The fate of $640 million worth of IMF loans to Russia will likely depend on a U.S. Congressional investigation, a delay that could cost Russia as much as $1.2 billion.

U.S. Treasury Secretary Lawrence Summers said last week that the next installment of a promised IMF loan should not be delivered until the U.S. government is satisfied that the funds will not be criminally abused.

The administration has been shaken by recent allegations that IMF and other financial creditors may have been involved in a money-laundering scheme through the Bank of New York.

If Congress launches an investigation, the U.S. delegate to the IMF would be obliged to vote against the loan.

"The IMF Board of Directors is scheduled to convene a meeting in late September, but in light of the recent events the meeting may be postponed," Deputy Finance Minister Mikhail Motorin said.

"We hope that all problems related to the allocation of the tranche will be regulated before the meeting," he added.

Russian observers, meanwhile, have reacted to the U.S. concern with a mixture of incredulity and indignation.

"It is not clear why [Summers] wants another check, so long as the PricewaterhouseCoopers audit of Russia's Central Bank answers the questions about the use of IMF funds," Alexander Livshits, the president's special envoy to the Group of Eight industrialized countries, said in a Sept. 1 news conference.

To others, the answer seems perfectly clear.

"In all likelihood, the scandal over the Bank of New York and Summers' statement are manifestations of political problems inside the United States that are getting sharper as elections are approaching, not distrust of Russia," Motorin said.

"It is technically impossible to use IMF money for purposes other than intended.. Russia's Finance Ministry has records to prove how the IMF funds had been used. Furthermore, all Finance Ministry hard currency assets are deposited in correspondent accounts in the United States, so it is very easy to trace them."

The IMF has expressed satisfaction with Russia's efforts and results, specifically improvements in tax collection, the relative stability of the ruble and the state of a targeted operating surplus in 1999.

Gerard Belanger, head of the IMF mission to Moscow, has said he sees no obstacles to the release of a second tranche of the fund's loan to Russia.

IMF Executive Director Michel Camdessus has also said that the Bank of New York scandal will not affect the terms and amounts of financial assistance to Russia.

Russia's 1999 budget assumes that the remainder of the loan will be delivered, so any delay could cause serious problems for the country's liquidity.

A source close to the government told The Russia Journal that if the tranche is delayed, Russia will have to find some $1.2 billion to fulfill its debt obligations to the IMF.

Whatever the short-term results, most analysts seem confident that the scandal will not endanger long-term U.S. commitment to Russia.

"The presidential race has not started in the U.S. yet, so the scandal will not be as big a problem for Al Gore as it could have been if it had erupted later," said Sergei Alexashenko, head of the Development Center think tank.

"In my opinion, the scandal marks America's divorce with Russia's present authorities, but not with Russia."