KUCHMA UPBEAT ON RECEIVING $2.5 BILLION LOAN FROM IMF. Ukrainian President Leonid Kuchma has said he is hopeful that an IMF mission expected in Ukraine on 23 July will recommend the release of a $2.5 billion loan to Kyiv, Ukrainian Television reported on 19 July. He said that the IMF mission "is coming with the wish to make a final review of the [loan] program and approve it." Kuchma added that the World Bank, which, like the IMF, suspended cooperation with Ukraine, has promised him it will release more than $1 billion in credits following "the very first telephone call from the IMF." Meanwhile, Kuchma has once again appealed to the Supreme Council to approve an amended 1998 budget with a reduced deficit equal to 2.3 percent of GDP. "The refusal to make a decision on this issue will threaten Ukraine's national interests," Ukrainian Television quoted the president as saying. JM

MOLDOVAN, UKRAINIAN FOREIGN MINISTERS DISCUSS BORDER ISSUES. Moldovan Foreign Minister Nicolae Tabacaru met with his Ukrainian counterpart, Borys Tarasyuk, in Chisinau on 17 July to discuss disputed border issues, BASA-press reported. Tabacaru said the talks were constructive and that the three separate disputes over their common border would be resolved simultaneously rather than separately. Tabacaru said Ukraine's proposals are being studied, but he gave no details about those proposals. Tarasyuk also met with Moldovan President Petru Lucinschi, who said Chisinau will work to "consolidate its traditional relationships with Ukraine." PB

A dramatic increase in the number and intensity of ties between Russia's regions and various foreign countries has prompted the central Russian government to set up a special department within the Foreign Ministry to deal with such contacts.

Established earlier this year to "regulate rather than forbid" such contacts, the new department has yet to receive full parliamentary approval. The State Duma approved the measure last month, but the Federation Council--in which the regions are represented directly--has yet to back it.

On the one hand, many people in Moscow approve such expanded contacts between the regions and foreign countries. Not only do such ties help to promote economic development, but they are widely viewed in Europe and the U.S. as entirely natural. The EU, for example, has institutionalized sub-state representation at a variety of forums. Any number of American states maintain special liaison offices in key foreign trade partners. And the Russian authorities themselves have openly pushed ties between regions within the Commonwealth of Independent States as a means of promoting the integration of that organization's 12 member countries.

On the other hand, even more officials in the Russian capital are concerned about the negative impact that such contacts may have on Russian foreign policy, Russian political development, and even the stability of the Russian state. Representatives of the Foreign Ministry noted several weeks ago that Moscow was extremely unhappy when several Russian regions entered into direct economic contacts with Abkhazia, a breakaway region in Georgia. Such contacts undercut Moscow's efforts to promote ties with Tbilisi, they argued.

The Russian Foreign Ministry was even more upset when representatives of Bashkortostan, Dagestan, Sakha, Tatarstan, and several other regions participated in an Istanbul conference that formally recognized the Turkish Republic of Northern Cyprus. Not only did that declaration contradict Russian policy vis-a-vis that island, but it inevitably raised questions in the Greek half of the island about just how reliable a partner the Russian government will prove to be.

And the Russian Foreign Ministry openly complained to the press in June that Saratov Governor Dmitrii Ayatskov's efforts to promote ties with German Chancellor Helmut Kohl crossed the line between what Moscow considers permissible and what it does not.

The Russian government is also concerned about the ways in which such ties between its regions and foreign countries could affect domestic political development. While the central authorities seem pleased by the economic aspect of such contacts, they are less happy about the way in which such an independent source of wealth allows the regions to act with respect to Moscow. Regions with significant foreign ties often negotiate with the relatively weak central government from a position of strength, giving the regions rather than Moscow the upper hand on such issues as tax collection and the implementation of centrally adopted laws.

Finally, many in Moscow are nervous about the way in which such ties could help to power secessionist movements within the Russian Federation. Many of the most independentminded regions of the country, populated by ethnic Russian and non-Russian alike, are actively pushing to have representatives abroad, just as some union republics did in the Soviet period. Several recent Russian commentaries have recalled the symbolic importance for Ukrainians and Belarusians of the missions to the UN that those two republics maintained from 1945 until the end of Soviet power.

Tatarstan, for example, now has representatives of various kinds in more than 15 countries. Chechnya is actively pursuing such contacts. And even regions like Leningrad, Pskov, and Karelia are entering into special relationships with foreign states.

In most countries around the world, such ties between regions and foreign countries would not seem to be a serious problem. Both the central governments and the regions recognize that there is a more or less natural division between their powers and responsibilities.

But that is not the case in Russia. From the viewpoint of both Moscow and the regions, their relationship is one in which the gains of Moscow appear to the regions like a return to hypercentralization and the gains of the regions look to Moscow like the first step toward secession.

For this reason, the contacts Russian regions now have with foreign countries could prove explosive. But the creation of a new department at the Russian Foreign Ministry suggests that Moscow may now be preparing to institutionalize something that has long been common in other countries.