-----Original Message----- From: John Hermann <[EMAIL PROTECTED]> To: John Hermann <[EMAIL PROTECTED]> Date: Friday, 3 September 1999 7:18 AM Subject: Our Banks Drive Russians Into Poverty Economic Reform Australia ERA EMAIL NETWORK Date: Tue, 31 Aug 1999 From: Bob Olsen <[EMAIL PROTECTED]> Subject: Our Banks Drive Russians Into Poverty QUOTES: The West's money had no evident effect on the underlying economy. Russia's industrial output actually dropped by 60 per cent since 1992. A United Nations report last month went even further, blaming Western aid and the rigid economic policies that accompanied it for a ``man-made depression'' that plunged millions of Russians into poverty, social insecurity and poor health. Russian money scam infuriating Stephen Handelman Toronto Star, August 31, 1999 NEW YORK - Last September, a team of Canadian and Russian economists concluded that as much as $140 billion (U.S.) had been funneled out of Russia since the collapse of the Soviet state. This astonishing figure, greater than the combined capital flight out of Latin America during the 1980s, confirmed what many analysts had been saying for years: Russia's failure to live up to Western hopes for a post-communist democracy was not the result of Russian "genes" or the natural chaos of a transition economy; it was a man-made, avoidable catastrophe. "Russia lost crucial development capital ... that could otherwise have been used to generate economic growth", John Whalley of the University of Western Ontario's Centre for the Study of International Economic Relations, one of the authors of the study, charged at the time. Now the other shoe has dropped. For the past two weeks, newspapers have linked that multi-billion-dollar capital flight to money-laundering and international organized crime activities. One Russian crime boss was allegedly responsible for laundering $4.2 billion alone through the prestigious Bank of New York over the past year. Law enforcement authorities in the U.S. and Britain have now opened major investigations. The U.S. Congress has announced hearings. Even Russia, tentatively, has committed itself to a review of the books. But this shouldn't be news to anyone either. Russia's financial and political corruption - or more specifically, the blood link between organized crime and politics in the post-Communist state - has been evident to anyone who bothered to look. Until now, most people could take comfort in the fact this seemed to be Russia's problem. But the real lesson of the headlines is Western complicity. And it should make us furious. For the past eight years, Western governments and financial institutions have been pouring money into Russia. Much of the money and credits was given with only a cursory nod to the accounting rules of due diligence. Some of the funds might end up in unexpected locations or in unsavory hands, we were told with a wink, but if this was what it took to transform Russia into a free-market democracy, it would be worth it. They have been doing this, of course, in our name. It seemed to work. A few Russians and Western investors and consultants got very rich, trickling down just enough cash and entrepreneurial spinoffs to spark a temporary economic boom. At one point, the Moscow Rolls Royce dealership was the largest in the world. But the operation was a failure. The West's money had no evident effect on the underlying economy. Russia's industrial output actually dropped by 60 per cent since 1992. A United Nations report last month went even further, blaming Western aid and the rigid economic policies that accompanied it for a `"man-made depression" that plunged millions of Russians into poverty, social insecurity and poor health. Why should Western largesse contribute to a depression? Simply because the money was used for the most part to shore up a government that was rapidly expending its resources on unproductive and speculative projects. Russia's economic reformers subsidized the old Soviet party elite and its allies in the military and security organs with cheap selloffs of government property. They did this to neutralize the threat such people were believed to pose to the new Russian democracy. Western advisers for the most part agreed. And everyone, including the reformers, soon got so rich that no one wanted to stop the gravy train - even as the profits from hundreds of questionable financial operations leaked out of the country. If governments weren't raising questions, why should banks? Whether they were based in Switzerland, Cyprus, London, New York or Toronto, bankers and investors gladly accepted the profitable accounts being opened up by ``mysterious'' Russians. Today's headlines concentrate on allegations that the laundered monies came from narcotics or other smuggling activities - as if to suggest this is nothing more than a classic case of trans-national crime, like the Colombian drug cartels. But even the Russian mafiya couldn't manipulate such sizeable funds on its own. Evidence slowly emerging suggests the huge sums passing in and out of New York banks were controlled by senior officials or advisers with close government connections - many of them the same officials with whom Western governments have been dealing for years in their efforts to "reform" the Russian economy. This money was the product of the sustained sabotage of the Russian economy. Estimates of capital flight out of Russia have recently increased to more than $200 billion. Clearly, a lot more Western banks and financial institutions have been complicit, either wittingly or unwittingly, in what may turn out to be one of the century's biggest financial scandals - while Western governments have closed their eyes. If this isn't worth getting mad over, nothing is. ------------------------------------------------- Contents copyright � 1996-1999, The Toronto Star. ---------------------------------------------------------------- This is the Neither public email list, open for the public and general discussion. To unsubscribe click here Mailto:[EMAIL PROTECTED]?Subject=unsubscribe To subscribe click here Mailto:[EMAIL PROTECTED]?Subject=subscribe For information on [EMAIL PROTECTED] http://www.neither.org/lists/public-list.htm For archives http://www.mail-archive.com/[email protected]
