08/13/1998 22:04:13 U.S. tells Russia bluntly to restore confidence
By Janet Guttsman
WASHINGTON, Aug 13 (Reuters) - The United States told
Russia bluntly on Thursday to restore confidence in its
beleaguered economy and said that Washington was working on
finding a way to help.
But White House spokesman Mike McCurry declined to be drawn
on whether additional cash might be made available to Russia,
which won a $23 billion international rescue deal last month,
or to comment on whether the ruble would have to be devalued.
He confirmed that officials from the Group of Seven
industrialized countries discussed Russia on Thursday and said
Treasury leaders were in touch with Moscow.
"It's critical that the Russian government act quickly to
restore confidence in their economy, and that is something that
we have communicated directly with Russian officials," McCurry
told a news briefing.
"The international community has a big stake in seeing that
Russia gets their economy moving in the right direction."
Asked if there was talk of unilateral action before
President Bill Clinton's Moscow summit next month, he said:
"Clearly ... there's some work going on on that." He gave no
Russian officials have repeatedly said that they are
committed to a painful program of economic reforms drawn up in
cooperation with the International Monetary Fund.
They dismiss all talk of devaluing the ruble, which is
currently held in a broad corridor against the dollar.
But financial markets remain deeply skeptical, both about
Russia's reformist credentials and its ability to withstand
pressure to devalue.
Russian stocks fell 6.5 percent and the deepening crisis
was cited as a reason for lower U.S. share prices. The Dow
Jones Industrial Average fell 1.09 percent on Thursday.
The Russian crash came on the day that international
financier George Soros called for a ruble devaluation and the
creation of a currency board, which would peg the ruble to the
dollar and tie cash in circulation to central bank reserves.
"The meltdown in Russian financial markets has reached the
terminal phase," Soros wrote in a letter to the Financial Times
Soros, famous for speculating successfully against sterling
in 1992, said later in a statement he had no position in the
ruble. He wanted his letter to serve as a "wake-up call" to
industrialized nations about Russia's urgent need for help.
The United States, fearful about political instability in
Russia, was a key sponsor of last month's rescue, which was put
together under the auspices of the IMF and which included money
from the fund and other donors.
David Lipton, Treasury undersecretary for international
affairs, traveled to Moscow for urgent talks this week.
McCurry said Lipton had been "communicating the sense of
urgency we have about the need to restore both confidence and
stability in the Russian economy" in top-level talks there.
Asked about G7 involvement, McCurry said reports of a
telephone conversation by deputy finance ministers appeared to
be correct. "I would not be surprised if the G7 remains fully
engaged in monitoring both the developments in Russia and in
Asia generally," he said.
Russia, looking more at its political significance than at
its economic clout, has been lobbying to turn the G7 --
Britain, Canada, France, Germany, Italy, Japan and the United
States -- into a Group of Eight.
Russian President Boris Yeltsin has attended the group's
annual summits, but Russia's finance minister and central bank
chief do not join all G7 talks on the world economy.