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

Janine Wedel, professor of public policy at George Mason University and author of Collision and Collusion: The Strange Case of Western Aid to Eastern Europe, tells INSIGHT that "the U.S. supported the creation and the thriving of the oligarchs by supporting privatization. The entire policy apparently was to underwrite Anatoly Chubais et al., and the Harvard clique. Much of the economic aid went to them, including USAID money and also hundreds of millions of dollars from the World Bank and IMF [International Monetary Fund] loans. The Harvard people were intimately involved in the `reforms,' and especially privatization, which were thoroughly corrupt in the way that they were implemented. It was devastating to many Russians."

But, Wedel says, "The damage is done. Privatization in Russia is largely over and those who got the spoils got the spoils. These things had a beginning and an end, but the end continues in a big way. It's very hard to underestimate the effect of privatization on economics, politics and society in Russia. Think of a country in which practically everything is state-owned and all of a sudden there are all of these enterprises and natural resources to divvy up. Just think of the politicized corrupt processes that might go on. It's hard for us to imagine, but essentially in Russia a few at the top got almost all of it. With this privatization the people who got it got it forever, and realistically there's no going back."

Wedel concludes: "What happened in Russia is really egregious, and the answer to the problem is that you can't have a monopoly on policy and information and a clique on both sides dictating policy and information. That's just a program for disaster. The monopoly on Russian reform was almost 100 percent given to the Harvard/Chubais group with little independent information being considered, and it was enabled at the highest levels of the U.S. government. A lot of Russians believe the U.S. deliberately set out to destroy their economy. What happened in Russia certainly goes against the grain of any sort of reform in the traditional sense of the word--meaning progress."

Joe Wrinn, a spokesman for Harvard, denies that the university was guilty of any of the charges, explaining that "no one has ever criticized the actual work that was done in Russia by HIID." Did Harvard profit from investments in Russia? According to Wrinn, "Harvard doesn't talk about any of the trades. We give out something called the "John Harvard Letter" and that goes through different types of investments as opposed to a particular company or particular stock. I don't think the Justice Department has raised issues about Harvard Management, the university's investment arm."

True, the Justice Department hasn't raised this issue, but Harvard was one of only two foreign entities allowed to bid in the "Loan for Shares" program directed by Shleifer and Hay in Russia. What Harvard Management made on those investments is anyone's guess, but Harvard's endowment went from approximately $4 billion in 1992, the first year of HIID's contract, to $19 billion in 1998.