ALSO: Yugoslav troops could be out of Kosovo by noon Sunday

June 19, 1999
Web posted at: 4:45 p.m. EDT (2045 GMT)

In this story: Russian debt on the table Musicians protest debt plan RELATED STORIES, SITES

COLOGNE, Germany (CNN) -- The world's economic powers haggled over Yugoslavia's part in a massive reconstruction plan for struggling Balkan nations during meetings Saturday in Germany.

Western leaders flatly refused to consider economic aid for Serbia so long as President Slobodan Milosevic, considered a war criminal by NATO nations, remains in power.

"So long as Milosevic is there, the money will not be there," a British spokesman told reporters covering the Group of Eight summit in Cologne.

But Russia, which helped negotiate an end to the recent Kosovo conflict, disagreed.

"The conduct of one man must not penalize 10 million Serbs," Russian Prime Minister Sergei Stepashin told French President Jacques Chirac on Friday night, French officials said.

German officials, speaking on condition of anonymity, said that seven of the eight nations attending the summit were trying to block the Russian push.

But European Commission officials said they were preparing to offer a multi-million aid package regardless of Yugoslavia's leadership. The Commission estimates it will make available 150 million euros ($155 million) in 1999, and 500 million euros ($516 million) in each of the following three years to rebuild roads, homes and other buildings.

"The 500 million is going to be available whether Milosevic is there or not," said European Union financial expert Joly Dixon.

Russian debt on the table

On the second day of their three-day summit, G-8 leaders also planned to discuss Russia's financial situation, including about $70 billion in debt run up by the former Soviet Union.

Russia is balking at paying back money owed by former Soviet republics that are now independent. Following a breakfast meeting with German Chancellor Gerhard Schroeder, Stepashin said he was confident a deal was on the way.

"We more or less successfully are coming to a conclusion on the issue of Soviet debt," the prime minister said. "In principle, we reached an agreement."

Stepashin added, "There are a few wrinkles, but I consider that the result is almost 100 percent."

He said Schroeder also agreed to push the International Monetary Fund to release $4.5 billion in Western aid that was blocked when Russia's financial markets collapsed last August.

A senior U.S. official, speaking on condition of anonymity, said Stepashin had assured Western leaders that Russia fully intended to comply with the IMF's terms for release of the funds.

"He talked about the efforts they are making with the Duma to pass the necessary legislation to meet the prior actions requirements of the IMF agreement and their hope is that in July that they would be able to go forward with the IMF," the officials said.

The IMF wants a series of revenue-raising measures implemented before it releases the aid package.

Musicians protest debt plan

The G-8 leaders will also likely consider a U.S.-backed proposal to help Russia keep control of its nuclear arsenal. On Friday, they approved a program to drop $100 billion in debt owed by the world's 33 poorest nations.

But religious groups and others -- who have pushed for more generosity from the world's wealthiest nations -- said the plan fell short of what is needed to relieve the crushing burden of debt.

The Jubilee 2000 Coalition, with Irish rocker Bono of the group U2 and other musicians at the forefront, were organizing a human chain Saturday to ring the site of the G-8 summit.

Bono was to meet with Schroeder and British Prime Minister Tony Blair later in the day.

Moscow Bureau Chief Jill Dougherty, The Associated Press and Reuters contributed to this report.

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