Clinton Team Sharpens Focus On Aid to Former Soviet Republics

Washington worries about Russia's deteriorating economy

ASSEMBLING a team of new advisers who have worked closely with the changing dynamics of the former Soviet Union, President Clinton is preparing to sharpen the United States' focus on Russia and other independent republics.

Over the past several weeks, Mr. Clinton has filled high-level diplomatic, defense, and economic posts with those experienced in the economic and security aspects of the former communist empire.

Strapped by budgetary constraints, Clinton's policymakers are pressed to devise new ways to assist Russia without dipping into resources needed at home.

Anxious to develop more cogent plans, Clinton called on his old Oxford University roommate, Time magazine columnist Strobe Talbott, to administer the wide variety of US assistance programs for the ex-Soviet Union and its former East European satellites.

Madeleine Albright, whom Clinton selected to be US ambassador to the United Nations, advised him to give the former Communist bloc a higher profile in both White House and State Department policy circles.

In a document released in December by the Institute for the Study of Diplomacy at Georgetown University, she advised the new president to convene a conference to define US interests and to develop bipartisan support for a policy toward the ex-Soviet republics, characterized as the world's most dangerous trouble spot.

Last spring, Washington became mired in the debate over whether to commit roughly $4.5 billion to a proposed $24 billion international aid package to the ex-Soviet Union. The aid was approved by Congress during the summer. Russia receives aid

According to the Washington-based Institute of International Finance (IIF), Russia last year received $17.5 billion of the overall $24 billion package.

The International Monetary Fund, the World Bank, and the Group of Seven top industrial nations - the US, Britain, Canada, France, Germany, Italy, and Japan - have forwarded some $2.7 billion in grants, $6.8 billion in trade credits, $1.2 billion in multilateral assistance, and $6.8 billion in debt deferrals, according to the Institute of International Finance.

The $6 billion set aside to help stabilize the ruble has not been disbursed, because the Russians have not moved to establish a convertible currency.

Harvard University economist Jeffrey Sachs, an adviser to the Russian government, says that without a Western aid strategy, Russia's reformers will become even more vulnerable to political attacks from hard-liners who are anxious to thwart the reforms. The free-marketers suffered a setback in December when President Boris Yeltsin removed Acting Premier Yegor Gaidar to placate the opposition.

Another adviser to Russia's economic team, Anders Aslund, the director of the Stockholm Institute for East European Economics, says $27 billion more is needed this year to help Russia pay for imports and to shore up its financial reserves. The US portion, he says, totals $3 billion.

Mr. Aslund implores the US to take the lead. "Without Washington, European and Asian countries will look for every excuse not to help," he says.

But Aslund concedes that outside help will only come "if Russia comes up with an economic stabilization plan, Yeltsin gets control of the Central Bank [and reins in reckless spending] and Russia's April 11 referendum on the constitution has a positive outcome for Yeltsin."

Lawrence Summers, a former chief economist to the World Bank who has been nominated to become undersecretary of the Treasury for international affairs, devoted much of his time during the past two years to macroeconomic studies of the former Soviet empire and the world economy's capacity to help.

"Bold reform is the only answer and the only prospect for success .... The evidence is that the problem is the failure to reform, not the results of reform," Mr. Summers says.

Promoting US engagement, Summers proposes the transfer of American technology and expertise and help in "everything from dismantling weapons to fixing nuclear power plants to getting oilfields working again."

Summers falls short of calling on Washington to ante up more funds, however.

Washington is worried about Russia's deteriorating credit-worthiness. Last month, Moscow defaulted on more loans from the US Agriculture Department's Commodity Credit Corporation, which has been helping Russia meet its massive grain needs for the past two years.

The Russian arrears on US-guaranteed bank loans - which now total about $200 million - have prevented Moscow from accessing fresh lines of credit for commodity purchases.

Russia's negotiations with its official creditors, the so-called Paris Club, are on hold. The republic will be hard-pressed to pay $3 billion in debt service this year on its $80 billion debt. `A rainbow at the end'

Asked about his plans for US aid to Russia, Clinton says he has "given a lot of thought to what we might do ... to give those folks some way of feeling that this thing's going to come out okay, that if they stick with it, there is, in fact, a rainbow at the end of the tough road."

Whether that rainbow means more financial support is the subject of a contentious debate among Washington policymakers.

On Capitol Hill, calls for spending on public works projects, adequate health care coverage for needy Americans, job training, industrial research and development, and a host of initiatives could drown out pleas for more US financial help for the beleaguered ex-Soviet republics.

Despite Washington's domestic focus, Senators Sam Nunn (D) of Georgia and Richard Lugar (R) of Indiana are pressing ahead, urging Clinton to steer US aid to Russia's defense conversion, housing construction, and energy development needs. The two senators are already at work on a 20-year, $5.5 billion plan for nuclear disarmament in the former Soviet republics.

In an interview, Senator Lugar warned that if the US tries to share the burden and enlist the Europeans and Japanese to help pay for the nuclear materials, the project will lose steam in parliamentary debates, and ultimately derail.

US Defense Secretary Les Aspin is intent on helping Russia and other ex-Soviet states convert their massive military industries into civilian production, a goal he pursued as chairman of the House Armed Services Committee.