Kremlin Conspiracy

by Brian Freemantle

  ‘Not any more,’ said Pike, equally controlled. ‘We’re tied now, East and West: neither can afford the financial strain of the other getting beyond control. A sovereign default anywhere – Africa, Latin America, it doesn’t matter where – would have a chain effect. Banks nervous to cover one endangered loan by calling in another would directly pressure you. There’d be a panic and there’d be collapses: a lot of collapses. The Soviet Union have considerable debts, bunched short-term. Capital repayments too. There would be a concerted demand for payment. Could you meet a concerted demand?’

  ‘We’ve not sought any repayment rearrangement, neither do we intend to,’ said Lydia stiffly.

  ‘You’re calling in loans from Poland, Hungary, Romania and Czechoslovakia,’ guessed Pike. ‘To pay you they’re seeking deferment from us. You’re creating the chain effect already.’

  ‘We’re not calling in loans,’ said Lydia. ‘Merely insisting that they’re met on time.’

  ‘And what’s happening proves my point,’ said Pike triumphantly. ‘Pressure from one side immediately creates pressure on the other.’

  ‘We’ve sought repayment from our debtors, as is our right,’ persisted Lydia. ‘That’s sound banking principle.’

  ‘There is an alternative,’ he said.

  ‘What?’

  ‘Bridging finance.’

  She frowned at him. ‘Where’s the logic of increasing our indebtedness!’

  ‘In maintaining the status quo,’ said the American. ‘What assets, in practice, could you seize if you declare someone in Africa in default? Virtually none.’

  ‘That wouldn’t be the point,’ said Lydia, with strained patience. ‘The object would be one of example.’

  ‘Which I’ve already explained wouldn’t work.’

  ‘The repercussive danger is certainly one which needs relaying back to Moscow,’ conceded Lydia.

  ‘You’ve my assurance that it would happen,’ insisted Pike. He was persuading her, he decided: slowly it was coming his way.

  ‘Would additional funding be available?’

  He had no authority to offer any commitment, Pike realized. But he’d been right in what he’d told her: it was the only alternative. ‘Yes,’ he said. ‘I believe it would.’

  ‘How much?’

  ‘What would you be seeking?’

  ‘That would need detailed assessment,’ said the woman. ‘If it’s to be a full cushion against the short-term capital as well as interest – and cover, too, the failed payments from our own debtors – I would estimate something in the region of $250,000,000,000.’

  She looked expectantly at him and Pike said, ‘That’s a figure I could put forward to the Fund for consideration.’

  ‘I can’t make a formal request to you,’ admitted the Russian.

  ‘I wouldn’t propose it as such,’ said Pike. ‘I would put it forward as a discussion proposal, nothing more.’

  ‘And I’ll make sure the difficulties of default are fully appreciated,’ undertook Lydia. She smiled hesitantly across at him. ‘There’s nothing more to discuss, is there?’

  ‘I don’t want to go, not yet,’ he said.

  ‘No,’ she agreed.

  ‘Tomorrow will be soon enough.’

  ‘Too soon.’

  ‘It’ll hurt.’

  ‘I want it to.’

  They ate in the room, disinterestedly because of their impatience to make love again. It did hurt, for both of them, but not enough to take away the pleasure. They remained in bed throughout the afternoon and the evening, consumed and cocooned with each other, with no awareness or concern about anything happening outside, just resting and loving and resting and loving. In the morning, before it was properly light, she lay cradled in the crook of his arm, her head against his chest. Pike said, ‘We could arrange another meeting like this if there were an approach for re-finance.’

  ‘Yes,’ she agreed.

  ‘I’d like that to happen.’

  ‘Not as much as me, my darling,’ said Lydia.

  He hadn’t made a mistake at all, decided Pike. The reverse, in fact. He felt very happy.

  There had not been an appearance before the Court but Jane still felt humiliated by the abruptness of her dismissal. And that’s what it was, she recognized, even though she’d been allowed the formality of tendering her resignation. Just an hour after submitting it she had the official response, agreeing to her departure and adding that she was not required to work any period of notice but to be out of the building that evening.

