On Sep 7, 2024, at 4:11 PM, Janine Wedel via Salon <salon@listserve.com> wrote:
--Greetings, Readers –The exchange below has come to my attention. I am the author of The Nation article (1998) referenced in the below indented passage. I would invite you to take a look at the article itself (The Harvard Boys Do Russia: How the Best and Brightest Helped Destroy the Russian Economy), as the overall focus and argument are mischaracterized in the passage. As you’ll see, the article does not debate economic reform strategies. It does detail the various roles of the key Harvard players in 1990's Russian reform (funded by U.S. and other Western state, multilateral, and private aid sources): Jeffrey Sachs, yes, but notably also Andrei Shleifer, Jonathan Hay, Larry Summers. This information was gleaned from years of on-the-ground study as a social anthropologist, interviewing hundreds of people and gaining access to numerous documents. (Additional detail, in case of interest, about the group's modus operandi is provided in this article and subsequent exchanges: https://nationalinterest.org/article/tainted-transactions-348; Tainted Transactions: An Exchange | The National Interest; Tainted Transactions Wedel Replies.pdf (janinewedel.info.)If you follow Sachs’s track record (whether it’s economic reform, sustainable development, or ending poverty in Africa), you’ll readily see that he takes credit where projects/programs are perceived to have gone well and disavows involvement where they have not. In my research on Russian reform and aid, Sachs does not emerge as a leader in Russian privatization (other Harvard players do). That did not stop him from claiming the following in his own reporting documents to funders – well before it was obvious to most Western observers that things had not gone so well. For instance, project documents submitted by Jeffrey D. Sachs and Associates, Inc. (Sachs’s consulting firm at the time) to the Finnish government state: “The [Sachs] team has had an extensive interaction with the [Russian] State Committee on Privatization and has helped in the design of the mass privatization program legislation recently enacted by the parliament.”For those interested in the context of this fascinating historical era, see the 2001 updated Collusion and Collusion: The Strange Case of Western Aid to Eastern Europe, especially Chapter 4, “A Few Good Reformers: The Chubais Clan, Harvard, and ‘Economic’ Aid” (https://janinewedel.info/collusion.html). Should there be anyone out there who wants to know details of the numerous investigations of the Harvard Russia project and the 2005 out-of-court settlement of the case brought by the U.S. government against Harvard players and Harvard University itself, or about where the major players both from Harvard and the “Young Reformers” from Russia landed a decade+ later, see Chapter 5 (“The Privatizers”) of the 2009 Shadow Elite: How the World's New Power Brokers Undermine Democracy, Government, and the Free Market (https://janinewedel.info/shadowelite.html) Hint: The Russian “reformers” became key technocrats making money in Putin's authoritarian state. The American experts “failed up.”For what it's worth, Shadow Elite (Chapter 6) may also be of interest to this listserv for its detailed network analysis of the pivotal Neocon Core and how they pioneered changes in governance and helped take the United States to war in Iraq in the early 2000s.If this is TMI, my apologies!JanineJanine R. WedelDistinguished University Professor, Schar School of Policy and Government, George Mason UniversityAlso: Visiting Scholar, Institute for Futures Studies, Stockholm; and Faculty Associate of the Petrach Program on Ukraine jwedel@gmu.edu Website: www.janinewedel.infoFrom: Salon <salon-bounces@listserve.com> on behalf of Chas Freeman via Salon <salon@listserve.com>
Sent: Wednesday, September 4, 2024 10:16 PM
To: salon@listserve.com <salon@listserve.com>
Subject: [Salon] Jeffrey Sachs: A Front Row Seat to the Cold War That Never Ended
Jeffrey Sachs: A Front Row Seat to the Cold War That Never Ended
An inside story of the road not taken
About two months ago, over on Counter Points, we did an interview with Matt Taibbi on the long arc of his career, stretching from the Soviet Union to Substack. In a throwaway moment, when we were discussing the American economist Jeffrey Sachs, I noted what a wild ride his own career had been, going from one of the “Harvard boys” stripping Russia for parts in the 1990s to an outspoken critic of U.S. hegemony. Sachs reached out after the show aired to say that his role in post-Soviet Russia was badly misunderstood, and that in particular, while he was indeed at Harvard, he was not among the Harvard economists involved in the scandalous sell-off of Russian assets known as “loans for shares.” It wasn’t a hostile message, and it seemed like Sachs had even grown weary of the discussion. I asked if I could share it with Taibbi, and he agreed.
