An important political victory

Russia has reached an agreement with foreign commercial creditors to restructure $31.8 billion of its external debt, handing Acting President Vladimir V. Putin an important political victory and helping to clear the way for the country to tap international money markets again. Russia was effectively barred from borrowing overseas after the August 1998 economic crisis, when it defaulted on domestic treasury bills and stopped making payments on its debts to foreign banks and governments. Over the last 18 months, Russia has met with representatives of the London Club of commercial creditors, a loose affiliation of banks and investors, to draw up a repayment schedule to ease Russia's debt burden and to restore its image. The agreement, announced Friday evening in Frankfurt by creditors_ representatives and First Deputy Prime Minister Mikhail Kasyanov of Russia, would basically write off about half of Russia_s foreign commercial debt, analysts said. While its terms are slightly worse than those originally sought by Russia, the deal should enhance Mr. Putin_s standing with businesspeople and politicians at home and abroad ahead of the March 26 presidential election. Mr. Putin is expected to win handily, but to foreigners wary of his past in the K.G.B., he still has to prove he can right Russia_s muddled economy.