Set out on Unprecedented Financial Path

Sheila Tefft, writer of The Christian Science Monitor, The Christian Science Monitor

DESPITE their budding economic partnership with the Soviet Union, the world's seven industrial powers remain skeptical about rescuing their beleaguered capitalist convert.

Meeting during the weekend in Bangkok, the finance ministers and central bank governors from the major industrial nations agreed to accelerate efforts to salvage their free-falling former rival.

But the financiers, gathered for the annual meeting of the World Bank and the International Monetary Fund, avoided immediate commitments to new loans, debt-payment deferrals, or a huge capital infusion to transform the Soviet economy.

They agreed to send a team of deputies to work out a bailout with Moscow and the republics but underscored their stern conditions for rescue. The Group of Seven (G-7) includes Britain, Canada, France, Germany, Italy, Japan, and the United States.

The G-7 wants to see an economic reform program and a clear delineation of financial responsibilities to be borne by the disintegrating Soviet center and the republics. The industrialized countries also want to know how the Soviets will repay $70 billion in foreign debt, and they want better statistical information about the Soviet economy.

"What we are seeing here," said Alan Greenspan, chairman of the US Federal Reserve Board, "is really for the first time the Soviet Union engaging the West in a level of detail which is unprecedented." US Treasury Secretary Nicholas Brady labeled the plan "a prescription for progress." (Soviets agree on treaty, Page 3; wrangle over debt, Page 4.)

"October will be a very famous month in the history of the Soviet Union," said Viktor Gerashchenko, chief of the Soviet central bank.

Behind the rhetoric of summitry, however, deep doubts remained over prospects for resolving differences between Moscow and the Soviet republics, maintaining debt payments, transforming the ruble into a convertible currency, and holding the Soviet Union to reforms that can keep ahead of the country's deepening divide.

In the meeting with officials of the industrialized countries, Grigory Yavlinsky, the top Soviet economic planner and head of the Soviet team here, painted a bleak picture of rapidly falling gold reserves and a limited capacity to make debt payments during the next two months. "The situation from a social and political point of view will become harder and harder," he added at a seminar yesterday on the Soviet economy.

The Soviet Union is seeking more than $10 billion to avoid bankruptcy into early 1992, and experts estimate the country will need as much as $200 billion to overhaul the economy.

But before that level of assistance materializes, "we need ratification and implementation of the economic treaty," said Canadian finance minister Donald Mazankowski.

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