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Russia aid plan defended
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September 5, 1999: 10:58 a.m. ET
Clinton aide defends IMF policy despite banking fraud allegations
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NEW YORK (CNNfn) -A senior Clinton administration official, seeking to ward off political criticism amid growing allegations of a cross-border banking scandal, said Sunday that U.S. and International Monetary Fund support for Russia should continue.
White House National Security Advisor Samuel Berger, in an article published in the Washington Post, said IMF assistance helped start a market economy in Russia after decades of communism.
"Tens of thousands private businesses have been created. Russia's first modern middle class has emerged. With IMF help, Russia has beat hyperinflation," Berger wrote.
The Clinton administration official argued that continuing to help Russia economically would benefit U.S. security interests. Various recent nuclear weapons treaties and the deactivation of nearly 5,000 nuclear warheads "...would not have been possible had we not simultaneously supported Russia's transformation into a more stable, open and prosperous society, despite the frustrations of that undertaking," the national security official said.
Berger's comments come amid reports that Russian mobsters, officials and business tycoons may have diverted funds from the IMF and elsewhere and laundered the money in U.S. and European banks.
Most of the attention in the United States has focused on the Bank of New York (BK) and Republic Bancorp (RBNC). But there has been growing concern in Europe as well.
Deutsche Bank AG Chief Executive Rolf Breuer reportedly indicated his company may have been involved. "It is possible that we were misused as intermediaries," he said, according to the Sunday edition of German newspaper Welt am Sonntag. The bank is investigating, the newspaper said.
Presidential politics
Republican candidates in the upcoming presidential race are beginning to use the bank scandal allegations to tarnish the Democratic administration for its support of Russia's President Boris Yeltsin.
Berger reiterated the IMF's position that there was no proof of the allegations, and that steps were being taken to ensure that aid money was used properly.
"While we have no evidence that IMF funds have been stolen, we will continue to insist on safeguards and accountability of IMF programs as a prerequisite for disbursements. Today IMF funds can be used by Russia only to refinance debt to the IMF," wrote Berger.
-- from staff and wire reports
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