Western Financial Assistance and Russia's Reforms
Russia's postcommunist future balances precariously on the knife-edge. On one side lie democratization, market reform, and an end to the downward economic spiral of recent years. On the other side lie hyperinflation and, in its wake, growing political and social instability. A movement in either direction during the first years of Russia's new democracy -- toward growing stability or instability -- is likely to gain momentum and determine Russia's destiny for decades to come. Western financial assistance, closely linked to economic reforms in Russia, can play a critical role in pushing the process toward stabilization and democratic rule.
Every country in Eastern Europe and the former Soviet Union must grapple with the disastrous conditions left by decades of communist economic mismanagement, including a mind-boggling misallocation of resources, which systematically favored heavy industry at the expense of consumer goods and services; the wanton despoiling of the environment; the isolation of the economy from global advances in technology; and, of course, the destruction of the basic institutions of markets and private property. This legacy holds hostage the new and fragile democratic institutions of the region. In the face of deep economic crisis, the postcommunist governments are generally unpopular, and are under considerable pressure to meet the rising aspirations of a newly free citizenry. At the same time they are confronted with an economic collapse and a range of technical and institutional problems unrivaled in their complexity.
The case for foreign assistance arises in this cauldron of