If only for reasons of parochial self-interest, Russia's deal with the International Monetary Fund (IMF) to bail out its crisis ridden economy with over twelve billion dollars in additional loans this year should cheer us here in Sri Lanka. Russia and the CIS States are, after all, our biggest tea buyer. They have in recent times taken our principal crop to new heights in rupee terms and helped an industry that not so long ago wallowed deep in the doldrums to demonstrate new vigour.

An economic crisis in Russia would no doubt have had a domino effect elsewhere in the Commonwealth of Independent States. This would have been a disaster for the tea industry here that has been doing well both this year and the year before. A devaluation of the ruble, which had been predicted by some global analysts as an inevitable fallout if no deal with the IMF was possible, would surely have hurt us. It would have meant that tea drinkers across what used to be the old USSR would turn to cheaper alternatives to Ceylon tea that they have in recent years been learning to relish.

This would have been a heavy blow on the tea industry here which a few months ago conceded substantially higher wages to its workers. The unions naturally took advantage of the super profits that growers were making to demand a fair share for the workers. Predictably the owners resisted, trying to settle for a price wage supplement no doubt out of awareness that the good times are not forever. Eventually a compromise was reached with both a wage increase and a supplement based on tea prices.

Certainly the privatisation of the state-owned plantation industry by the sale of long leases to private enterprise has led to better management, agricultural practices and much more on the thottams. But the harsh reality is that the cost of production of tea in Sri Lanka is still much higher than it is in India and Kenya, our two main competitors. It is essential that prices should be high enough to give growers a reasonable margin over what the planters call the COP (cost of production) if much needed investment in replanting, factory modernisation and a variety of other development measures are to continue.

With Russia and CIS becoming the main buyers, any economic downturn in those countries depriving consumers there of buying power would have its inevitable impact on tea prices here. This, of course, is not what worried the United States and the other big powers who have used their considerable muscle to influence the IMF to save Moscow from a financial catastrophe. What they feared was the effect of the political chaos that would have resulted if the world's second largest nuclear power got into an economic bind such as that Indonesia is grappling with today.

The world press reported much of the high pressure activity of the last few days when President Yeltsin lobbied western leaders for support. He spoke on the phone to world figures like President Clinton, Chancellor Kohl, President Chirac and Prime Minister Tony Blair. Clinton who talked to Yeltsin for twenty minutes on the telephone was firm in his demand that negotiations between Russia and the IMF were quickly concluded. But, as the Washington Post reported, he stopped short of offering direct U.S. aid.

The western world well understand the geopolitical logic of ensuring that Russia remains stable. Although in global terms, the Russian economy may not be as big or as important as those of the western powers and of Japan, Washington is sharply aware that a steep devaluation of the ruble may mean the end of the road for Boris Yeltsin. That's how it was for Suharto of Indonesia. In Indonesia however, there were no extremists on the wings to seize power. The worst case scenario was a military takeover. In Russia the story is different and the west is obviously concerned about who calls the shots in a nation with thousands of nuclear weapons.

Whatever the arguments, the IMF too is not awash with cash having already invested billions of dollars in bailing out those Asian nations that have not yet started coming out of the woods. Also, it does not wish to look as though it has caved into demands by big western banks and brokerages that bought Russian bonds because of the high interest they carried and are now fearful of any possible devaluation of the ruble.

The IMF has now put a package together for Russia. The negotiations that preceded it have been described as the most difficult ever between the Yeltsin government and the IMF. The Russians say that the agreement signals faith on the part of the international community that Russia has both the will and the ability to overcome her problems. There is still a long way to go yet and we in Sri Lanka must hope that infusion of new aid will enable the Russian consumer to cheer himself up with Ceylon tea!