  Jane left quietly, without goodbyes to her staff, which she supposed would confirm her guilt to Burnham and to whoever else he’d told. So what! she thought in near tearful belligerence. The Bank didn’t matter, not any more. And anyway she’d never liked official departures, with awkward ceremonies and insincere speeches. Far better this way, in fact. She was quite free now, able to fit into whatever arrangements Tom might like to make. It was going to be wonderful, married to Tom: she knew it was.

  By the time he telephoned from Switzerland she was more concerned at the lack of contact from him than at what had happened at the Bank. Despite which – and as reconciled to it as she now was – Jane would still have liked Tom to have shown more sympathy when she recounted the story.

  ‘I was worried when you didn’t call,’ she said.

  ‘What the hell for?’

  Jane grimaced at the abrupt question. ‘I just thought you might have telephoned.’

  ‘You know what I’ve been doing!’

  ‘Yes.’

  ‘Then you must surely know how busy I’ve been.’

  ‘I’m sorry,’ she said. ‘I wasn’t trying to make a big thing out of it.’

  ‘My father wants to talk to me straight away,’ said Pike. ‘I’m flying home direct from Switzerland.’

  Alone in her Kensington apartment, Jane’s face twisted with disappointment.

  ‘I’m sorry.’

  ‘I understand,’ said Jane.

  ‘I’ll call you from Washington.’

  ‘I could come out,’ she said hopefully.

  The suggestion seemed to surprise him. ‘I’m going to be busy,’ he said.

  ‘There’s no reason any longer for me to be in London.’

  ‘It would mean living in an hotel,’ he said. ‘I gave up the Manhattan apartment.’

  ‘I wouldn’t mind that,’ she said. ‘We’d be together.’

  There was a pause from his end of the line. Finally he said, ‘I’ll fix it and then I’ll call you.’

  ‘Do you want me to come out?’

  ‘Of course I do: what sort of a question was that?’

  ‘Nothing,’ she said, in immediate retreat. ‘I’m sorry.’

  ‘I’ve got a plane to catch,’ said Pike. ‘I must go.’

  ‘Be careful,’ she said automatically.

  ‘I’ll call you from Washington,’ he repeated.

  ‘Tom.’

  ‘What?’

  ‘I love you.’

  ‘Yes,’ he said impatiently. ‘I love you too.’

  Chapter 36

  His father was waiting in the car at Dulles airport, to be briefed on the drive back into Washington. The executive directors were already convened at the IMF headquarters when they arrived and Pike went straight into the conference, rehearsed by the limousine discussion with his father. Unlike previous occasions he spoke directly to the conference and not through his father: as he talked he looked directly towards the British delegation, disappointed that Burnham didn’t appear to be included in it and therefore wouldn’t see his elevation in status.

  There was an eruption of questioning when he stopped, with the British chancellor leading. ‘There was no doubt that they are considering default?’ demanded Stephen Wilder.

  ‘Absolutely none,’ said Pike. ‘She specifically told me that was the measure they were contemplating. It’s definitely Third World indebtedness.’

  ‘How sure are you that the woman understood the knock-on ef
fect if they did that?’ demanded the American Treasury Secretary.

  Pike looked towards Bell, inexplicably offended at hearing Lydia described as ‘the woman’. ‘I’m quite sure,’ he replied.

  ‘Isn’t it surprising that they hadn’t realized that before?’ demanded Bell.

  It was Pike’s father who answered. ‘The financial responsibility … the awareness … is a new thing: we’ve established that over the last few months,’ said the older man. ‘With the centralized system as opposed to our own I can understand it being an aspect easily overlooked. They had no way of knowing, after all, if Western consortia were involved.’

  ‘We’re involved in every African country,’ said Volger.

  ‘We hadn’t anticipated the extent of the Soviet move there,’ said Pike. ‘That took a specific analysis when I was in Switzerland. If we, with our supposedly more advanced banking system and expertise, hadn’t considered it, why should Moscow?’

