With the rouble already having crashed below 4000 last month this assumption looks too optimistic

With the rouble already having crashed below 4,000 last month, this assumption looks too optimistic.The 1995 budget also assumes that about $10bn of international credits, including the IMF loan, will flow into Russia this year. For the IMF to release its loan, Russia’s budget deficit this year needs to be 7.7 per cent of gross national product, but Western bankers predicted it could rise as high as 10 per cent.The Chechen war and central bank credits to state enterprises are two reasons for the expanding budget deficit. However, the European Union has indicated its disapproval of Moscow’s tactics by delaying the signature of a trade and co-operation agreement with Russia.The IMF is concerned about the Chechen war insofar as it is likely to increase government spending this year by the rouble equivalent of several billion dollars. Talks on the $6.25bn (£4bn) loan will resume later this month, but the IMF will be pressing for firmer evidence that Russia is capable of meeting the financial targets deemed necessary to justify the credit.
Bankers discounted suggestions that Western countries, which dominate the IMF, are attempting to punish Russia for having used excessive force in Chechnya. Russia’s prospects of achieving economic stability suffered a blow yesterday after the International Monetary Fund said it was dissatisfied with Russian government budget forecasts for this year and was withholding a multi-billion-dollar loan.

After three weeks of talks in Moscow, IMF negotiators flew out unconvinced that the government will be able to suppress inflation, hold down the budget deficit and reduce the flow of central bank credits to inefficient industries and collective farms. But, he went on, all this amounted to no more than a “flirtation.” It was not sufficient to justify “setting up home together.” For alongside the old quarrels about the Common Agricultural Policy, foreign trade and the Social Chapter, “the two countries still do not share the same vision of the future of the Old Continent.”For France, he said, being “at the heart of Europe” remained a “necessity.”He noted John Major’s parliamentary difficulties that had made him a “hostage of the Euro sceptics,” but asked whether, in courting France, Britain’s main aim was not to sow dissention in the Franco-German alliance.. Its prominence and length suggested that, while this was clearly the view of a single commentator, it might reflect a wider feeling of frustration with British advances in some official circles.As France took over the European presidency at the beginning of the year it was an open secret that Britain was working hard behind the scenes to gain a more sympathetic hearing in Europe, and had detected signs that the French might be more open than before to some of Britain’s views.Langellier’s article concedes that the British had grounds for hoping to woo the French. “Albion,” the frontpage article said, was “making sheep’s eyes” at its old enemy in the hope of “influencing the destiny of Europe via Paris.”
The whole tenor of the article by Jean-Pierre Langellier, was that France should have no truck with such overtures and that the differences between the two countries were still greater than what they had in common. AN ARTICLE in the influential paper Le Monde has taken Brtitish diplomacy to task for trying to sway the future of the European Union by means of a concerted charm offensive towards France.

Mr Claes warmed to the idea of new ways of linking the EU and the US, suggested by both France and Britain.”I am in favour of strengthening and giving more diversity to these links,” he said.Leading article, page 18. “I have the feeling that in the IGC, the decision will be taken to strengthen the links between the EU and the WEU,” he said But he doubted that the EU itself would take over the WEU. In the future, Europe has said that it will develop its own security organisation through the Western European Union. Next year’s inter-governmental conference (IGC) to rewrite the Maastricht treaty will focus on this.Mr Claes was a strong advocate of this when Belgian foreign minister and remains involved. Virtually every European state apart from Ireland and Switzerland is now a signatory, including Russia.The Nato secretary-general was clearly sceptical of US calls for a new organisation to handle relations between Nato and Russia “First things first. Let’s start with what’s on the table,” he said, referring to the two unsigned agreements.

But alliance sources say that as enlargement enters its second phase, some new arrangement – perhaps a new treaty – is inevitable. When the study is completed, “we will inform Moscow,” said Mr Claes.Relations with Russia have been all but frozen for the past few months. Last year, Russia refused to sign two agreements with Nato; while the war in Chechenya is going on, it is unlikely that either side will want to raise these again, according to Nato sources.In the meantime, Nato is working on Partnership for Peace, the US initiative from last year to forge new links with Eastern Europe and the states of the former Soviet Union This week Austria becomes the latest state to sign up. Differences between the US and Europe over this had been overblown “I did not see such big differences over enlargement.