Just as international organisations are seeing Russia achieve the kind of economic performance they long hoped for, their prospects of influencing the country's future policy are declining fast.
With growth of 7 per cent last year, a strong trade balance, a projected budget surplus for this year, the rouble stable and foreign currency reserves building up, Russia's economy looks stronger than it has for years.
A compliant parliament, an energetic president and a team of liberal economic reformers in key government positions ought to be well placed to implement structural reform - notably in banking and of natural monopolies - that has long been demanded by bodies such as the International Monetary Fund.
Yet an IMF mission hoping to agree a new programme left Moscow empty-handed in late November after unexpected and fundamental disagreements over issues including the levels of government expenditure.
Since then, there has been little sign of reconciliation. Indeed, the supposedly private meeting in Moscow this weekend between Germany's Chancellor Gerhard Schroder and President Vladimir Putin has taken on a new public importance following hints yesterday that Russia would not honour repayments this month to the Paris Club of sovereign creditors.
One reason for Russia's apparent lack of concern over making repayments is that it does not now need money from foreign donors and is more confident in dictating its own terms as a result. "We have far less leverage than in the past because of the strong financial situation," says a senior official at one international organisation.
Another factor is that Mr Putin, concerned about Russia's dependence on the outside world, has sent signals to his administration in recent months that foreign aid should be reduced in an effort to establish greater autonomy.
Just as important, however, is that the main foreign lenders are rethinking their strategies towards Russia and taking a tougher stance. Organisations as diverse as the World Bank and the Soros Foundation have reduced their commitments.
"There was a tremendous urge in the early 1990s to pump a lot of money into Russia, but the actual results were less than the expectations," says Tom Graham, a political analyst at the Carnegie Foundation and former US diplomat. "Everybody is reassessing what happened."
Janine Wedel, a US academic, argued in her book Collision and collusion that western assistance to Russia focused on supporting a small circle of individuals - the young liberal reformers - rather than on specific policies. When these individuals fell out of favour, so did the foreign sponsors and their programmes.
US Republican congressman Christopher Cox, who last September produced a scathing report on President Bill Clinton's policy towards the country during the 1990s, concluded: "Russia today is more corrupt, more lawless, less democratic, poorer and more unstable than it was in 1992."
An analysis published this month by the US General Accounting Office (GAO) examined the Dollars 38bn provided to Russia in the 1990s by five leading international institutions: the IMF, the World Bank, the European Bank for Reconstruction and Development (EBRD), the European Union's Tacis and the US Aid programme.
Albeit couched in more diplomatic language, the report is also critical, citing studies by the organisations themselves. It says that approaches were unco-ordinated, expectations too high, and both corruption and a lack of Russian political consensus in favour of reform substantially limited progress.
Mr Graham says that much aid was directed at supporting companies in the donor countries and "trying to persuade Russians to do things they didn't want" with little thought to local social and economic conditions. The result only helped boost corruption.
Meanwhile the IMF, the largest individual lender, came under political pressure to offer repeatedly credits in exchange for promises that never materialised, while apparently turning a blind eye to less attractive aspects of policy.
If international organisations are reconsidering their approach to Russia in the wake of the difficulties of the past, the political environment in which they are operating is also changing.
The fading memory of the collapse of communism, disillusionment over the slow pace of progress, and recent scandals including allegations of money laundering through the Bank of New York and Russia's campaign in the breakaway republic of Chechnya and cultivation of "pariah states" have done much to reduce the appetite for increased support.
Finally, all the international organisations remain hampered by another factor. Russian thinking on economic matters roughly reflects the approaches of the organisations. But the broader goals of building a civil society and a just legal system - which most believe are essential for long-term policy implementation - remain far from fulfilled. *****
***** The New York Times January 8, 2001, Monday, Late Edition - Final SECTION: Section A; Page 3; Column 1; Foreign Desk HEADLINE: Putin Tells Schroder He'll Pay Soviet Debt BYLINE: By PATRICK E. TYLER DATELINE: MOSCOW, Jan. 7
The German chancellor, Gerhard Schroder, left Moscow tonight like a smiling creditor who got what he wanted from President Vladimir V. Putin of Russia, who saw off his guest with an affirmative airport declaration: "We intend to pay and will pay the debts of the former Soviet Union." About $20 billion of the $48 billion in Soviet-era debt is held by Germany.
After a festive weekend of negotiation, religious services celebrating the Eastern Orthodox Christmas, motor touring and even sleigh riding through the snowy Russian countryside, the two leaders, and their wives, Doris and Lyudmila, parted company today in high spirits. But neither indicated that a solution had been found to Russia's imminent default on $1.5 billion in debt payments due in the first quarter of the year.
Mr. Putin seemed to be smiling tonight because Mr. Schroder said he and the Russian leader were still discussing ideas about how to convert part of that debt into investments in Russian industries, an idea that Mr. Putin favors. Negotiations are expected to be stepped up this month, both leaders said.
"No one in the world has an interest in placing Russia's economy in a situation where it will not be able to honor its international obligations," Mr. Putin said, explaining that 25 percent of Russian budget expenditures this year will go to debt and interest payments.
Mr. Schroder said nothing to disagree, and the tenor of parting remarks suggested that a compromise was possible along the lines of Russia's making a substantial payment this year as warranted by its strengthening economy, while some debt is rescheduled or converted into investments in Russian industries.
But Mr. Putin acknowledged the strong political pull on Mr. Schroder on the debt issue, saying, "At one point in our conversation, the chancellor told me that friendship is one thing, but duty is duty." Though Mr. Putin said nothing more about the context of the remark, it clearly signified the German position that stronger ties between Berlin and Moscow will not translate into debt forgiveness and that Mr. Schroder, as his government said in a statement this week, expects Russia to live up to its obligations.
The parting remarks by the two leaders did not touch on how each was looking to the incoming administration in Washington, or President-elect George W. Bush's proposal to build a national missile defense shield. Mr. Putin said, "It was very important for me to learn and hear, personally, from one of Europe's leaders, how Germany sees the development of relations between the European Union and Russia and between Russia and Germany."
Both leaders endorsed further medical studies into the possible health effects from NATO's use of depleted uranium ammunition during the 1999 offensive in the Balkans.
But Mr. Putin went further, criticizing NATO's intervention by saying, "The use of force in Yugoslavia, or anywhere in Europe in the 20th and the 21st centuries is absolutely unacceptable." Mr. Schroder just smiled and left for home. *****
Yoshie