US Envoy Praises Russian Reforms

SIX months older and six months wiser since his arrival here as American ambassador, veteran businessman and political insider Robert Strauss remains an optimist about Russia's future.

"I am more certain than I have ever been that they're going to make it. The odds are more dramatically in favor of freedom and democracy surviving and a market system being built than [they were] when I arrived here," he told a group of American reporters at lunch here yesterday.

Ambassador Strauss is sanguine about the problems piled on Russian President Boris Yeltsin's doorstep and the hard times ahead. But he gives the Yeltsin government high marks for not backing off from its "tough-minded" reform policies. "While things ... may be worse than they were six weeks ago [when the reforms began], they're not nearly as bad as I thought they were going to be," he says.

"I was afraid the reaction from the public would be more emotional and more intense than it is ... [to] price increases and the lack of food and other consumer goods.... I thought criticism of President Yeltsin might be stronger and more effective. But his popularity still seems to be very high. I thought hunger might be worse than it is."

The Washington political veteran reiterated his belief that the West should act more decisively to support the Russian reform effort. "The nations of the West are beginning to realize more and more that the stakes out here are so high that you can't sit back," Strauss said. He expressed sympathy with the frustration that Mr. Yeltsin vented following his recent visit to the United States, Canada, and France over lack of response to Russia's economic crisis.

"I think he has a right to be getting a little weary of 10 or 15 countries sending diplomats through here, all of them talking to his people and more conversation than cash.... I think he understands the difficulty they have helping him, but he wants them to understand more of what's at stake, that he can't live on conversational support. He needs tangible support. And I think he's going to get it."

In recent weeks Western governments have been discussing more rapid admission of Russian and other former Soviet republics to the International Monetary Fund (IMF), as early as late April, as well as meeting a persistent Russian request for a $5 billion to $6 billion fund to support the value of the ruble. Strauss predicted that Russian entry may come "sooner" and that the fund could be formed after Russian talks with the IMF on taking further reform steps.

The IMF should seek what Strauss called "very stern but responsible standards that have to be met" before offering further loans and support. The most important item is a tough monetary policy, curbing the more than 350 percent inflation that has beset Russia in the last two months. "There is no point in taking a stabilization fund and competing with a bunch of printing presses because the printing press is going to win out," Strauss said.

The American envoy was talking just after the finish of a visit here by US Secretary of State James Baker III, who held two days of talks with Yeltsin and other Russian officials, focused mainly on arms control. He expressed the hope that a broad agreement on new lower limits for nuclear weapons could be ready by July when Yeltsin is expected to come to the US for a full-scale summit.

Strauss strongly refuted reports of a cool attitude toward Yeltsin in the Bush White House, pointing to the Baker-Yeltsin talks here. "The two of them got along extremely well," he said. "You could sort of feel they liked each other."

Strauss came out here with a mission to provide the savvy of a man who has made a fortune in business and also knows his way around the corridors of power in Washington. And he has not been shy to offer some sound advice on these topics. Strauss is encouraging the Russian government, for example, to hire former Federal Reserve Chairman Paul Volcker as an economic advisor. Mr. Volcker, who recently spent some time here looking over the Russian reform plans, "has credibility second to none with the central

banks of Europe, Asia, and our country," he offered.

Take the grocery store problem. The straight-talking Strauss expresses more than a little mystification and frustration with the lack of movement on privatizing and demonopolizing the state-run economy. He points with exasperation to the "homeless" piece of sausage in the typical state store where the merchant does not care whether it sells or not. d like to see someone open a dozen grocery stores here," he says, a proposal he unabashedly put to the chief of the Russian central bank the other day.

Then there is the legislative and administrative mess, the lack of clear laws on everything from taxes to exports. "I found the only place in the world that can use 500 lawyers," the always colorful Texas lawyer and dealmaker said. "If we could take 500 lawyers out of our own and move them into this government, it would be one of the great bonanzas of all time for both countries."