Sachs, in his note, said a lot more about his experience as an adviser to the nascent Russian government, and backed it up with contemporaneous news reports, op-eds, and TV interviews. We encouraged him to put his reflections into essay form and he agreed to do so. The resulting product is below and is also published in Taibbi’s Racket, which you can subscribe to here.
Matt has written his own essay based on the new information offered by Sachs, coupled with his own experience in Russia. He writes:
The more time I spent looking at U.S. economic policy toward Russia, the more I was convinced something was terribly wrong. I corresponded regularly with Janine Wedel, then a professor at George Washington and Pitt Universities who wrote an influential article in The Nation called “The Harvard Boys Do Russia.” Janine’s thesis was the rapid liberalization of Russia’s economy was “more shock… than therapy” and that one of the biggest by-products had been episodes like the mass inflation of 1992 and Black Saturday: “The evaporation of much potential investment capital: the substantial savings of Russians.” Her article was not kind to Jeffrey Sachs, and described him as part of the corruption scandal at the Harvard Institute of International Development (HIID) that I also wrote about.
Who’s right? By the time I started digging into HIID, Sachs was gone. He said on Breaking Points today that privatization, certainly the nuclear core of Yeltsin-era corruption, “wasn’t my bailiwick” and that he never worked on those issues with colleagues who “didn’t do the right thing.” All I can say is, as someone who covered prikhvatizatsia fiascoes like the infamous loans-for-shares auctions as much as any American, Sachs never crossed my radar. I assumed that as a Harvard heavy with ties to Lawrence Summers and the “energetic young reformers,” he was at least a co-architect of Russia’s downfall.
Now, I’m not so sure.
We’re crossposting Matt’s piece here — I strongly recommend it.
The Sachs essay is a valuable historical document and adds new context to one of the most significant hinge moments of our time, during which a series of fateful decisions were made by American policymakers—decisions that were not predetermined but were genuine choices that could have been made differently—that set the course toward our present conflict. It’s by no means the end of the story, but no doubt an important part of it.
But it’s not just history. There are lessons here to be learned if there’s an appetite for it.
The history keeps going. The Biden administration today unleashed its three most powerful ministries on Russia, accusing the country of meddling in the 2024 U.S. election: The Department of Justice filed charges, the Treasury Department laid down sanctions, and the Department of State demanded Russian news outlets register as foreign agents.
Sachs, to be sure, is a controversial figure — I consider that a compliment — and has his critics on both the left and the right. He joined us again on Counter Points for an interview Wednesday about his new essay, during which he addressed many of those critiques and took questions from me, Taibbi, and Emily Jashinsky.
How the Neocons Chose Hegemony Over Peace Beginning in the Early 1990s
By Jeffrey Sachs
In the late 1980s, President Mikhail Gorbachev opened the chance for world peace by unilaterally ending the Cold War. I was a high-level participant and witness to these events, beginning in 1989 as a senior adviser to Poland, and then in 1990 onward to the Soviet Union, Russia, Estonia, Slovenia, Ukraine, and several other countries. We are in a hot war today between the U.S. and Russia in Ukraine in part because the U.S. could not take “yes” for an answer in the early 1990s. Peace was not good enough for the U.S.; the U.S. government chose to assert global dominance as well, bringing us to today’s harrowing dangers. The failure of the U.S., and the West more generally, to help the Soviet Union and then Russian economically in the early 1990s marked the first steps of the U.S. misguided quest for dominance.
