Russians Strive to Fit the G-7 Mold

MOSCOW — At the last Kremlin briefing before today’s Summit of the Eight in Denver, the Russian transcriber was thoroughly rattled.

She looked up in perplexity at a mention of the “Paris Club” creditor nations and stopped writing altogether when talk turned to trade tariffs. When the preview of the Denver confab was over, she seized the arm of a departing journalist to ask in panic: “What on Earth is a Sherpa?”

Unfamiliarity with the lingo of the Group of 7 industrialized countries--a “Sherpa” is a behind-the-scenes negotiator--may be the least of Russia’s hindrances to joining the exclusive club and transforming it from the G-7 to the G-8.

With double-digit inflation, seven years of a shrinking gross domestic product, a propped-up currency and credit institutions still in their infancy in Russia, integration with the G-7 remains little more than a hope.

Fitting Russia into the fold of rich nations was a promise made by President Clinton during a meeting with President Boris N. Yeltsin in April.

The pledge was widely regarded as a sop to the Kremlin leader for his acceptance of NATO expansion into countries that were once part of Moscow’s political orbit.

Trying to integrate struggling Russia into the world economy at this stage conjures up an image of Cinderella’s ugly stepsister trying to jam an oversized foot into the glass slipper.

“You just cannot mesh the remnants of a command economy with the market institutions through which the G-7 states influence the global economy,” said one Western economics attache here.

Although Russian officials have been trumpeting their country’s elevated role in the G-7 summit this year--the first Russian involvement in purely economic sessions--some acknowledge that full integration will be a lengthy process.

“There are some issues, especially those relating to the financial obligations of the eight countries, which as yet remain of only theoretical relevance for Russia,” said Sergei V. Yastrzhembsky, Yeltsin’s spokesman.

For instance, Clinton and the leaders of Britain, Germany, France, Italy, Canada and Japan will meet without Yeltsin on Saturday to discuss European monetary union.

Monetary policy is a major stumbling block for Russia, as the ruble has been made convertible and stable only through the intervention of the Central Bank. The bank’s “ruble collar” has protected the currency from more than 40% inflation last year and an expected 15% this year.

But officials warned last week that they may have to stop propping up the currency if a long-predicted economic turnaround fails to materialize.

Russia’s GDP fell another 3% last year, the sixth straight year of contraction since the 1991 collapse of communism and state subsidies to industry.

Modest growth had been predicted for this year, but more recent forecasts suggest flat performance or even another 0.5% to 1% shrinkage.

Unemployment is a problem plaguing some of the G-7 countries--even powerhouse Germany suffers a postwar record 11%--but Russia’s jobless rate is too complicated even to calculate. Moscow acknowledges that about 9% of the work force is idle, but officials have no firm estimate of those who are formally employed by idle factories and are not getting paid.

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While Russia’s economy remains too much of a work in progress for the country to become a full-fledged member of a new G-8, officials here argue that there are other merits to including the former superpower.

“We believe that the depth of reform already implemented in Russia gives grounds for considering this a market economy,” said Vadim Lukov, head of the Foreign Ministry’s international policy department.

Deputy Foreign Minister Georgy Mamedov described Russia’s role in a reconfiguring group of the world’s most influential nations as the facilitator of its reconciliation with the developing world.

“On the eve of Denver, Russia is getting numerous messages from Asian, Middle Eastern and even Latin American countries,” Mamedov said. “They want certain issues to be raised and presented in Denver because the decisions to be adopted there will determine the appearance of the world.”

Russia has been involved at the fringes of four previous G-7 summits, but the Denver meeting will be the first in which it has a role in economic matters. Kremlin officials plan to use their higher profile in Denver to press for inclusion in other international economic bodies, such as the Paris Club and the World Trade Organization.

Moscow claims that it is owed as much as $150 billion by countries it traded with during the Soviet era, which the Kremlin would like recognized by the Paris Club to balance a reported $125 billion that it owes to other states.

Russia has indicated that it wants WTO membership by the end of next year, but it must first negotiate separate tariff arrangements with each of the member countries--a process that may take as long as full G-8 integration.