Russia, IMF Making a Deal

MOSCOW: Russia's precipitous slide from superpower to economic deadbeat has created a prickly dilemma for the IMF. They want to loan Russia money -- no one in the West much likes the idea of a total collapse with all those nukes lying around -- but between the communists in the Duma and the corrupt oligarchs in the Yeltsin/Primakov government, the country has repeatedly proven itself unable to repay and unwilling to reform. "Politically, it's very hard for Russia to push dramatic IMF-directed reforms because there's a lot of anti-West sentiment," says TIME senior economic reporter Bernard Baumohl. "And it's too embarrassing for the IMF to keep throwing good money after bad."

This time around, both sides are blinking. Although they were still haggling Tuesday night over the exact size of the loan, TIME Moscow correspondent Andrew Meier says, "The IMF seems to have compromised on the size of the budget surplus it requires from Moscow (to increase its solvency), and in that it's made the best of a bad situation. In return, Russia's likely going to get the $4.5 billion it needs to pay back its IMF loan, and not a lot more." The money may never even leave the fund; it's more of a grace period than a check. At a time when Russia's diplomats may be NATO's only way out of the mess it's made of Kosovo, the West is looking to pat Moscow on the head, not slap it in the face. And what's another $5 billion between friends?