Winston Churchill famously wrote: “In War, Resolution; In Defeat, Defiance; In Victory, Magnanimity; and in Peace, Good Will.” The U.S. showed neither magnanimity nor good will in the waning days of the Soviet Union and the Cold War. It showed insolence and power, until today. In the economic sphere, it did this in the early 1990s by neglecting the urgent short-term financial crisis facing Gorbachev’s Soviet Union (until its demise in December 1991) and Yeltsin’s Russia. The result was profound instability and corruption in Russia in the early 1990s that created a deep resentment against the West. Even this grave mistake of Western policymaking, however, was not definitive in setting the course for the current hot war. From the mid-1990s onward, with even more consequence, was the relentless U.S. bid to expand its military dominance over Eurasia, in a sequence of moves that eventually led to the explosion of large-scale war in Ukraine.
My orientation as economic adviser
When I came to serve as Poland’s and later Russia’s economic adviser, I carried with me three fundamental convictions, based on my studies and my experience as an economic adviser.
My first core conviction drew upon the political economy insights of John Maynard Keynes, the greatest political economist of the 20th century. In the early 1980s, I had read his scintillating book The Economic Consequences of the Peace (1919), which is Keynes’ devastating and prescient critique of the harsh peace of the Versailles Treaty after World War I. Keynes railed against the imposition of reparations burdens on Germany as an affront to economic justice, a burden on the economies of Europe, and the seed of future conflict in Europe. Keynes wrote of the reparations burden and the enforcement of war debts:
If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp. Nothing can then delay for very long that final civil war between the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the late German war will fade into nothing, and which will destroy, whoever is victor, the civilization and the progress of our generation. Even though the result disappoint us, must we not base our actions on better expectations, and believe that the prosperity and happiness of one country promotes that of others, that the solidarity of man is not a fiction, and that nations can still afford to treat other nations as fellow-creatures?
Keynes was of course proved right. The Carthaginian peace imposed by the Versailles Treaty came back to haunt Europe and the world one generation later. The lesson for me in the 1980s was Churchill’s dictum of magnanimity and good will, or Keynes’ admonition to treat other nations as “fellow creatures.” Following Keynes, I believe that rich, powerful, and victorious countries are wise, and obligated, to help poor, weak, and defeated countries. This is the path to peace and mutual prosperity. This is why I have long championed debt relief for the poorest countries, and why I made debt cancellation a hallmark of the policies to end hyperinflation in Bolivia in the mid-1980s, instability in Poland in the late 1980s, and grave economic crisis in the Soviet Union and Russia in the early 1990s.
My second core conviction was as a social democrat. For a long time, I was wrongly described by the lazy mainstream media and economically unsophisticated pundits as a neoliberal, because I believed in the need for Poland, Russia, and other post-communist countries of the region to enable markets to function, and to do so quickly to overcome black markets in the face of the collapse of central planning. Yet, all along, from the very start, I believed in a mixed economy along social democratic lines, not a free market “neoliberal” economy. In a 1989 interview with the New Yorker I put it this way:
Look, I’m no particular fan of Milton Friedman’s or Margaret Thatcher’s or Ronald Reagan’s version of the free market. In United States terms I’d be identified as a liberal Democrat, and the country I admire the most is Sweden. But the point is whether you were trying to create a Sweden or a Thatcherite England, starting from where Poland is, you’d move in exactly the same direction. And that is because Sweden and England and the United States have certain basic attributes that have nothing to do with what Poland has right now. They are private economies, where the vast, vast proportion of the economy is in the private sector. There is a free financial system: banking; independent financial organizations; strict recognition of private property; joint-stock companies; a stock exchange; a hard currency convertible at a unified rate. All those attributes are the same whether you’re going to provide free day care or private day care. Poland starts from the opposite extreme.
In practical terms, social-democratic style reforms meant the following. First, financial stabilization (ending high inflation, stabilizing the currency), should be done quickly, along the lines explained in the hugely influential 1982 paper “The Ends of Four Big Inflations” by the future Nobel laureate Thomas Sargent. Second, the government should remain large and active, especially in public services (health, education), public infrastructure, and social protection. Third, privatization should be cautious, careful, and law-based, so as to prevent large-scale corruption. While I was often incorrectly associated by the mainstream media with the idea rapid “mass privatization” through giveaways and vouchers, mass privatization and the attendant corruption was the very opposite of what I actually recommended. In the case of Russia, as described below, I had no advisory responsibilities whatsoever regarding Russia’s privatization program.
