What could be more sensible? Western banks with money to lend getting together with Russian fuel producers who are short of cash to invest in upgrading their extraction facilities.


Yet for months this transaction, which could bring as much as $2 billion in U.S. government guaranteed loans to the oil and gas industries, has hung in the balance because of an arcane currency regulation.


There can be no doubt that large-scale investment is desperately needed in Russia's oil industry, where some wells have simply ground to a halt because of the poor condition of their equipment.


President Boris Yeltsin's lifting of a requirement for oil and gas producers to sell half their hard-currency export earnings to the state should be welcomed as a measure that removes the final obstacle to the loans for new equipment, backed by the U.S. Export-Import Bank.


The currency-sale rule -- introduced to earn the state more dollars and bolster the ruble's exchange rate in the process -- meant the oil companies had first to sell dollars for rubles, then to buy dollars back again with the rubles, and finally transfer the dollars to their creditor as repayment for a loan.


For international lenders, the fear was that the money could at some point simply get stuck somewhere in this chain of transactions -- possibly as the result of some arbitrary rule change -- and that their outstanding loans would not be honored.


Abandoning compulsory currency sales, however, means export earnings can now be deposited abroad until scheduled repayments are made. In this way, the banks can be more sure they will get their money back.


The government should benefit from this as well. Some estimates say the state will receive around 60 percent of increased production in the form of tax revenues and duties.


And, since the money will be disbursed by Western banks, there is good reason to believe that it will be spent on the purposes for which it is intended, rather than on Mercedes and kottedzhi for company executives.


But it is precisely these executives who need to start investing more of their own money in the industry, rather than spending it on plush offices.


There are signs that, as the stock market developes in Russia, the barons who control the country's fuel and energy resources are beginning to realize there is more money to be made from improving the value of their own -- often sizeable -- holdings in their firm, than in milking the company dry.


The way to do this, of course, is to convince outside investors that their company is run efficiently and represents a good buy. And there is no better way of achieving this than by diverting a larger portion of revenues toward investment.