WHO LOST RUSSIA? THE SAME PEOPLE WHO ARE TAKING IT BACK — THE SOVIETS AND THEIR FRIENDS

(Washington, D.C.): The nickel has
dropped for all but the most
self-deluding observers of developments
in Russia: The relatively brief
Russian dalliance with genuine political
and economic reform is at an end.

Those who were committed to a systemic
transformation of Russia along democratic
and free market lines have now been
stripped of power or have accommodated
themselves to the new political reality.
President Boris Yeltsin and Foreign
Minister Andrei Kozyrev are, at best,
spent forces; at worst, they have aligned
themselves with the Soviet apparatchiks
who now dominate the Parliament and hold
virtually every key portfolio in the new
Cabinet under the communist premier,
Viktor Chernomyrdin.

At this writing, the sole reformer
left in a senior position is deputy
premier and privatization chief Anatoly
Chubais and he has signalled that his
departure date may soon be at hand.
Unfortunately, even if he remains, he is
unlikely to exercise appreciable
influence insofar as privatization will
likely be one of the first victims of the
new Moscow center’s unreform
program, notwithstanding the fact
that the right to own private property is
guaranteed under the just-adopted
constitution. Similarly, Boris
Fyodorov — were he to reverse his
decision to resign and lend his name and
liberal coloration to the retooled Soviet
cabinet — would be rendered irrelevant
by the now-dominant hardliners
masquerading as “slower”
reformers.

Clinton/Talbott’s Whistling
Past the Graveyard

Although the ominous implications of
such developments for Russia, the
“near-abroad” and the world
more generally are becoming unmistakable,
the Clinton Administration is
determinedly choosing not to recognize
the obvious. After all, President Clinton
and his key advisors — especially
Ambassador-at-large and Deputy Secretary
of State-designate Strobe Talbott — are
committed to draconian reductions in U.S.
defense spending and capabilities. He has
likewise been the principal advocate of
diluting the conditionality attached to
IMF and other institutional lending to
Moscow. Finally, Talbott has long
demonstrated a reflexive willingness to
defer to Moscow center.

These factors have helped put
the President of the United States in the
deplorable position of pronouncing the
reform movement in Russia alive and
reasonably well just as it was being
interred. As with previous
instances of egregious miscalculation
about Russian developments (e.g.,
optimistic expectations that reformers
would prevail in the December
parliamentary elections), the
Administration has been reluctant to
admit its error. Instead, it is striving
to downplay, if not conceal, the gravity
of the situation.

For example, on 19 January 1994 ABC
News captured on film evidence of the
extraordinary lengths to which the
Clinton Administration is going to
provide “spin control” on the
debacle confronting its Russia policy:
U.S. Ambassador to Russia Thomas
Pickering was caught in what he evidently
thought was a confidential exchange with
the recently deposed First Deputy Premier
and leading Russian reformer, Yegor
Gaidar. Pickering urged Gaidar to
downplay the significance of his
departure from the Kremlin saying,
“We don’t want to let it get out of
hand because I think things are rocky
enough now.”

The Clinton Administration’s bid to
promote the idea that reform is not dead
but simply being stretched out jives with
the party line being disseminated
feverishly by the resuscitated Soviet
propaganda machine — an instrument whose
power will likely prove quite formidable
despite its enforced retirement over the
past few years. There should be little
doubt, however, about the effects of such
a convergence: To the extent that
Washington is seen as implicitly, if not
explicitly, endorsing the Kremlin’s line
that Russia is a special case, that the
rules of market economics simply do not
apply to Russia, that so-called
“shock therapy” has not worked
and must be radically scaled back, the
United States will be undermining any
remaining prospects for real reform.

Recent comments by former Finance
Minister Fyodorov are instructive in this
regard. As reported by the 22 January
editions of the New York Times,
Fyodorov claimed that Strobe
Talbott “actually stabbed [the
reformers] in the back”
when he called for “less shock and
more therapy” immediately after the
parliamentary elections: “[Talbott]
helped the opposition [to reform], and he
helped certain forces to influence the
decision-making process here.”

Fyodorov went on to observe, as the Times
put it, “bitterly”:

“When Strobe Talbott
says less shock and more therapy, I’d
like to ask him what kind of shock
therapy is it when inflation is 20
percent a month, where there have
been only five bankruptcies up until
now, when official unemployment is
only 1 percent? Or is he not familiar
with shock therapy in other
countries?”

Roll Out the F.O.M.s

In this endeavor, the warmed-over
Soviets can rely upon the assistance of a
cadre of trusted mouthpieces in the West.
These include: Princeton University
professor Stephen Cohen, Duke University
professor Jerry Hough and Columbia
University Padma Desai. Despite their
past fealty to Moscow center and general
wrongheadedness about the desirability of
and prospects for systemic reform, these
academics and other “talking
heads” like them will inevitably be
trotted out by the Western media and
cited by the retooled communists to
legitimate the “new look” of
Russian reform. Indeed, the
MacNeil-Lehrer NewsHour gave Prof. Desai
a platform for just such a performance
last Friday; the Senate Appropriations
Foreign Operations Subcommittee extended
a similar courtesy to Prof. Cohen today.
Cohen response was predictable:

“Russia desperately needs
moderate, consensual gradual reforms.
Any more shocks are almost certain to
send some rough beast slouching
toward Moscow. As we talk today a
broad coalition of moderate Russian
politicians, people who call
thesmelves centrist and see
themselves trapped between Yeltsin
and Zhironovsky is struggling behind
the scenes to regroup and become the
decisive force in Russia politics, to
take charge and reshape the reform
process, with or without Yeltsin. This
moderate bloc in my judgment is
Russia’s best hope and
possibly last chance for some kind of
peaceful and democratic market
reform.”

