Global Policy Forum

By David E. Sanger

Washington - Only hours after hearing Treasury Secretary Lawrence Summers describe the new conditions Russia must meet to receive continued international aid, the head of the country's central bank said his country was "being treated like whipping boys" by Washington and suggested he would resist intensive audits of his country's books. The comments by Viktor Gerashchenko, a wily veteran of Russia's shifting political scene, who also ran the Soviet Union's central bank, marked the first time that Russia has openly and harshly criticized the extensive new auditing demanded by Washington before lending new money to Moscow through the International Monetary Fund.

But American officials said that Gerashchenko's outburst -- in which he suggested that the new restrictions on lending to Russia were chiefly a product of Washington politics -- was in sharp contrast to his behavior during the meeting with Summers. Several suggested that he may have been playing to a domestic audience in Russia, where the accusations of money laundering and the demands for new audits have smacked of more American interference in the running of Russia's chaotic economy.

His criticism of the United States also runs counter to the message that Russia's foreign minister, Igor Ivanov, has been delivering here. Ivanov was asked by Russian President Boris Yeltsin to reassure American officials, media and other groups that Moscow is strongly interested in cracking down on corruption and welcomed international scrutiny. "It's fair to say," one senior administration official said, "that they don't have their talking points in full agreement."

In contrast to Ivanov's promises of cooperation, Gerashchenko, speaking to reporters after meeting Summers, said that he was already providing the IMF with as much information as it needs. "We can improve the technology once," he said, "but why should we have to account for everything every day? Do we have to publish our accounts in the gutter press or at official councils?" Among the American demands, which were incorporated in a financial communique issued by the finance ministers of the Group of Seven industrialized nations on Saturday night, Russia must agree to quarterly audits of its central bank reserves, the public money that is a key measure of the government's fiscal health and a major factor in the value of the ruble.

The IMF was surprised by last year's discovery that the central bank was linked to an offshore investment company in the Channel Island of Jersey and that the bank had misreported its asset levels to the fund. The offshore company, Fimaco, was acquired by a subsidiary of the central bank during Gerashchenko's previous tenure as central bank chief, although the Fimaco operations that have drawn the most attention to date fell during the 1994-98 period when he did not head the central bank.

Summers continued his public warnings to Russia on Sunday, repeating the line he took at the opening of a congressional inquiry last week into corruption, money-laundering and the still-unsubstantiated charges that IMF funds had been illegally diverted. "We are concerned about Russia," Summers said. "The capacity of the IMF and the World Bank to help bring about effective policies depends on the will and capacity of Russian authorities and the Russian people to carry forward reforms in their national interests." He specifically said it was "critical" that Russia develop "adequate safeguards to ensure that funds provided by" the bank and the fund 'are used for their intended purpose."

As the two men sparred from a distance, Russian officials on the sidelines of the annual meetings here of the World Bank and the IMF said they did not know when they would receive an additional dose of aid that had been scheduled for release this month. It is essentially money that will be used to pay back the IMF for interest due on past loans -- in this case, about $370 million -- and as an additional safeguard the money will never actually enter Russia. Instead, the IMF will transfer it from one fund to another; it is akin to getting a loan from a bank to pay one's mortgage from that bank for the month.

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