My third core conviction was practicality. Provide real help, not theoretical help. I advocated urgent financial assistance for Poland, the Soviet Union, Russia, and Ukraine. My advice was heeded by the U.S. government in the case of Poland, but firmly rejected by the U.S. government in the case of Gorbachev’s Soviet Union and Yeltsin’s Russia. At the time I couldn’t understand why. After all, my advice worked in Poland. Only many years later did I appreciate better that while I was discussing the “right” kind of economics, my interlocutors in the U.S. government were the early neoconservatives. They were not after Russia’s economic recovery. They were after U.S. hegemony.
Early reforms in Poland
In 1989, I served as an adviser to the first post-communist government of Poland and helped to devise a strategy of financial stabilization and economic transformation. My recommendations in 1989 called for large-scale Western financial support for Poland’s economy in order to prevent runaway inflation and enable a convertible Polish currency at a stable exchange rate and an opening of trade and investment with the countries of the European Community, now the European Union. These recommendations were heeded by the U.S. government, the G7, and the International Monetary Fund.
Based on my advice, a $1 billion zloty stabilization fund was established that served as the backing of Poland’s newly convertible currency. Poland was granted a standstill on debt servicing on the Soviet-era debt, and then a partial cancellation of that debt. Poland was granted significant development assistance in the form of grants and loans by the official international community.
Poland’s subsequent economic and social performance speaks for itself. Despite Poland’s economy having experienced a decade of collapse in the 1980s, Poland began a period of rapid economic growth in the early 1990s. The currency remained stable and inflation low. In 1990, Poland’s GDP per capita, measured in purchasing-power terms, was 33 percent of neighboring Germany. By 2024, it had reached 68 percent of Germany’s GDP per capita, following decades of rapid economic growth.
Trying for a Grand Bargain for the Soviet Union
On the basis of Poland’s economic success, I was contacted in 1990 by Grigory Yavlinsky, economic adviser to President Mikhail Gorbachev, to offer similar advice to the Soviet Union, and in particular to help mobilize financial support for the economic stabilization and transformation of the Soviet Union. One outcome of that work was a 1991 project undertaken at the Harvard Kennedy School with Professors Graham Allison, Stanley Fischer, and Robert Blackwill. We jointly proposed a “Grand Bargain” to the U.S., G7, and Soviet Union, in which we advocated large-scale financial support by the U.S. and G7 countries for Gorbachev’s ongoing economic and political reforms. The report was published as Window of Opportunity: The Grand Bargain for Democracy in the Soviet Union in October 1991.
The proposal for large-scale Western support for the Soviet Union was flatly rejected by the Cold Warriors in the White House. Gorbachev came to the G7 Summit in London in July 1991 asking for financial assistance, but left empty-handed. Upon his return to Moscow, he was abducted in the coup attempt of August 1991. At that point, Boris Yeltsin, President of the Russian Federation, assumed effective leadership of the crisis-ridden Soviet Union. By December, under the weight of decisions by Russia and other Soviet republics, the Soviet Union was dissolved with the emergence of 15 newly independent nations.
The U.S. refuses my recommendations for large-scale aid to Russia
In September 1991, I was contacted by Yegor Gaidar, economic adviser to Yeltsin and soon-to-be acting Prime Minister of the newly independent Russian Federation as of December 1991. He requested that I come to Moscow to discuss the economic crisis and ways to stabilize the Russian economy. At that stage, Russia was on the verge of hyperinflation, financial default to the West, the collapse of international trade with the other republics and with the former socialist countries of Eastern Europe, and intense shortages of food in Russian cities resulting from the collapse of food deliveries from the farmlands and the pervasive black marketing of foodstuffs and other essential commodities.
I recommended that Russia reiterate the call for large-scale Western financial assistance, including an immediate standstill on debt servicing, longer-term debt relief, a currency stabilization fund for the ruble (as for the zloty in Poland), large-scale grants of dollars and European currencies to support urgently needed food and medical imports and other essential commodity flows, and immediate financing by the IMF, World Bank, and other institutions to protect Russia’s social services (healthcare, education, and others).