  There were nods of agreement from several of the delegates around the room.

  ‘Did they appear to consider themselves in a position of strength in Africa?’ asked the Bank of England chairman.

  ‘Absolutely,’ assured Pike. ‘They clearly intend to bring any doubtful debtors into line with one convincing example.’

  ‘So it will be a hard attitude to change,’ persisted the Englishman.

  ‘She did understand the effect,’ reiterated Pike.

  ‘But will she be able to make others understand?’ said Bell. ‘I argued against the informality of the meeting before and I say again that it should have been a fuller and more authoritative delegation.’

  Pike’s father at once became aware of the politicking of the Treasury Secretary and moved to confront it. ‘The information we’ve gained and the conference we’re able to have here today is precisely because the contact was informal. We would never have made the sort of progress that we have with a delegation, any more than we would have been able to prevent some public awareness.’

  ‘I agree,’ said Henry Ambersom. Looking directly towards Pike the World Bank chairman said, ‘I think you are to be congratulated.’

  ‘I think we are overlooking a very practical problem,’ persisted Bell, ignoring Ambersom’s open praise. ‘The IMF and the World Bank can cover minimal problems. But I don’t consider the $250,000,000,000 minimal in any degree. We’ve confirmed a problem we feared might arise, a problem that will arise anyway if they persist in default. How do we stop it if they don’t? We don’t have the finance available to offer the bridge they need.’

  There was a moment of absolute quiet throughout the room as Bell produced the spectre that haunted them all. Prepared by the ride from the airport Pike’s father said, ‘There is a way.’

  Concentration was focused entirely upon the IMF managing director, as he intended it should be, because the proposal was going to be the one which would project him right into the Treasury Secretary’s seat and he wanted everyone to realize it, not necessarily now but later, with hindsight. ‘This has, quite obviously, got to be considered as an international problem,’ he said. ‘And internationally there is an imbalance in the spread of the loans to the Soviet bloc. The preponderance of debt is concentrated throughout Europe and the Far East. In total American institutions are only extended to $150,000,000,000. There has been detailed discussion in the past of the United States of America providing safety-net finance through the IMF. I think that facility should at last be created….’

  ‘Are you actually suggesting that the United States of America makes itself responsible for $250,000,000,000?’ said Bell, overanxious to express his contempt.

  ‘Of course not,’ said the older Pike, further exposing the Treasury Secretary. ‘I’m suggesting an increase in all the quotas, from every country. But I am proposing that the contribution of the United States is correspondingly bigger. I am suggesting that additional US finance be made available to provide whatever safety net might be necessary if there is a shortfall. And I am also proposing that an approach be made …’ he hesitated looking directly at Bell, intent upon every advantage. ‘… an official approach, to Saudi Arabia. In the past the Saudi Arabians have reacted favourably to requests for advance funding. No country would be exempt from the effects of a world banking collapse: certainly not a country which has its oil priced in dollars, as Saudi Arabia has. It is a fact of which they are fully aware. I am talking in generalities but it would not be difficult to calculate the percentage increase necessary from the individual quotas from member countries, from America and from the Arabs.’ His proposal was presented with exactly the sort of flair he knew appealed to the President. And there would be no reason, once it was created and the Soviets involved, why Jordan couldn’t make public what had happened. The idea of the United States snatching everyone else back from the brink would appeal most of all.

  ‘I think the proposal has much to commend it,’ said Henry Ambersom.

  ‘So do I,’ said Volger, adding to the implied American approval.

  ‘Have you any conception of the total indebtedness you are considering!’ demanded Bell, aware that the discussion was moving out of his reach.

  ‘I would be interested to hear if the American Treasury Secretary has an alternative proposal,’ said Ienari Tanaka, the Japanese minister, entering the discussion.

  Adjusting the cliché to fit the surroundings, Pike supposed that was the sixty-four trillion dollar question.

  ‘Yes,’ said Bell. ‘I have.’

