Looting Russia's free market; as communism collapsed in the former Soviet Union, U.S. economic `reformers,' led by a Harvard University clique, took free-market capitalism to a new low

0 Comments | Insight on the News, Sept 2, 2002 | by Kelly Patricia O'Meara

The 70-page filing concludes that "Harvard, Shleifer and Hay knowingly caused false claims to be submitted to USAID and are therefore liable under the False Claims Act, FCA. This is not a case where Defendants did not know the rules--it is one where they did not care. Harvard and its employees, no matter how brilliant, are still subject to the laws of the United States."

Like Enron and the other corporate failures, the Russian-aid program seems to have been designed deliberately to confuse, say critics. While there is no exact figure as to just how much assistance money was under the influence or control of Shleifer and Hay, those who have studied the failed reform programs think it is in the hundreds of millions--if not billions--of dollars and resembles Wall Street schemes wherein a few on top reaped sums stolen from the many.

Anne Williamson is a Soviet and Russian specialist and author of the forthcoming book, Contagion: The Betrayal of Liberty, Russia and the United States in the 1990s. She tells INSIGHT that "it's great that the Justice Department has brought this suit against Hay, Shleifer and Harvard, but the problem is they're not looking at the rape of Russia. All the government is looking at is Hay and Shleifer's personal investments and abuses of the program the government gave them to control. The suit is just addressing a very narrow part of a much bigger problem."

Williamson explains, "The larger issue is the amount of U.S. taxpayer money these men had direct and indirect control over. They could funnel large amounts of money to people who were nothing less than quislings--Russians who were willing to sell out for money. What we did beyond the economic abuse was we built up a very small group of people and labeled them as reformers and great democrats. The perverse result of this was that every other Russian reformer was pushed aside. It was the opposite of open debate and democracy. Our money--taxpayer money--actually smothered other actors who weren't all communists, but rather were decent people who were trying to have input into the process in the creation of a new country, a new government and a new way of life."

"They got pushed aside," continues Williamson, "because they couldn't compete with the hundreds of millions of dollars the United States was pouring into people Harvard had identified as people who would work with them on their reform program, which really was just to loot Russia. Harvard's mission was not to deliver all the legacy of the Russian people into the hands of a dozen people--this is not what was sold to the American taxpayer. I was there in Russia while it occurred. I was an eyewitness to what happened, and every Russian knows what happened, every Russian resents what happened and every Russian resents us for it."

Williamson concludes: "Hay and Shleifer took advantage of the opportunities provided to them. Harvard University privatized our aid program, then they socialized the benefits amongst themselves and their supporters in the private investment world, then socialized the risk by dumping it on the U.S. taxpayer when their policies failed and Russia defaulted on its loans in 1998. We now have to deal with a large territory and significant piece of geography that is controlled by a handful of corrupt people we support. The issue isn't political or cultural, it's an issue of corruption. It addresses the fact that our government, and representatives chosen by the government, are corrupt. There are large groups feeding from the public treasury under the camouflage of foreign aid, humanitarian work, building a better world, exporting democracy--all phrases under which the theft is organized. The answer is to end all foreign aid--absolutely, tomorrow, shut it down."