Re: Speaking of Putin, why is Europe buying natural gas from him? Putin never made secret from whence he came........the KGB.
Indeed. Yet and more importantly, Putin was Yeltsin's protégé... So why did the US bankroll Putin's rise to power in the first place? Clue:
White House Says Financial Backing For Yeltsin Should Be More 'Energetic' : How Best to Aid Russia? U.S. and IMF Disagree
By Alan Friedman International Herald Tribune
Friday, January 7, 1994
As President Bill Clinton prepares for his first NATO and Moscow summit meetings, a behind-the-scenes fight has broken out among Western government officials and economists over the strategy for disbursing as much as $13 billion of Western aid for Russia through the International Monetary Fund.
After a period of disarray on the issue within the Clinton administration, senior U.S. officials, as well as respected outsiders such as Gerald Corrigan, former president of the Federal Reserve Bank of New York, made clear in interviews that they were now pushing for speedier aid to Russia, to bolster the position of President Boris N. Yeltsin and other Russian reformers.
Mr. Clinton's own view, which he has said he will express in Moscow, is that there needs to be more Russian reform as well as "more attempts to build a safety net to deal with the consequences of reform." (Page 2)
Mr. Clinton, who will meet with Mr. Yeltsin at the Kremlin next Thursday and Friday, arrives in Brussels on Sunday on a trip that will also include stops in Prague, Minsk and Geneva.
Policymakers in Mr. Clinton's administration, while avoiding direct criticism of the IMF, say they are eager to see more financial support for Mr. Yeltsin's government, partly to try to reduce the influence of Vladimir V. Zhirinovsky, the ultranationalist politician whose new parliamentary clout could threaten economic reforms.
Senior U.S. officials contend that they are not trying to bully the IMF into relaxing its criteria for providing loans to Russia. But one U.S. policymaker said that "there should be some immediate support" for Russia and suggested the organization should not be so "doctrinaire" in the way it judged conditions for providing fresh money to Moscow. As the largest single shareholder, Washington has more influence than other IMF members.
A White House aide said Wednesday the IMF and the World Bank, its sister organization, "can be more effective in conveying assistance to Russia, perhaps in some fields be more energetic."
The normally apolitical IMF has been thrust to the center of the controversy because it was asked last year to supply nearly half of the $28.4 billion Russian aid package promised by the Group of Seven leading industrialized nations.
Since last spring, the IMF has released only $1.5 billion of a $3 billion special loan program intended to help Russia make the transition to a market economy. The remaining funds are being held up because of Moscow's failure to cut Russia's inflation rate and carry out some promised economic reforms.
The behind-the-scenes struggle has developed since last month, when Vice President Al Gore accused the IMF of being too strict in its conditions for loans to Russia.
The debate pits the critics against the management of the IMF, which will send a delegation to Moscow about a week after Mr. Clinton's visit. At stake initially will be the second $1.5 billion tranche of the special loans and, later, as much as $4.1 billion of badly needed standby credits and $6 billion of potential currency-stabilization loans.
Mr. Corrigan, the former New York Fed president whom Mr. Clinton named last year to chair the Russian-American Enterprise Fund, a bilateral investment program, has views similar to those of Mr. Gore about the IMF's handling of loans for Russia. He warned in an interview that the IMF had been placing "too much emphasis on the traditional macroeconomic policy process."
Mr. Corrigan said Russia faced "the danger of a major setback if more effective and timely aid is not forthcoming." He said the IMF should express its economic targets for Russia in broader ranges and "build in an element of flexibility."
Jeffrey D. Sachs, the outspoken Harvard professor who is an economic adviser to the Russian government, went even further, saying the IMF had "failed miserably" because it was "an international bureaucracy that is very narrowly focused."
Mr. Sachs suggested that instead of asking the IMF to handle large loan programs for Russia, "the Group of Seven and President Clinton should admit they have done this wrong and work out new aid at a political level."
An influential senior European central bank official, however, argued against pressing the IMF to deviate from the way it judges Russia's loan eligibility.
"Governments want to use the IMF because they don't want to give more bilateral money themselves," the official said. "Let the governments shell out funds if they consider it politically urgent."
The White House has made it clear that Mr. Clinton is not likely to bring fresh U.S. aid offers to Moscow. This is partly because of congressional resistance to going beyond the already approved $2.5 billion of U.S. aid and the $1.6 billion of food and other credits promised at last year's Clinton-Yeltsin summit meeting in Vancouver, Canada.
This week, in an unusual move that underscored its sensitivity to the criticism, the IMF and the World Bank made available a five-page memo defending themselves. Michel Camdessus, the IMF's managing director, added that the organization had encouraged Russia "to take bold steps" to create a more effective social safety net, and he said it would intensify those efforts.
Reflecting the IMF's institutional mandate, Mr. Camdessus contended that it was necessary to help Russia take credible steps toward solving macroeconomic problems, stabilizing prices and stopping capital flight.
At the heart of the dispute is the question of whether the IMF should soften conditions for fresh loans to Russia. Last year, Moscow failed to receive more loans when it missed targets for reducing inflation and its budget deficits.
The monthly inflation rate fell from a peak of 26 percent in August to about 12 percent in December, but this was still above the target of single-digit inflation. Russia's budget deficit as a proportion of its gross domestic product was supposed to decline to 5 percent by the end of 1993.
"Under ideal circumstances, we would have disbursed more funds," an IMF official said. "But the reality is different. We are living in the real world. We don't go around waving blank checks. The IMF has a fiduciary responsibility that when it does lend money, the money will be used wisely and the reforms it is supporting will be carried out."
Separately, although it is not the subject of Mr. Clinton's trip, European government officials say they expect some early relief for Russia on the government-debt front. The Paris Club of Western creditor nations, which last year rescheduled about $15 billion of Russian principal and interest payments and arrears, is soon to discuss extending the rescheduling through the first three months of 1994.
A further $2 billion to $3 billion of Russian principal and interest payments could be covered by the expected move.
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