  Now it was the Treasury Secretary who commanded the attention of the directors. ‘Surely,’ said Bell, ‘a more sensible and far less costly undertaking would be to provide standby cover to Western banks likely to be affected by the default of any African country?’

  It was fortunate, thought Pike, that he had anticipated the suggestion. Prepared, his father rose from beside him and said, ‘No, I do not consider such an undertaking would be either more sensible or far less costly. The most obvious problem is that we do not know which of the indebted African countries will be made into an example by the Soviet Union. If we are going to prepare a contingency for the entire continent, then the sum involved would be $195,000,000,000. I consider the difference immaterial in view of the respective debtors. The developing African countries have consistently and persistently rescheduled and declared moratoria. Certainly by covering Western banks we could avoid a collapse but the element of lending is repayment. The Soviet Union has consistently repaid: indeed we know from the Zurich meeting that the very proposals they are considering now, coupled with a gold sale, are to meet their commitments. I consider a loan to Moscow to cover their short-term difficulties is much sounder business than shoring up Africa yet again.’

  It was a strong rebuttal, uncontestable among the countries assembled, all of which had suffered from non-repayment of African debts.

  ‘I would be prepared to suggest the increase in quotas to my government,’ said Pierre Larousse from France.

  ‘So would I,’ said Luigi Cambino, the Italian minister.

  From around the room came indications of agreement to the idea of additional funding for the Soviet Union and, after gauging the feeling of the meeting, the IMF managing director proposed – and had unanimously adopted – the reference to committee for calculation of the details of individual contributions. There was a further decision to have the Saudi Arabian delegation composed of members of the Interim Committee, headed by the British chancellor.

  After the formal ending of the meeting there were the inevitable private groupings, several of the delegates coming forward personally to congratulate Pike. The British contingent made no approach. It was thirty minutes before Pike managed to extricate himself; for the first time he was feeling tired from his flight from Europe and the concentration of the meetings. Henry Ambersom was at the door, obviously waiting.

  ‘You did an extremely good job,’ said the World Bank chairman.

  ‘Thank you, sir,’ said Pike.

  ‘It w
as good of you to find time to go up to see Janet.’

  ‘I said I would,’ reminded Pike. ‘How is she?’

  Instead of answering, Ambersom said, ‘I’ve got a favour to ask.’

  ‘What?’

  ‘Could you go up again? The doctor treating her is anxious to see you.’

  ‘What about?’

  ‘He didn’t say.’

  ‘I’ll try,’ promised Pike.

  Lydia Kirov’s return to Moscow was practically a duplicate of Pike’s to Washington.

  Malik was waiting for her at Sheremetyevo airport and they drove directly to a meeting of the Politburo Committee. Lydia had prepared her briefing on the homeward flight and she delivered it without interruption, conscious towards the end of something like impatience from the three men confronting her.

  When she finished Lenev said, ‘So default would be sufficient?’

  ‘That’s what he said.’

  ‘So let’s declare it …’ He shuffled through papers before him. ‘Let’s default Zambia,’ he said. ‘We’ve sufficient reserves.’

  ‘I think refinancing requires further consideration,’ said Lydia.

  ‘If it goes wrong, it could destroy everything,’ said Korobov.

  ‘No,’ said Lydia. ‘There’s more to gain.’

  ‘It’s an unnecessary extension,’ said Pushkov.

  ‘The proposal always allowed for an approach from the West,’ reminded Lydia.

  ‘We’ve achieved enough,’ said Lenev.

  ‘I think we should wait for further contact: to see their proposals at least,’ said the woman. ‘The American commitment is still slight, compared to the rest of the world. And there’s the provision for influence in the undeveloped countries.’

  Her last was a telling point, which led to a continuation of the discussion for a further two hours. At the end of it Lydia felt as strained as she had after any negotiations during the preceding twelve months.

  ‘You consider it worthwhile?’ demanded Lenev finally, clearly making it Lydia’s personal responsibility.

  ‘Yes,’ she said, recognizing the commitment the man was demanding. So scared, she thought: every one of them.