08/26/1998 16:19:01 Europe says Russia must go it alone
By Robert Mahoney
BONN, Aug 26 (Reuters) - Major European powers told Russia
on Wednesday it would have to go it alone in salvaging its
battered economy and currency.
"Russia must do it by itself," said German Finance Theo
He said neither the Group of Seven industrialised nations,
the International Monetary Fund nor the European Union could fix
French President Jacques Chirac urged Moscow to push through
economic reforms, saying international support would only work
if reforms were implemented decisively by the new government of
acting prime minister Viktor Chernomyrdin.
A Berlin newspaper reported that German and French finance
ministers planned to write to Russia urging "fundamental and
possibly painful" reforms to fight Moscow's currency and debt
The Berliner Tagesspiegel said in an unsourced report to
appear on Thursday that Waigel had spoken by telephone with his
French counterpart Dominique Strauss-Kahn on Monday and agreed
to draft a joint letter.
Details are expected to be finalised by the end of the week,
and the two will probably address the letter to Chernomyrdin,
the paper said.
German finance officials were not immediately available to
comment on the report.
The British Treasury said it was closely monitoring the
Russia crisis and was in contact with other Group of Seven
European sources said the four European members of the G7
--Germany, France, Britain and Italy-- were in close contact but
it was premature to speculate on a joint initiative or letter.
Waigel told reporters in Cologne it was up to the Russian
government and Duma lower house of parliament to take action to
restore confidence in the rouble.
He was speaking as the rouble plunged more than 40 percent
against the German mark and a bewildered Russian central bank
said it could no longer afford to defend its currency.
The German government has ruled out granting any more
international financial aid to Russia, on top of a $22.6 billion
package put together by the IMF last month, until Russia
implements agreed tax and budget reforms.
Germany is Russia's biggest foreign lender and investor.
Russia's sovereign and commercial debt to Germany totals 75.8
The financial crisis led to declines in European shares.
Frankfurt was hardest hit among major European bourses, with the
Xetra-DAX plunging more than three percent in a reflection of
German banks' estimated $30 billion exposure to Russian debt.
Waigel said Germany had good relations with Chernomyrdin,
who was unexpectedly re-appointed by President Boris Yeltsin
"We will make use of these relations to help Russia," Waigel
Chirac also offered moral support to Russia but insisted on
In an annual speech to French ambassadors in Paris, Chirac
said the international community should back efforts by IMF
chief Michel Camdessus to ease the crisis.
But he added: "His intervention today in Russia, with the
full support of the G7, will only succeeed if the essential
domestic reforms sought by President Yeltsin are implemented
resolutely by the new government of Chernomyrdin."
Chernomyrdin flew off to Ukraine suddenly on Wednesday to
Chirac renewed a call for a strengthening of the IMF, in
particular by giving its policy-making interim committee