-Caveat Lector- ------- Forwarded message follows ------- Date sent: Wed, 15 Dec 1999 18:25:54 +0100 To: "English edition" <[EMAIL PROTECTED]> 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 études en sciences sociales. Author of Le Krach Russe, La Découverte, Paris, 1998. _________________________________________________________________ (1) See Krasnaja Zvezda, Moscow, 9 October 1999. (2) Libération, 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> ------- End of forwarded message ------- A<>E<>R ~~~~~~~~~~~~~~~ Integrity has no need of rules. -Albert Camus (1913-1960) + + + + + + + + + + + + + + + + + + + + + + + + + + + + The only real voyage of discovery consists not in seeking new landscapes but in having new eyes. -Marcel Proust + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your common sense." --Buddha + + + + + + + + + + + + + + + + + + + + + + + + + + + + It is preoccupation with possessions, more than anything else, that prevents us from living freely and nobly. -Bertrand Russell + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Everyone has the right...to seek, receive and impart information and ideas through any media and regardless of frontiers." 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