Yeltsin Pledges No Retreat From Economic Reforms : Russia: U.S. promises to redouble efforts to help Moscow get more international financial support.

MOSCOW —  Russian President Boris N. Yeltsin pledged that his struggling nation would make no retreat from its difficult course of economic reform, delighted U.S. officials said Thursday, as President Clinton and the Russian leader completed the first round of their two-day Moscow summit.

But officials said both leaders recognized the urgent need to do more to ease the pain that reform has inflicted on millions of ordinary Russians if Yeltsin’s government and the effort to shift the former Communist state to a free-market democracy are to survive.

The United States, while offering no new financial aid of its own, promised to redouble its efforts to help Moscow get more help from international financial institutions. And officials continued to explore ideas for improving Russia’s social safety net of unemployment insurance and other benefits.

In a hopeful Kremlin ceremony today, Clinton and Yeltsin, as expected, were joined by Ukraine’s president, Leonid Kravchuk, in signing a hard-won agreement to dismantle all of the 1,800 nuclear warheads that fell to Ukraine after the collapse of the former Soviet Union in 1991.

Hoping to sweep aside one of the most terrifying relics of the Cold War, Yeltsin and Clinton also were putting the finishing touches on an agreement to stop aiming long-range nuclear missiles at American and Russian soil.

On Thursday, the embattled Yeltsin chalked up an indisputable plus. One of his close allies was elected head of the Federation Council, or upper house of the Russian Parliament--a sign that Yeltsin’s relations with the new legislature will be at least somewhat less confrontational than with its predecessor.

Officials in the American delegation, while acknowledging that the widespread suffering triggered by economic reforms poses a serious threat to Yeltsin’s political survival, nonetheless described the first rounds of closed-door sessions in unusually positive terms.

“The Russians indicated an unstinting commitment to the reform process, indeed, an intensification of the reform process,” declared Secretary of State Warren Christopher.

And Treasury Secretary Lloyd Bentsen said Clinton pledged that as long as the reform process continues, the United States will work with other leading democracies, the International Monetary Fund and the World Bank to keep support flowing “as rapidly . . . as possible.”

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The release of those funds, which could total more than $24 billion, is tied to progress on reforming Russia’s economic system, including curbs on the often-inflationary operations of its Central Bank.

But those steps have repeatedly become entangled in Moscow’s bitter struggles over political power.

And Clinton came to Moscow without his checkbook.

Last year, the United States made $4.1 billion available to the nations of the former Soviet Union to help Yeltsin move ahead with the conversion to a free-market economy, and Congress approved $2.5 billion more this year. With the Administration in tight straits over the budget and the battle for Clinton’s massive health care reform about to begin, no new U.S. financial aid is in the offing this year.

For his part, Yeltsin, asked by reporters if he wanted more U.S. aid, dutifully answered, “Not more than was promised already.” He said he wanted to “express my satisfaction” at the first round of talks.

Hewing to the line, Oleg Lobov, a former first deputy prime minister, was quoted by the Itar-Tass news agency as saying, “Yeltsin informed the American delegation in a detailed way about positive progress in Russian reforms, stressing that there could be no talk about any slowdown in the pace of reforms.”

Anders Aslund, a Swedish economist who advises the government, said such “clear statements (by Yeltsin and Clinton) are more important in this situation than actual money. It’s an endorsement of the reformers, who were hurt so badly in the elections.”

Russian officials said they had asked for additional U.S. credits for the former Soviet nations so those countries can afford to buy Russian oil and gas at world prices. Russia has been trying to raise its prices toward world levels but meets resistance and ends up selling for less in order to avoid destabilizing those countries politically.

Moreover, even as he and Clinton spoke at a brief news conference, Yeltsin sent a strong signal that backed up their optimistic assessment. He reappointed Deputy Prime Minister Anatoly B. Chubais the senior Russian official in charge of the effort to convert the economy from the Communist state-run system to a free-market, demand-oriented enterprise.

