The West should grant Russia two years to restructure its estimated $70 billion foreign debt if it wants economic reform to succeed here, one of America's leading bankers has suggested.


"It's a tough challenge and one that needs time", William Rhodes, Citi-corp's vice chairman said in an interview with The Moscow Times.


Rhodes, an expert in debt restructuring who was closely involved in managing Latin America's debt crisis, left Russia on Sunday after spending five days meeting with senior economic officials and christening Citibank's new representative office in Moscow.


Rhodes said he supported a debt rescheduling plan for Russia set forth by Paul Volcker, former chairman of the U. S. Federal Reserve Bank and an unofficial advisor to the Russian government. Volcker has devised a two-year debt restructuring plan which would enable Russia to apply interest payments to principal.


"This would buy time to find a solution", said Rhodes, who said he had a keen interest in Russia for more than 30 years after majoring in Soviet studies at Brown University. "As the economy improves, Russia would be able to formally restructure its debt and service its creditors".


Creditors and debtors have had difficulty agreeing on a time frame for


Russia to pay back its debt.


In recent meetings in Washington, Russian government officials requested 10 to 15 years to pay off its debts, but met with a cool reception from large creditor nations. The United States, which is not a leading debt holder, supports more lenient terms for Russia.


Further talks of the Paris Club, an organization of countries holding the debt, are scheduled for this month.


As competition heats up among developing countries for infusions of capital from world economic bodies, money is going increasingly to countries that try hardest to meet payments and show themselves to be most creditworthy, he said.


Hungary, for example, has -been rewarded for its effort to meet its outstanding payments with a $1. 5 billion grant of direct capital last year. Poland, however, received less than one-third that figure because its commercial debt is still unstructured.


"The main thing is that Russians


don't put themselves in category of a country that is not willing to put its house in order when it comes to debt", Rhodes said.


While the ex-Soviet Union has its unique economic problems, Rhodes borrows lessons from Latin America's debt crisis to back his ideas for Russia. An economic reform program that relies solely on debt rescheduling will not work in the long-term, he said.


"Debt is not the biggest challenge", Rhodes said. "Stabilizing the internal economy is. There are too many instant experts coming in here and advising the government on how to proceed".


Rhodes said the West must be more patient and realistic with the pace of reform, while Russia must consolidate its efforts to shore up its economy and stop it from spiraling out of control.


"One of the things this country needs is a unified approach - from all areas", he said.


Citibank has been working with The Federal Reserve Bank of New York and the Russian-American Bankers Forum in sculpting programs aimed at introducing modern banking practices in the former Soviet Union.


Rhodes applauded the government's deregulation efforts and its first steps toward privatization. But he said it most do more to stabilize the ruble and help it become convertible.


"The government must take the tough steps early on", he said.