Russia did eventually change its mind and will now pay its debts to its Paris Club creditors. After a puerile attempt to avoid payment of last month’s installment and Europe’s sharp reaction to it, with Germany’s Deputy Finance Minister Caio Koch-Weser even threatening Russia will be dropped from the G-8, the Russian government seemed to realize that by reverting to such tactics it would merely damage its relations with the West. The Russian officials who went to Berlin vowed to pay up on time. Everyone pretends that nothing has really happened.
This is not actually true, however. Foreign debt repayment has not been foreseen in the 2001 budget and now the Finance Ministry is feverishly looking for ways to scrape up the money due creditors. Perhaps this year’s budget, already approved by the Duma and President, will have to be revised. Certain social programs will have to be cut and some economic projects axed. Of course, Russia’s last year fat profits from extremely expensive oil could have made it possible to make the scheduled payment of $3 billion without Russia tightening its belt overly much. But where has this revenue gone? In part, this question has been answered by Duma’s Accounting Chamber head Sergei Stepashyn who said the bulk of the money went to pay for the military campaign in Chechnya and this money should have been allocated under a separate budget expenditure item. “The war is expensive,” he admitted. Generally speaking, the foreign debt situation is a graphic example of the new Russian leadership’s infantilism, of the infantilism of officials who did not foresee debt repayment, perhaps expecting that Russia would be allowed to get away with it, and also the infantilism of its president and his entourage who dream about Russia recovering its geopolitical role and spheres of influence without it dawning on them that they will have to pay billions of dollars for their dream to come true.
The debt, which the West could have given a fledgling Russian democracy craving reforms and integration into the civilized world will not be remitted to a state claiming a superpower status and showing unrestrained ambitions. The great have to pay. This year, it is $3 billion, and in 2003 it will be $15 billion. Perhaps such a figure will help Russian society wake up and realize that it is better policy to live in accordance with common sense, not ambitions, as well as to elect a president who would actually implement free market reforms and democratic values, not be simply another conqueror of the Caucasus. That $15 billion could just be the price Russia will have to pay for its return to the civilized world.
