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Date sent: Wed, 15 Dec 1999 18:25:54 +0100
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From: Le Monde diplomatique <[EMAIL PROTECTED]>(r)
Subject: West's autistic view of Russia
Le Monde diplomatique
-----------------------------------------------------
December 1999
AS THE CHECHEN WAR CONTINUES
West's autistic view of Russia
_________________________________________________________________
Conspiracy or chaos? Either way, not much good has come of eight years
of Western "aid" to Russia and uncritical support for the group of
free-marketeers around President Boris Yeltsin.
by JACQUES SAPIR *
_________________________________________________________________
Many Russians believe that the West's attitude to their country since
1991 has been geared, consciously or unconsciously, to undermining
their country. This applies at the level of both national governments
and international organisations. The conspiracy theorists find
confirmation of their view in the policies that have been recommended
to the Russian leadership by a succession of high-handed foreign
official experts since the winter of 1991. Their view was even more
thoroughly confirmed by the economic crash of August 1998,
particularly with the pressure for "reforms" coming from Western
governments just at the time when Russia's financial institutions were
collapsing. The Nato intervention in Kosovo added still further to
their sense of being victims of a conspiracy and this is now reflected
in Russia's new "military doctrine", revealed to the world in October,
which takes a decidedly anti-Western stance (1).
This reading of the world is indicative of a country in which people
have no control over their destinies. The greater the gap between the
authorities and society, the more such theories flourish. However, in
this context the conspiracy view fails to tell the whole story.
The International Monetary Fund (IMF) was initially set up as a way of
helping capitalist countries through temporary balance of payments
crises. It then became a prime mover in promoting liberal economic
policy worldwide, and in late 1991 was given a key role in the
business of channelling aid to Russia. It had no expertise in dealing
with so-called "transitional" societies, let alone in resolving their
crises. In its view, it had a scientific approach that was both
infallible and universally applicable. As a result, in its handling of
the issue of aid for Russia, it simply used its habitual concepts and
means of intervention.
In Russia, as in its dealings with other countries, the IMF made a
priority of reducing inflation and cutting budget deficits, whatever
the consequences. This meant adopting monetary and fiscal policies
that ignored the very particular social and monetary circumstances in
which businesses were operating, in the carry-over from the Soviet
period. The deflationary drive succeeded, but at the price of a
demonetarisation of the economy, a collapse of the tax base, and a
freeing-up of the economy which in turn resulted in capital flight,
the criminalisation of part of the Russian economy and the development
of a purely speculative finance market around Russia's treasury bonds
(the GKO). This monetary policy also led to an overvaluation of the
rouble - a four-fold rise between January 1993 and December 1996 -
which had disastrous consequences for Russian industry.
The Asian crisis of 1997 and Russian crisis a year later provided a
rude awakening. The crisis is still not past, and anyone who followed
the violent differences of opinion between IMF economists and the
World Bank in September-October 1998 would be tempted to think that
the former had been overcome by a kind of scientific autism. True, the
IMF's managing director Michel Camdessus made the notable admission
that his organisation had contributed to creating an "institutional
desert in an ocean of lies" in Russia (2), before announcing his
resignation on 9 November. However, while remorse and admissions of
guilt may have value in the confessional, they have little value in
the business of economic policy, any more than they have in politics.
In many instances Washington has played a determining role in
decisions made by the G7 and the IMF. Their strategy has been a
mixture of objectives that have been fixed and initiatives that have
been more or less uncoordinated, a result of the progressive
fragmentation of the decision-making process within the United States
itself. In the former category we have nuclear, chemical and
biological non-proliferation, together with integration of the Soviet
Union (subsequently Russia) into the world economy. It was in the name
of non-proliferation that Washington supported Moscow from 1990 to
1993 in its resistance to demands for sovereignty from the Soviet
republics, particularly in the case of Ukraine. Another constant has
been the concern to prevent a brain-drain of Russian expertise to
countries such as Iran and Iraq. This has seen the US, together with
the European Union, funding a number of Russian research institutes
dealing in military applications.
The shortsightedness of the US political establishment in regard to
developments in Russia derives in large part from a cultural
unwillingness to study and understand the material and institutional
conditions that underpin state structures and market relations in the
countries with which it has to deal.
This blinkered view is further aggravated by fears of a resurgence of
the USSR - largely unfounded but nonetheless deeprooted. In its
concern to avoid any possibility of a "communist comeback", US
diplomacy has supported the group of liberals around Yeltsin, and uses
the extent of their influence as its sole yardstick for success or
failure of the economic transition. Effectively Washington has been
supporting leaderships rather than processes. It has also devoted much
energy to weakening the influence of Russian politicians whom it
considers a threat to its friends. This was the case with the
campaigns against Arkady Volsky (3) in 1992 and 1993, and against
Yevgeny Primakov, prime minister from September 1998 until this May.
On several occasions this strategy has led to the White House
intervening in Russian political life, both directly and indirectly.
For instance, during his showdown with the Russian parliament in 1993
Yeltsin received explicit financial and political support from the US.
During the first Chechen war President Bill Clinton was moved to
compare Yeltsin to Abraham Lincoln. American financial aid and advice
were key factors in the run-up to the presidential election in 1996.
And Washington's promotion of free-market liberalism left no space for
criticism or backtracking in the processes of privatisation and
deregulation in Russia.
