Date: Tue, 3 Nov 1998 12:34:48 -0500 (EST)
From: Robert Weissman <[EMAIL PROTECTED]>
To: Multiple recipients of list STOP-IMF <[EMAIL PROTECTED]>
Subject: PERSPECTIVE ON RUSSIA: Blame the Know-It-All West (fwd)
PERSPECTIVE ON RUSSIA
Blame the Know-It-All West
The financial collapse was the inevitable outcome
of its advice on 'reform,' followed since 1992.
By Georgy Arbatov
MOSCOW — Russia today is mired in a crisis much deeper and more destructive
than the Great Depression of 1929 1932. The Russian people have placed the
blame where it belongs: on their own leader, Boris Yeltsin, and his first
name basis Western allies —Bill and Helmut — who, under the rubric of
"reform," pushed market shock therapy on them.
In particular, the present crisis signifies such a complete failure of
American policy toward Russia that, given the right spark, relations could
rapidly deteriorate or even fall into the pattern of a new Cold War. Anti
American sentiment is already higher now than at any time since 1991. Calls
for the resignation of Yeltsin are mounting.
To avert a replay of the bitter times of tension, we need to start over at
the beginning, reconstructing on a new footing the relations established so
hopefully with the end of the Cold War and the demise of the Soviet Union.
The financial panic caused by the incompetent Kiriyenko government, with
Viktor Chernomyrdin standing in the background, made the situation
critical. But Sergei V. Kiriyenko's default and devaluation only threw a
burning match into a vast pool of gasoline. The Russian economy was already
in a highly flammable state due to the years of shock therapy initiated by
former Prime Minister Yegor Gaidar in the early 1990s that elicited so much
enthusiasm in the West. As I and others warned as early as 1992, this kind
of "reform" would only deliver the final blow to an economy that had been
ailing from the time of the Brezhnev stagnation.
Gaidar and his young team had no practical experience in free markets when
they were put in charge of wrecking what was left of the Russian economy.
Unknown economists, they had industriously studied and practiced Marxist
economics. Then, having read Friedrich von Hayek and Milton Friedman, they
immediately became zealous economic liberals. In the space of several
months, they wanted to wipe away the social, financial and industrial
infrastructure of 70 years of centralized socialism and put in its place
the kind of free markets that took centuries to develop in the West. If
people suffered inordinately, it was only proof of just how bad the old
system really was.
Of course, these market extremists would not have been able to change
anything without a president who transformed their ideas into government
policy, the International Monetary Fund that financed those policies and
the Western leaders who embraced them.
President Yeltsin has only a very vague understanding of macroeconomics.
Thus, a very important role was played in the destruction of the Russian
economy by outside advice, above all from Western leaders, the IMF and
Harvard economic specialists. Their advice to stick with shock therapy at
all costs was as unanimous as it was wrong. As a result, today the Russian
gross domestic product has fallen by 50% from the time of perestroika. The
standard of living has plummeted, the mortality rate is up and the birth
rate is down. Education, health care, science and culture have tragically
deteriorated. Crime and corruption are rampant.
Despite the obvious fact of its total failure, the West still clings to
the same idea of "reform," first initiated by Gaidar, promising aid in
return. This was Clinton's warmed over message at the last Russian American
summit.
The West, it seems, fails to understand that the financial collapse of
Russia was not an unfortunate incident, but the inevitable outcome of the
economic reforms pursued since 1992. It is this predicament that presents
the new prime minister, Yevgeny M. Primakov, with such a formidable task.
It helps to explain why he has been so slow in forming a cabinet and
working out a clear and plausible economic program.
In the eyes of the Russian people, all the men who have been in charge
have become a joke. The myth that the Western leaders would save their
friend Boris from himself and Russia from his failed policies has been
shattered. The Russian people now suffer because of that friendship, and
they know it. The idea of the market economy as the best way to go has also
been discredited. Why, we ask, is the way we organize our economy the
condition of our friendship with the West? Why is it even the business of
the West? We want to continue on the course of democratic development.
Ought that not be the foundation of our relations?
Georgy Arbatov is director emeritus of the U.S.A. Canada Institute in Moscow.
