Banks must not fund

Despite much protest from human-rights groups and other international organizations, World Bank President James Wolfensohn agreed to implement the disbursement of a $650 million loan after a meeting Feb. 1 with Russian Deputy Prime Minister Viktor Khristenko. Considering Russia’s policy toward Chechnya has consistently violated international law, this comes as a disappointment to the international community.
Despite the World Bank’s decision, however, the International Monetary Fund has delayed payment of a $640 million loan to Russia. Russian officials insist this loan is necessary to support and implement Russia’s new economic program, and without it, Russia will be forced to rely on private financing and loans from Japan and other countries to achieve economic growth. Citing economic factors, however, the IMF has been hesitant to support Russia’s demands for loans. On Jan. 30, IMF financier George Soros stated that the organization “must pull out of Russia since foreign investors and international financial institutions have lost the ability to influence the development of the situation in the country.” The IMF has lost confidence in international investments in Russia, Soros was implying, because of the Russian government’s handling of the Chechnya crisis.
Although Russian First Deputy Prime Minister Mikhail Kasyanov commented that the IMF’s decision was a blatant act of opposition to Russia-West relations, banks and other financial institutions should not finance any government whose actions explicitly violate international law. Such institutions are responsible for maintaining and encouraging accordance with international laws, treaties and standards because of their considerable influence in the international community.
Although Russia’s actions in Chechnya have served to encourage and revitalize a demoralized public in lieu of economic relief, which itself would no doubt do much to alleviate current conditions in the conflict, the Russian forces in Chechnya have flouted most humanitarian standards for treatment of civilians. Russian forces have destroyed most civilian towns and villages, killing an undisclosed number of Chechen civilians, and they have failed to provide safe transportation or exit routes for fleeing refugees. The Russian soldiers — unpaid by their own government — have also been allowed to loot households of any goods or valuables, whether they were occupied or not.
In addition to being ethically objectionable and costly on their own, these measures have exacerbated the economic developmental challenges faced by Russia. Even if Russia is to ultimately keep control of Chechnya, rebuilding it will be a daunting financial, political and physical task that will undoubtedly further impair economic progress.
The Russian government can hardly be seen as a reliable investment partner, considering it has accepted various commitments — including the protection of human rights — and has subsequently abrogated or neglected them. Considering that alienating the Russian government is hardly a wise step to take, the banks can maintain an objection to the methods employed in the conflict without necessarily maintaining an objection to the ultimate political goals of the conflict.