In November 1991, Gaidar met with the G7 Deputies (the deputy finance ministers of the G7 countries) and requested a standstill on debt servicing. This request was flatly denied. To the contrary, Gaidar was told that unless Russia continued to service every last dollar as it came due, emergency food aid on the high seas heading to Russia would be immediately turned around and sent back to the home ports. I met with an ashen-faced Gaidar immediately after the G7 Deputies meeting.
In December 1991, I met with Yeltsin in the Kremlin to brief him on Russia’s financial crisis and on my continued hope and advocacy for emergency Western assistance, especially as Russia was now emerging as an independent, democratic nation after the end of the Soviet Union. He requested that I serve as an adviser to his economic team, with a focus on attempting to mobilize the needed large-scale financial support. I accepted that challenge and the advisory position on a strictly unpaid basis.
Upon returning from Moscow, I went to Washington to reiterate my call for a debt standstill, a currency stabilization fund, and emergency financial support. In my meeting with Richard Erb, deputy managing director of the IMF in charge of overall relations with Russia, I learned that the U.S. did not support this kind of financial package. I once again pleaded the economic and financial case and was determined to change U.S. policy. It had been my experience in other advisory contexts that it might require several months to sway Washington on its policy approach.
Indeed, from 1991 to 1994, I would advocate nonstop but without success for large-scale Western support for Russia’s crisis-ridden economy and support for the other 14 newly independent states of the former Soviet Union. I made these appeals in countless speeches, meetings, conferences, op-eds, and academic articles. Mine was a lonely voice in the U.S. in calling for such support. I had learned from economic history—most importantly the crucial writings of John Maynard Keynes, especially Economic Consequences of the Peace—and from my own advisory experiences in Latin America and Eastern Europe, that external financial support for Russia could well be the make or break of Russia’s urgently needed stabilization effort.
It is worth quoting at length here from my article in the Washington Post in November 1991 to present the gist of my argument at the time, explicitly drawing upon Keynes’ logic:
This is the third time in this century in which the West must address the vanquished. When the German and Hapsburg Empires collapsed after World War I, the result was financial chaos and social dislocation. Keynes predicted in 1919 that this utter collapse in Germany and Austria, combined with a lack of vision from the victors, would conspire to produce a furious backlash towards military dictatorship in Central Europe. Even as brilliant a finance minister as Joseph Schumpeter in Austria could not stanch the torrent towards hyperinflation and hyper-nationalism, and the United States descended into the isolationism of the 1920s under the “leadership” of Warren G. Harding and Sen. Henry Cabot Lodge.
After World War II, the victors were smarter. Harry Truman called for U.S. financial support to Germany and Japan, as well as the rest of Western Europe. The sums involved in the Marshall Plan, equal to a few percent of the recipient countries' GNPs, was not enough to actually rebuild Europe. It was, though, a political lifeline to the visionary builders of democratic capitalism in postwar Europe.
Now the Cold War and the collapse of communism have left Russia as prostrate, frightened and unstable as was Germany after World War I and World War II. Inside Russia, Western aid would have the galvanizing psychological and political effect that the Marshall Plan had for Western Europe. Russia's psyche has been tormented by 1,000 years of brutal invasions, stretching from Genghis Khan to Napoleon and Hitler.
Churchill judged that the Marshall Plan was history's "most unsordid act," and his view was shared by millions of Europeans for whom the aid was the first glimpse of hope in a collapsed world. In a collapsed Soviet Union, we have a remarkable opportunity to raise the hopes of the Russian people through an act of international understanding. The West can now inspire the Russian people with another unsordid act.
This advice went unheeded, but that did not deter me from continuing my advocacy. In early 1992, I was invited to make the case on the PBS news show The McNeil-Lehrer Report. I was on air with acting Secretary of State Lawrence Eagleburger. After the show, he asked me to ride with him from the PBS studio in Arlington, Virginia, back to Washington, D.C. Our conversation was the following: “Jeffrey, please let me explain to you that your request for large-scale aid is not going to happen. Even assuming that I agree with your arguments—and Poland’s finance minister [Leszek Balcerowicz] made the same points to me just last week—it’s not going to happen. Do you want to know why? Do you know what this year is?”
“1992,” I answered.
“Do you know that this means?”
“An election year?” I replied.