This set of choices cannot be understood without analysing the
fragmentation of the decision-making process in Washington. Conflict
between the Pentagon - looking for a more gradual transition - and the
State Department played an important role in the early 1990s. The US
military showed far more concern about Russia's social and economic
stability than Strobe Talbott, the US deputy secretary of state
handling relations with Russia. In the course of 1993 the State
Department got the upper hand, and this, together with an alliance
with the US Treasury, resulted in priority being given to shortsighted
policies of privatisation and economic austerity. The information
supplied by the US security services on the real state of Russian
society, and on the corruption and criminalisation of America's
"friends" in Russia, was either systematically rejected or ignored.
The most spectacular instance of this was a report which the Central
Intelligence Agency (CIA) sent to Vice President Al Gore, only to have
it returned with critical comments attached.
This fragmentation also finds expression in the US' inability to
conceptualise the Russian situation in overall terms. For instance the
presence of US oil interests in the area of the Caspian Sea means that
Washington has pursued aggressive policies in the region which work to
the detriment of their political friends in Moscow. The US presence in
Azerbaijan has become increasingly marked, either directly or via
Turkey as middleman. In Ukraine its concern is to prevent any hint of
a rapprochement with Russia, for fear of reviving the spectre of the
ex-USSR.
For a final example of this lack of coherence we need only look to the
eastward expansion of Nato. The Pentagon has been reticent on this
front, but the State Department has been pushing it, partly under
pressure from East European lobbies in the US, and partly as a way of
weakening the EU.
The conclusion is inescapable that the US has had a series of policies
- rather than one coherent policy - in relation to Russia. It is a
mixture of shortsightedness and hostility. The economic crisis of 1998
and the corruption scandals of this year brought this lack of
coherence into the open. So that the question currently being asked in
Washington is "Who lost Russia?"
Europe's policies - or lack of policy - are another factor in the
equation. In France and Britain particularly, policy towards Russia
has been framed within "IMF-speak", so that rather than seeking
comprehensive solutions to the problems of social, political and
economic change, it is just offering a set of formulas.
Experts with a vested interest
The EU has proved incapable of arriving at a clear and creative view
of security issues in its relations with Russia. We may well ask
whether such a shared vision will ever be possible, given that both
economic interests and political cultures in Europe are so widely
divergent. The economic crisis of 1998 led to noticeably closer
relations between France and Germany, which distanced themselves from
the US and began arguing for greater degrees of state intervention.
As a result, neither Paris nor Bonn were as suspicious of Primakov as
Washington. Britain and the US, on the other hand, became increasingly
of one opinion, and this has greatly reduced the chances of developing
a coherent European policy towards Russia.
This political impotence is matched by an impotence at the economic
level. While it is true that Europe's budget made ample provision for
wide-ranging aid programmes in Eastern Europe (for instance the Phare
programme for the countries of Central Europe, and the Tacis programme
for Russia), the organisation of these programmes fast became a public
scandal. Money was being channelled to Western consultants rather than
to the needs of Russia's people and their economy.
Much of this can be blamed on the bureaucratic procedures of the
European Commission. But Europe's leaders have also been guilty of
pursuing short-term interests, such as the disposal of the EU's
agricultural surpluses under the guise of food aid to Russia, which
has rarely been necessary and which has always been disastrous in its
effects on Russian agriculture.
Finally, no analysis of Western policy towards Russia would be
complete without an account of the role played by overlaps of
personnel - a role which has been extremely negative and has
encouraged situations of collusion which have in turn opened the way
for corruption. For instance, Robert Rubin, US Treasury Secretary from
1996 to early 1999, had previously been head of the Russian department
at Goldman Sachs, the bank that played a major role in opening up
Russia's finance markets. His deputy, Lawrence Summers, who took over
this year, is a former student of a deputy managing director of the
IMF, Stanley Fisher. In recent years society dinner parties in New
York have seen a growing presence of the "nouveaux Russes" (a pun on
nouveaux riches) involved in the Bank of New York money-laundering
scandal.
In addition, a number of the economists who have been advising the US
government as Russian experts also happen to be friends with Russia's
leading free marketeers - in particular friends Anatoly Chubais - and
with consultants working for speculative investment funds on Wall
Street. A former leading CIA official, Fritz Ermarth, also a member of
the National Security Council, has gone public with a criticism of the
extent to which US government policy is influenced by US finance
interests, which have invested massively in Treasury bonds issued by
the Russian government (4).
Unfortunately such practices are not confined to the US. Just to take
the case of France, there has been a notable degree of overlap between
the upper reaches of the French Treasury and the IMF. There have also
been attempts by various Russian oligarchs to buy into the world of
the media.
Such overlaps of personnel and the influential role of these oligarchs
do much to explain the present inability to formulate a coherent and
progressive view of the transition in Russia, thereby fostering the
atmosphere of collusion and its corollary, corruption. Regardless of
its rights and wrongs, free-market ideology has often been no more
than a smokescreen for all too easily identifiable financial interests
that have sought to profit from the chaos which that ideology
contributed to creating in the first place.
* Director of studies at the Ecole des hautes �tudes en sciences
sociales. Author of Le Krach Russe, La D�couverte, Paris, 1998.
_________________________________________________________________
(1) See Krasnaja Zvezda, Moscow, 9 October 1999.
(2) Lib�ration, 31 August 1999.
(3) He was a former adviser to Mikhail Gorbachev and in 1992-93 was a
key proponent of a gradual and pragmatic transition. He joined the
opposition alliance this year, after the agreement reached between
Primakov and Yuri Luzhkov.
(4) See "Testimony of Fritz W. Ermarth on Russian organized crime and
money laundering before the House Committee on Banking and Finance",
US Congress, 21 September 1999, Washington DC.
Translated by Ed Emery
_________________________________________________________________
ALL RIGHTS RESERVED � 1999 Le Monde diplomatique
<http://www.monde-diplomatique.fr/en/1999/12/?c=07sapir>
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