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Chernomyrdin Appeals for Cooperation with West

January 30, 1994

DAVOS, Switzerland (AP) _ Russia could face ″chaos, collapse and domestic strife″ that would threaten the whole world if western investors abandon the country now, Russian Prime Minister Victor Chernomyrdin warned Sunday.

But his appeals for more western investment to help prop up Russia’s flagging market reforms received a cool response from business and government leaders attending a weekend economic forum.

Lee Kwan Yew, senior minister of Singapore, told Chernomyrdin that before investments can begin to flow to Russia in earnest, ″People must be convinced of a stable macroeconomic policy.″

Donor governments and businesses are worried Russia’s already rampant inflation may spiral out of control as a result of policy switches since last month’s parliamentary elections, which saw surprising gains by right-wing parties.

Chernomyrdin, a former boss of the state-owned gas company, is widely blamed for the recent resignation of two leading pro-Western reformists in a shake-up in President Boris Yeltsin’s government.

The reformers left because Yeltsin, prompted by Chernomyrdin, chose to retain Victor Gerashchenko as president of the Russian central bank.

Gerashchenko has a reputation for open-handed policies with regards to credits for industry, a practice that which is feared to be provoking hyperinflationary pressures.

Since arriving in this Alpine resort Saturday, Chernomyrdin has had a blitz of meetings with bankers and business leaders in an effort to convince them the reform process will remain on course.

Chernomyrdin pledged to try to keep Russia’s monthly inflation rate this year at the 13 percent seen in December 1993, even though the rate is expected to rise considerably early this year because of wage hikes for state workers already in the pipeline.

U.S. Treasury Undersecretary Lawrence Summers and other donor government officials attending the meeting have cautioned the West would be unwilling to give additional credit to Moscow until serious economic reforms were in place.

Russia is trying to secure the second $1.5 billion part of a loan promised by the International Monetary Fund.

Organizers of the World Economic Forum claim the conference has grouped executives representing turnover of more than $3 trillion. It is a popular event for developing nations seeking more investment.

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