DATE=12/2/1999
TYPE=BACKGROUND REPORT
TITLE=RUSSIA / I M F
NUMBER=5-44891
BYLINE=ANDRE DE NESNERA
DATELINE=WASHINGTON
CONTENT=

VOICED AT:

/// Eds:  This is the third in an eight-part series on 
Russia. Among other issues to be raised: corruption 
scandals, President Boris Yeltsin's legacy and NATO-
Russia relations. /// 

INTRO:  One of the main issues surrounding the "Who 
lost Russia" debate under way in the United States is 
whether international financial organizations helped 
promote economic reforms in that country.  In this 
third of eight reports on Russia, former V-O-A Moscow 
correspondent Andre de Nesnera looks at the role of 
the International Monetary Fund. 

TEXT:  Several weeks ago, the head of the 
International Monetary Fund - Michel Camdessus - 
announced he would leave the international 
organization in mid-February - two years before the 
end of his term.  He told reporters his resignation 
was prompted by "entirely personal reasons"- but he 
did not elaborate.

Although Mr. Camdessus won praise from many of the 
fund's major shareholders for his 13-year stewardship 
of the I-M-F, over the past few years, the 
organization has come under increasing criticism for - 
among other things - its lending policies toward 
Russia.

Since the fall of communist rule in Russia eight years 
ago, the I-M-F has pumped billions of dollars into 
that country, ostensibly to promote economic reforms. 
But critics say those reforms have  not  materialized 
and much of the I-M-F money has essentially been 
squandered. 

Paula Dobriansky - from the Council on Foreign 
Relations - says the whole lending procedure toward 
Russia has to be reviewed.

            /// DOBRIANSKY ACT /// 

      The issue of why we have given significant aid, 
      substantial aid, particularly large-scale 
      amounts of aid to Russia. And that these large 
      amounts of assistance have not been monitored, 
      that appropriate safeguards have not been placed 
      on them and consequently, there appears to be a 
      loss here, where these monies have essentially - 
      in some cases - gone down a black hole. 

            /// END ACT /// 

Many experts ask whether some of the I-M-F money 
earmarked for Russia has left the country as part of 
money-laundering schemes now under investigation. But 
I-M-F officials say they have no evidence of such 
diversion. 

Marshall Goldman -long-time Russia expert from Harvard 
University  - expresses the view of many experts, when 
he says the I-M-F imposed too few safeguards when it 
began disbursing funds to Russia.

            /// GOLDMAN ACT // 

      The I-M-F was too lax, in part because they had 
      never really dealt with a country that had such 
      lax moral codes of business as Russia. And that 
      is a strong statement, because they deal a lot 
      with Latin America and the countries in Africa, 
      as well as Asia. 

            /// END ACT /// 

In response, fund officials say they always carefully 
monitor how their loans are handled.  At the same 
time, they say they are looking at ways to strengthen 
safeguards on the use of I-M-F funds. 

But Bruce Johnson - from the Hudson Institute (in 
Indianapolis) research center - says it is virtually 
impossible to monitor how Russian officials use 
international financial aid, because they employ old 
Soviet-style techniques.

            /// JOHNSON ACT ///

      Anybody in the I-M-F who considers himself or 
      herself capable of monitoring the Russian 
      government in the way it handles its finances is 
      a self-deluded fool. And the Soviets are very 
      well trained in deception. Their lives depended 
      on their ability to deceive those above them at 
      all times. They simply carry on and hide what 
      they are doing. It takes extraordinary insight 
      to monitor that kind of  activity and get under 
      the blankets to see what they are doing in the 
      dark.

            /// END ACT ///

Many experts say a major flaw in the West's lending 
policy toward Russia was that the I-M-F provided money 
directly to the Russian government.  They say it would 
have been more effective to assist small-scale 
enterprises and non-governmental organizations - in 
other words go directly to the Russian people, 
bypassing the government. 

The I-M-F's lending policy toward Moscow has fostered 
a debate whether the organization should continue to 
help the Russian government. 

Condoleeza Rice - an expert on Russia and senior 
foreign policy adviser to presidential hopeful George 
Bush - says "no."

            /// RICE ACT /// 

      I think the I-M-F has done enough in Russia for 
      now. And it is probably wise to let the Russians 
      come up with an economic program that works for 
      where they find themselves now. And then perhaps 
      to have a conversation about how that can be 
      supported. But my own view is that more macro-
      economic engineering is probably not going to be 
      helpful.

            /// END ACT // 

But for the time being, the I-M-F has no plans to 
alter its activities in Russia. A recent statement 
from the fund says Russia and the international 
community will be better served if the I-M-F remains 
engaged and provides assistance under strict 
conditions. (Signed)

NEB/ADEN/KL 



02-Dec-1999 14:17 PM EDT (02-Dec-1999 1917 UTC)
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Source: Voice of America
.