“Yes, this is an election year. It’s not going to happen.”
Sachs appears on The McNeil-Lehrer Report and argues for a large-scale economic rescue package. In a car on the way back into D.C., he’s told by the secretary of state, “It’s not going to happen.”
Russia’s economic crisis worsened rapidly in 1992. Gaidar lifted price controls at the start of 1992, not as some purported miracle cure but because the Soviet-era official fixed prices were irrelevant under the pressures of the black markets, the repressed inflation (that is, rapid inflation in the black-market prices and therefore the rising the gap with the official prices), the complete breakdown of the Soviet-era planning mechanism, and the massive corruption engendered by the few goods still being exchanged at the official prices far below the black market prices.
Russia urgently needed a stabilization plan of the kind that Poland had undertaken, but such a plan was out of reach financially (because of the lack of external support) and politically (because the lack of external support also meant the lack of any internal consensus on what to do). The crisis was compounded by the collapse of trade among the newly independent post-Soviet nations and the collapse of trade between the former Soviet Union and its former satellite nations in Central and Eastern Europe, which were now receiving Western aid and were reorienting trade towards Western Europe and away from the former Soviet Union.
During 1992, I continued without any success to try to mobilize the large-scale Western financing that I believed to be ever-more urgent. I pinned my hopes on the newly elected presidency of Bill Clinton. These hopes too were quickly dashed. Clinton’s key adviser on Russia, Johns Hopkins professor Michael Mandelbaum, told me privately in November 1992 that the incoming Clinton team had rejected the concept of large-scale assistance for Russia. Mandelbaum soon announced publicly that he would not serve in the new administration. I met with Clinton’s new Russia adviser, Strobe Talbot, but discovered that he was largely unaware of the pressing economic realities. He asked me to send him some materials about hyperinflations, which I duly did.
At the end of 1992, after one year of trying to help Russia, I told Gaidar that I would step aside as my recommendations were not heeded in Washington or the European capitals. Yet around Christmas Day, I received a phone call from Russia’s incoming financing minister, Boris Fyodorov. He asked me to meet him in Washington in the very first days of 1993. We met at the World Bank. Fyodorov, a gentleman and highly intelligent expert who tragically died young a few years later, implored me to remain as an adviser to him during 1993. I agreed to do so and spent one more year attempting to help Russia implement a stabilization plan. I resigned in December 1993 and publicly announced my departure as adviser in the first days of 1994.
My continued advocacy in Washington once again fell on deaf ears in the first year of the Clinton administration, and my own forebodings became greater. I repeatedly invoked the warnings of history in my public speaking and writing, as in this piece in the New Republic in January 1994, soon after I had stepped aside from the advisory role.
Above all, Clinton should not console himself with the thought that nothing too serious can happen in Russia. Many Western policymakers have confidently predicted that if the reformers leave now, they will be back in a year, after the Communists once again prove themselves unable to govern. This might happen, but chances are it will not. History has probably given the Clinton administration one chance for bringing Russia back from the brink; and it reveals an alarmingly simple pattern. The moderate Girondists did not follow Robespierre back into power. With rampant inflation, social disarray and falling living standards, revolutionary France opted for Napoleon instead. In revolutionary Russia, Aleksandr Kerensky did not return to power after Lenin's policies and civil war had led to hyperinflation. The disarray of the early 1920s opened the way for Stalin's rise to power. Nor was Bruning's government given another chance in Germany once Hitler came to power in 1933.
The tragedy of Russia’s corrupt privatization
It is worth clarifying that my advisory role in Russia was limited to macroeconomic stabilization and international financing. I was not involved in Russia’s privatization program which took shape during 1993 to 1994, nor in the various measures and programs (such as the notorious “shares-for-loans” scheme in 1996) that gave rise to the new Russian oligarchs. On the contrary, I opposed the various kinds of measures that Russia was undertaking, believing them to be rife with unfairness and corruption. I said as much in both the public and in private to Clinton officials, but they were not listening to me on that account either. Colleagues of mine at Harvard were involved in the privatization work, but they assiduously kept me far away from their work. Two were later charged by the U.S. government with insider dealing in activities in Russia which I had absolutely no foreknowledge or involvement of any kind. My only role in that matter was to dismiss them from the Harvard Institute for International Development for violating the internal HIID rules against conflicts of interest in countries that HIID advised.