When combined with the assiduous
spin-control being applied from within
the Administration by one of their own,
Strobe Talbott, these F.O.M.s (Friends of
Moscow) can be relied upon to confuse the
debate, downplaying the reemerging
malevolence of the Russian government and
misleading those in the Congress, media
and public whose common sense might
otherwise lead to a more sound — and
prudential — appraisal. Just today,
Talbott actually told the Senate
Appropriations Subcommittee that
“The challenge now facing us is to
do everything we can to help”.

‘Blame the Reformers For
the Lack of Reform’

Particularly insidious is the argument
that will come from these quarters, as
well as from Moscow center’s agitprop:
The real downfall of Russian reform was
the minimal “discipline”
imposed by Western governments and
multilateral lenders as a precondition to
substantial aid disbursements. According
to this spiel, had more generous
infusions of taxpayer funds been provided
earlier on, all would have been well. The
corollary, of course, is that such
preconditions must be dispensed with now
— as a desperate measure to save what is
left of “reform,” if not out of
guilt about the adverse effects of past
stinginess.

In fact, nothing could be farther from
the truth. Russian reform was not
undermined by sensible Western
conditions;⁽¹⁾
it was undermined by the very Soviets in
nationalist garb who are now taking the
helm in Russia — creatures of the old
order who had no interest in seeing the
democratic and free market reforms
succeed. As long as these former
apparatchiks continued to run or
otherwise exercise de facto control
over the key Russian ministries, the
present outcome was inevitable. Under
such circumstances, more substantial
direct or indirect taxpayer outlays
extended earlier to Moscow could have had
only one result: more money would have
been squandered. And, as Jeffrey Sachs⁽²⁾
has recently observed, “It makes
little sense for the Clinton
Administration to commit to large-scale
economic assistance unless reformers
regain power.”

The Bottom Line

The Center for Security Policy
believes that there will be no
genuine systemic economic reform so
long as there remains: no consistent
control over the money supply; no ending
of the massive subsidies to large
state-owned industries; no
institutionalization of private property
rights; no formalization of Western-style
commercial and legal codes; no effective
measures to control capital flight (i.e.,
through a stronger domestic currency and
reduced inflation); and no wholesale
dismantling of the military-industrial
complex. While some commendable
progress has been made in the direction
of small business privatization, it has
not begun to offset the effects of
failure in these other areas — and has
not been sufficiently institutionalized
to make it as irreversible as Strobe
Talbott would have the Congress believe.

If it is now apparent that
such essential changes have not been
implemented to date, so it should be
clear that they are not going to be
adopted by the Soviet-era cabinet that
has just been installed.
Consequently, despite Clinton/Talbott
efforts to minimize the significance of
recent, serious political reversals for
reform in Moscow, the reality is that
such “whistling past the
graveyard” can no longer be
permitted to substitute for coherent,
far-sighted U.S. policy toward Russia.

Toward this end, the Center urges the
Congress to make a comprehensive review
of the present Clinton Administration
approach a high priority for this
session. It commends the Senate
Appropriations Committee for taking the
lead on this front with today’s hearing
and calls for similar examinations to be
conducted by the Finance, Armed Services
and Foreign Relations committees as
quickly as possible. Such hearings should
solicit testimony from those who have
proven vastly more accurate in their
assessments about Soviet and Russian
policy and prospects than have
“experts” like Talbott, Cohen,
Hough, Desai, et. al.

In particular, the Center for Security
Policy believes that the congressional
Armed Services Committees should examine
a central premise of the post-Cold War
decisions concerning U.S. force
structure, defense expenditure,
deployments and related decisions
involving technology transfer to and
space cooperation with Russia. For years,
American officials have argued that there
would be two, five or even ten years of
“warning” in the event the
Russians began to revert to form. History
makes clear that warning of such adverse
strategic developments is almost always
available and yet it is frequently
overlooked or misread. Even when it is
properly understood, Western democracies
have been notorious in their failure to
respond in a timely and appropriate
manner.

In fact, there is reason to
believe that the political and economic
reverses occurring in Russia today are just
the sorts of steps that would
constitute the precursors to reemergent
strategic threats from the former Soviet
Union. The United States and a
world that has generally stopped worrying
about such threats may not be able to
afford to do so for much longer.

– 30 –

1. If anything,
the absence of genuine accountability in
Western aid giving has substantially
enriched and emboldened the Russian
mafiosa that is undermining public
confidence in free market philosophy.

2. Sachs is a
Harvard University professor who resigned
last week as an economic advisor to the
Yeltsin regime following the Chernomyrdin
purge of reformers from the Cabinet.
Sachs, a strong advocate of systemic
reform, has faulted the International
Monetary Fund for not having been
enlightened enough in aiding Russia. The
truth of the matter is that the IMF has a
very modest track record of performance
in centrally controlled economies (e.g.,
the former Yugoslavia, Hungary, etc.). At
times, its prescriptions have been
misguided or too stringent, with the
effect of stifling growth. Still, for the
reasons mentioned above, it is
fundamentally incorrect to think that the
IMF — to whom Western governments
lateralled the ball when they were
reluctant to require discipline — was
primarily at fault for the losing the
historic opportunity for a democratic,
free market Russia.