At a dinner party of the world's richest industrial democracies, Russia is an ever-awkward guest. Once again this weekend, debt-laden and threatened with default, Russia comes to the table with wounded pride and a hand outstretched.
Two years ago, when President Boris Yeltsin went to the Denver summit of leaders of the seven major Western industrial powers, he triumphantly proclaimed the creation of a new Big Eight. But when Yeltsin joins President Clinton and others for an abbreviated rendezvous Sunday in Cologne, Germany, it will be clear that Russia once again is financially dependent on the West, while struggling to maintain its stature as a global power.
At stake for Russia in the debate over Yugoslavia is prestige and recognition for its diplomacy in the Kosovo crisis. But at stake in the summit is something even more fundamental: whether Russia's fragile economy can hang on without another disaster before year's end.
Russian experts and government leaders say Yeltsin's unwritten agenda for the meeting is to tell the West: It's payback time; Russia needs fresh international lending and should be rewarded for helping negotiate a settlement with Yugoslavia. The message is that Russia desperately needs the help, despite its uneven attempts to enact structural reforms and the sticky negotiations over Russian peacekeeping forces.
"This weekend is the crucial time," said Andrei Piontkovsky, a political analyst here. "Certainly, Yeltsin presents his bill for his services, and he will be paid.
"Russia's view is it wants to be rewarded for its behavior. But, to raise the price, Russia demonstrates that it can behave in different ways. It is primitive, but this is the logic. This march of 200 of our boys sitting helplessly at Pristina -- for Yeltsin they are a bargaining chip in future talks with friend Bill and the others meeting this weekend. And they will talk not only about peacekeeping. Much more important for Yeltsin is the financial."
Russia's restive generals set in motion the incident that triggered the fuss over the Kosovo peacekeepers. But in recent days, the talk of Russia's political elite has been focused just as tightly on the prospects for debt relief from the International Monetary Fund.
The last government of former prime minister Yevgeny Primakov won a tentative pledge of $4.5 billion in new lending, just enough to cover Russia's debt to the fund this year. To avoid any impropriety, the money will never leave Washington but will roll over from one IMF account to another.
But the promise was contingent on Russia meeting a long list of IMF demands for economic reform, including the passage of 30 bills in parliament. The Russian government promised to boost flagging tax revenue with new levies on gasoline and vodka, to seriously tackle reform of the banking system and to loosen currency controls. The fund also has insisted on and received from the Russian Central Bank a report on Russia's use of an obscure offshore firm to handle its currency reserves, but details are not known.
The new government of Prime Minister Sergei Stepashin, in its first major test of wills with the lower house of parliament, the State Duma, was overwhelming defeated Thursday. The chamber voted 219 to 101 to reject a proposed gasoline station tax hike -- a key part of the IMF package. The banking reform laws have been partly passed, but Russia has done more huffing and puffing at some wrecked banks than restructuring the system.
Moreover, the Duma is election-bound this fall and unlikely to tackle the most difficult choices. The gas tax bill was declared dead. "It is futile to hope that any government can get the Duma to approve these reforms, especially meaningful reforms, especially on the eve of the elections," said former prime minister Yegor Gaidar.
Stepashin courted IMF Managing Director Michel Camdessus at a dinner party on a riverboat in St. Petersburg this week, hoping for a little wiggle room. They reached an "absolute understanding," Stepashin said hopefully. Yeltsin may press Clinton for the same during his four-hour summit visit in Germany.
Russia's economy has shown signs of life since the devaluation, as factories have started making goods that can no longer be imported because they have become too costly. But serious financial strains remain, especially a threatening debt bomb.
Russia owes foreign creditors $17.5 billion this year; the country's overall federal budget is only about $23 billion. So it desperately needs to defer some of the debts, or it will face distressing alternatives: a sovereign default, which could further hurt its already rock-bottom credit worthiness; pay the debts at the expense of miners, teachers and nurses; or eat into the remaining hard currency reserves and watch the ruble tumble and hyperinflation take off.
Although Primakov vowed six months ago that Russia would not default on its loans, it already has started falling behind. Russia has missed about $2 billion in payments on Soviet-era debt to the London Club of commercial creditors and the Paris Club of creditor nations.
Now, Russia is racing the clock. The IMF board meets in late July; if loans are not approved then, the next chance will not come until autumn. "The $4.5 billion is peanuts," said Peter Westin, an economist with the Russian-European Center for Economic Policy here. "Russia has a difficult situation with a lot of debt payments in June, July and August. The IMF is still crucial." Westin said that restructuring Russia's debts, including those to the London and Paris clubs, first requires an approved IMF program. "The symbolic value of this tiny package is more important than the money it generates," he said.