Tainted Transactions: An Exchange

National Interest, The, Summer, 2000 by Jeffrey D. Sachs, Anders Aslund, Marek Dabrowski, Peter Reddaway, Igor Aristov, Wayne Merry, Michael Hudson, David Ellerman, Steven Rosefielde

The second part of the tragedy is that when, by 1994, it was crystal clear that the "reforms" were not working, the IMF, the G-7, Sachs, [dot{A}]slund and others continued--for four more long years--to pressure Yeltsin into largely futile efforts to push ahead with them. This compounded failure. For most Russians, such doctrinaire obstinacy put an end to the hopes of better living conditions that had been aroused by the fall of communism.

The pattern was this: the West kept offering loans in return for Kremlin promises to reduce inflation and the budget deficit, privatize industry, appoint Anatoly Chubais to run the economy, circumvent the parliament through presidential decrees, and so on. However, as Dmitri Glinski and T will show in our forthcoming book, The Tragedy of Russia's Reforms: Market Bolshevism Against Democracy (2000), not only did these Western recipes fail to stabilize the ruble, halt the steep plunge in investment, and get workers paid on time; they also created a humiliating dependency on the West's aid and foreign policy, promoted crony capitalism, fostered massive crime, corruption and capital flight, eroded state capacity all around, and destroyed what basis remained for achieving a modicum of social justice.

The devastating effect of all this in terms of values is that the majority of Russians, who a decade ago saw democracy and free markets as beacons of hope, now see before their eyes ugly perversions of these institutions, and wonder if they just won't work in Russia. Opinion polls repeatedly show profound doubt and even despair about Russia's future. They also show that anti-Americanism has permeated the whole society and is probably now deeper than at any time in Russia's history A substantial majority believe that the United States and the West have weakened Russia deliberately, in order to exploit and humiliate it.

Encouragingly, a few of Dr. Wedel's "transactors"--for example, Pyotr Aven, Konstantin Kagalovsky and David Lipton--have in varying degrees rethought and recanted the neo-Bolshevik social engineering that is the main cause of this tragic outcome. Others--not ably Sachs and [dot{A}]slund--have not. [dot{A}]slund, indeed, tries to publicly ridicule people like the former chief economist of the World Bank, Joseph Stiglitz, who dare to criticize either him or the now exploded "Washington consensus." Also silent as regards rethinking and self-criticism are the main architects and implementers of U.S. policy toward Russia: Strobe Talbott, Lawrence Summers and Al Gore. Their successors will, tragically, be left with a major, nuclear, long-term "Russia problem."

Igor Aristov, head of the Department for Competition Protection of the Financial Markets, Ministry for Antimonopoly Policy and Entrepreneurship Support, Russia:

It was very useful to learn the details about the Chubais Clan and its illicit activities from Janine Wedel's article.

It is not possible to overestimate the significance of such an article. For me personally this information is also very important because Russian tycoons have used illegal financial inflows for private purposes and against the national interest of Russia. To foresee their future intentions we need to understand the structure of their informal relations. Recent scandals have revealed the importance of monitoring closely their transactions, property, money and debts to international organizations. Thank you very much for the article.