When it comes to negotiations over Soviet debt, where Paris goes, London follows. After the conclusion over the weekend of discussions by the Paris Club creditors, most observers expect similarly drawn out moves towards a long-term resolution to emerge from the London Club which meets in Frankfurt today.

Triggered by the decision of the International Monetary Fund to provide an additional $4.5bn in aid to Russia between now and the end of next year, the 18 sovereign lenders to Russia who make up the Paris Club met last week to discuss debt restructuring.

The Paris Club agreed to roll over much of the interest and principal due to be paid on $8bn of debt falling due between August 1998 and the end of 2000, postponing any more definitive solution at least until the end of next year. That gives the Paris lenders time to assess Russia's changed status after parliamentary elections scheduled this December and presidential elections next June. It also gives Russia more breathing space and a smaller debt financing burden in the short-term, while opening the way for fresh financial support from lenders including the World Bank and the Japanese government.

Now it is the turn of the commercial lenders within the London Club, who are likely to take a similar approach - over an even more protracted period. On the table is the future of some $22bn in Prins, representing principal, and $6bn in Ians or interest arrear notes, as well as debt servicing charges some of which have been unpaid since Russia's default last autumn.

Prins and Ians are the fruit of a previous round of restructuring with the Russian government completed in December 1997. But from the point of view of investors, one central issue to attempt to resolve this week is the question of precisely who is their debtor.

Technically, money during the Soviet era was lent via Vneshekonombank, a subsidiary of the Russian government known as the "obligor". They will be keen to push for the Russian Federation itself to take on the obligation for future reimbursements. The Russian government, meanwhile, is attempting to push for a write-off of some of its Soviet-era debt. In exchange, Peter Boone, an analyst with Brunswick Warburg in Moscow, argues the government may be willing to make some up-front payment towards its debts.

Alexi Zabotkine, economist with United Financial Group in Moscow, says that Mikhail Kasyanov, Russia's chief negotiator, may for the first time officially raise the question of write-offs at the London Club meeting. Informally, ministers have already raised the hopes for between 50 per cent and 75 per cent to be forgiven. They have taken hope from the meeting of the G8 nations in Cologne last month, which called for a "comprehensive" solution to Russian debt.

That appears to stand in stark contrast to tough words from the German government reiterated in the last few days, opposing any write-off. But Philip Poole from ING Barings in London, says that any decision may come down to careful semantics. "It would be perfectly possible to maintain the size of the principal while cutting the size of the coupon," he says - mirroring what happened with Brady Bonds for South American debt.

On the other hand, he suggests that the most generous write-offs that have taken place so far under such restructuring schemes - for Poland and Egypt - only amounted to 50 per cent, and those under intense political pressure. he suggests 35 per cent may ultimately be a more realistic figure for Russia.

Even any intermediate "holding" decision from the London Club is likely to run over far longer than the few days taken by the Paris Club, however. While the representatives of 18 sovereign states can sit in a single room and reach decisions rapidly, the London Club's nine delegates have a more difficult task.

Their challenge to achieve consensus among many hundreds of individual institutions - a number that has grown as the original creditor banks to Russia sold on their debts, many to traders and financial institutions with very different approaches. As Eric Fine from Morgan Stanley points out, any restructuring of the terms of Prins requires approval from 98 per cent of their holders; and 95 per cent for Ians. "I'm sceptical about predictions of a rapid settlement," he says. "It could take as long as three or four years."