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Still, evidence of the divisions and sensitivities that add to Yeltsin’s problems could not be entirely submerged.

Vladimir P. Lukin, Russia’s ambassador to the United States and also a member of the Duma, or lower house of the Russian Parliament, said Yeltsin’s positive comments did not necessarily mean Russia would submit more strictly to the spending restrictions of the World Bank and IMF.

“We will take all advice into account, including that from international financial agencies, but elaborate our own approaches, our own rhythm,” he said. “We will decide for ourselves what reforms we will make and what price we are willing to pay for these reforms.”

Aware of Yeltsin’s vulnerability, Clinton operated on two planes throughout the day, delivering a broad-brush endorsement of democracy in public settings and, in his private meetings, according to participants, delving into the details of the economic transition taking place here.

Similarly, Bentsen, Christopher and other senior Clinton advisers here took pains to emphasize what they said was the unanimous commitment of the Russian leader’s senior aides to continued reform.

White House officials pressed the same line in background briefings for reporters.

They said Russian officials shared their sense of strategic priorities, focusing on the need for temporary support and relocation assistance for workers displaced by reform instead of arguing for long-term welfare programs.

They also pointed out that Russia’s budget deficit, which at one point reached 20% of its gross domestic product, now comprises only 9% of GDP--a sign, the officials said, that reforms have already made important strides toward creating a climate for economic stability and growth.

Clinton began his first meeting with Yeltsin in the Kremlin barely eight hours after arriving in icy middle-of-the-night darkness. His day did not end until around midnight with toasts and the now-ritual saxophone performance during a dinner at the Russian president’s dacha on the outskirts of Moscow--an elegant country palace built in 1896 for an uncle of Czar Nicholas II.

At Spaso House, the residence of U.S. Ambassador Thomas R. Pickering, Clinton told members of the Duma, other government officials and Russians taking their first steps in running private businesses that Russia “must be strong democratically and strong economically.”

In a show of public support for reform that played to Russian sensitivities since the end of communism, Clinton drew attention to the “greatness” Russia has demonstrated “in culture, on the battlefield, in government, in space.”

“And now on the brink of the 21st Century, this great nation is being called upon to redefine its greatness again in terms that will enable your nation to be strong and vital and alive for hundreds of years into the future,” he said.

At the heart of the President’s meetings Thursday was the challenge of keeping Russia on a path intended to convert almost all state-run enterprises to privately operated companies, and to do so without provoking a public uprising in response to the hardships that ensue.

Under the defunct Soviet system, most social welfare, including unemployment protection and pensions, were provided by specific industries. The health care and social safety net benefits for a coal miner, for example, would come not from the national government directly but from the mining company--which financed the benefits with part of huge government subsidies paid to such companies under the Communist system.

That pattern remains largely true today.

U.S. officials are repeatedly arguing that it is cheaper and more helpful to workers if the government provides benefits directly and cuts back subsidies to those state enterprises that are run inefficiently or are making products for which there is no market.

“That is a very high subsidy to pay to try to get to some of the social problems,” Bentsen said.

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Rather, he said, such funding should pay for worker retraining and investment in products that can be sold profitably in a competitive market.

Bentsen broke from the Yeltsin meeting to address the first luncheon meeting of the American Chamber of Commerce, founded here a month ago, and to listen to brief descriptions of some of the problems foreigners face in building investments here.

In his comments at the evening reception, Clinton also touched on the sensitive subject of how the Russian government will treat the neighboring former republics of the Soviet Union.

“We must keep our devotion to democracy, to a certain freedom in our economic affairs and to a respect for one another’s neighbors,” he said.

American pressure on Russia for good treatment of those nations, while likely to be well received at home, could provoke angry reactions from Russian nationalists if it is perceived as heavy-handed or rejecting of Russia’s view that it should retain a sphere of influence.

Times staff writer Richard Boudreaux contributed to this report.

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