Magazine article Newsweek

A Recipe for Disaster

Magazine article Newsweek

A Recipe for Disaster

Article excerpt

By putting too much faith in one team of reformers, America only added to Russia's economic mess

Even seven years af-ter the fall of the "Evil Empire," Russia has continued to supply the world with plenty of bad guys. Unreconstructed communists, neo-fascists and gangster hit men aren't difficult to come by in Moscow. It's the good guys who are hard to find.

That's a lesson Washington hasn't quite learned. In her new book "Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998," George Washington University anthropologist Janine Wedel argues that the Clinton administration was determined to cast Boris Yeltsin's young reformers as the good guys. This, she says, unwittingly contributed to Russia's current economic mess. The result, Wedel contends, is that American aid to Russia has proved to be "a disaster from beginning to end."

Unfortunately, she's largely right. Washington's most significant blunder was a failure to recognize that Yeltsin's reformers were introducing a system that only worsened endemic corruption, crime and cynicism. Nor did the Clinton administration heed warnings that some of Yeltsin's team were themselves profiting from the reform process. To American officials, Yeltsin's chief good guy was Anatoly Chubais, from 1992 until earlier this year the senior Russian official in charge of pri-vatization and reforms. "Chubais and his proteges are the Adam Smiths of Russian reform economics," Thomas Dine, the assistant administrator of the U.S. Agency for International Development (AID), argued in 1995. Financed by AID to the tune of $57.7 million between 1992 and 1997, the Harvard Institute for International Development ran a Moscow operation, the Harvard Project, to support reformers. The Harvard team and Chubais called the shots on how large infusions of aid were spent. …

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