BOSTON PUBLIC LIBRARY 



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3 9999 05018 434 8 



Some regard the Russian preference as presumptive, given 

 current arrearages on past GSM repayments. Yet, there are 

 important reasons why the Russian position on this issue makes 

 sense, both from their perspective, and our own. 



0.8. -Russian Comnercial Relationship 



Commercial credit guaranteed by the U.S. government (GSM) 

 provides an important lifeline to the emerging commercial sector of 

 the Russian economy. Under current circumstances, such credit 

 would not be extended by private institutions absent U.S. 

 guarantees. Consequently, our objective in advancing the 

 development of Russian commercial structures would be set back, not 

 advanced, by a decisions to forego commercial (GSM) terms, in favor 

 of food aid as a long term U.S. policy. 



Cash Flow 



It is important to understand that current debt repayment 

 difficulties facing the Russian Federation result not from a basic 

 unwillingness to repay past debt, nor from an absolute inability to 

 do so. The problem today is a simple question of cash flow. 



The immediate answer to Russia's current cash-flow problems 

 rests with the Paris Club negotiations. Russia is rich in natural 

 resources. Such resources can and will be brought on line to 

 service past debt, provided Western creditors have the confidence 

 and patience to weather today's uncertainties. In the meantime, 

 U.S. policymakers should move affirmatively to re-position current 

 U.S. policy dictates to allow continued credit to Russia on terms 

 it can afford. 



Food Aid 



We all expect that nearby future U.S. assistance to Russia 

 will be in the form of food aid (Food for Progress) rather than new 

 GSM credits. The Administration deserves important credit for 

 finding the means available to maintain trade with Russia, given 

 current restrictions on credit lending programs. Nevertheless, it 

 is also important to recognize that food aid is not the preferred 

 long-term solution to the cxirrent U.S. -Russia grain trade impasse. 



Problems with food aid are legion. Cargo preference 

 requirements inflate both U.S. and Russian costs in trade, 

 undercutting the effectiveness of the assistance offered by the 

 United States. Furthermore, there is not sufficient U.S. food aid 

 resources to adequately manage future Russian demand. 



Futura D.8. Policy 



Future U.S. policy should continue to maintain a mix of 

 commercial, food aid and technical assistance programs. Commercial 



