Russia To Put $7.5 Bln In Aid Fund For Allies

The leaders of Russia, Belarus and the Central Asian states of Kazakhstan, Kyrgyzstan and Tajikistan discussed joint efforts.

Russia is expected to contribute $7.5 billion to a rescue fund of five ex-Soviet states on top of more than $3 billion already promised to individual allies, Belarussian President Alexander Lukashenko said on Wednesday.

The leaders of Russia, Belarus and the Central Asian states of Kazakhstan, Kyrgyzstan and Tajikistan discussed joint efforts to fight the global economic crisis, including the creation of a $10 billion mutual rescue fund, at a summit in Moscow.

"To create the anti-crisis fund, which is worth approximately $10 billion, Russia will contribute $7.5 billion, Kazakhstan $1 billion," Lukashenko told the meeting.

Russian President Dmitry Medvedev, who addressed a final news conference, gave no figures of contributions by individual countries to the fund. He said there will be no non-refundable handouts.

"We are creating this fund to issue loans...to our allies," he said.

"Terms should be acceptable for the countries finding themselves in a difficult situation, similar to those under which international fianancial organisations issue their credits."

Russia, whose markets lost three quarters of their value and where gold and currency reserves plummeted to under $390 billion from more than $600 billion last summer, is one of the worst losers from the raging global crisis.

But Russian leaders insist the national economy is still strong enough to weather the storm itself and help its allies. In the past week, President Dmitry Medvedev has promised $2.15 billion in a rescue package for Kyrgyzstan and another $350 million to Cold War-era ally Cuba.

Russia has also agreed to speed up allocation of a $1 billion credit to Belarus and said it would consider in the next two weeks Minsk's request for another 100 billion roubles ($2.77 billion).

Moscow, which aims at using the troubled times to consolidate control over allies, has won major political concessions from the recepients of the aid.

Belarus agreed to form a joint air defence system with Russia, whose relations with NATO have reached post-Cold War lows in the past year.

Kyrgyzstan announced after receiving the Russian aid it would close a U.S. military base crucial for supplies of Western forces fighting in Afghanistan.

The rescue fund for the members of the economic group, known under its Russian acronym of EVRAZES, was negotiated on Wedneday as members of ODKB -- a post-Soviet security pact grouping members EVRAZES members plus Uzbekistan and Armenia -- were mulling the creation of a joint rapid reaction force.

The Russian-dominated force is set to become a nucleus for military and security cooperation between Russia's allies and a guarantor of stability in the post-Soviet space, especially in energy-rich Central Asia closely watched by the West.