The failure of the West to provide large-scale and timely financial support to Russia and the other newly independent nations of the former Soviet Union definitely exacerbated the serious economic and financial crisis that faced those countries in the early 1990s. Inflation remained very high for several years. Trade and hence economic recovery were seriously impeded. Corruption flourished under the policies of parceling out valuable state assets to private hands.
All of these dislocations gravely weakened the public trust in the new governments of the region and the West. This collapse in social trust brought to my mind at the time the adage of Keynes in 1919, following the disaster Versailles settlement and the hyperinflations that followed: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.”
During the tumultuous decade of the 1990s, Russia’s social services fell into decline. When this decline was coupled with the greatly increased stresses on society, the result was a sharp rise in Russia’s alcohol-related deaths. Whereas in Poland, the economic reforms were accompanied by a rise in life expectancy and public health, the very opposite occurred in crisis-riven Russia.
Even with all of these economic debacles, and with Russia’s default in 1998, the grave economic crisis and lack of Western support were not the definitive breaking points of U.S.-Russia relations. In 1999, when Vladimir Putin became prime minister and in 2000 when he became president, Putin sought friendly and mutually supportive international relations between Russia and the West. Many European leaders, for example Italy’s Romano Prodi, have spoken extensively about Putin’s goodwill and positive intentions towards strong Russia-EU relations in the first years of his presidency.
The neocon march to war with Russia
It was in military affairs rather than in economics that Russian-Western relations ended up falling apart in the 2000s. As with finance, the West was militarily dominant in the 1990s and certainly had the means to promote strong and positive relations with Russia. Yet the U.S. was far more interested in Russia’s subservience to NATO than it was in stable relations with Russia.
At the time of German reunification, both the U.S. and Germany repeatedly promised Gorbachev and then promised Yeltsin that the West would not take advantage of German reunification and the end of the Warsaw Pact (the Soviet Union’s military alliance) by expanding the NATO military alliance eastward. Both Gorbachev and Yeltsin reiterated the importance of this U.S.-NATO pledge. Yet within just a few years, Clinton completely reneged on the Western commitment and began the process of NATO enlargement. Leading U.S. diplomats, led by the great statesman-scholar George Kennan, warned at the time that the NATO enlargement would lead to disaster: “The view, bluntly stated, is that expanding NATO would be the most fateful error of American policy in the entire post-cold-war era.” So, it has proved.
Here is not the place to revisit all of the foreign policy disasters that have resulted from U.S. arrogance towards Russia, but it suffices here to mention a brief and partial chronology of key events. In 1999, NATO bombed Belgrade for 78 days with the goal of breaking Serbia apart and giving rise to an independent Kosovo, now home to a major NATO base in the Balkans. In 2002, the U.S. unilaterally withdrew from the Anti-Ballistic Missile Treaty over Russia’s strenuous objections. In 2003, the U.S. and NATO allies repudiated the United Nations Security Council by going to war in Iraq on false pretenses. In 2004, the U.S. continued with NATO enlargement, this time to the Baltic states and countries in the Black Sea region (Bulgaria and Romania) and the Balkans. In 2008, over Russia’s urgent and strenuous objections, the U.S. pledged to expand NATO to Georgia and Ukraine. In 2011, the U.S. tasked the Central Intelligence Agency to overthrow Syria’s Bashar al-Assad, an ally of Russia. In 2011, NATO bombed Libya in order to overthrow Muammar Gaddafi. In 2014, the U.S. conspired with Ukrainian nationalist forces to overthrow Ukrainian President Viktor Yanukovych. In 2015, the U.S. began to place Aegis anti-ballistic missiles in Romania, a short distance from Russia. From 2016 to 2020, the U.S. supported Ukraine in undermining the Minsk II agreement, despite its unanimous backing by the UN Security Council. In 2021, the new Biden administration refused to negotiate with Russia over the question of NATO enlargement to Ukraine. In April 2022, the U.S. called on Ukraine to withdraw from peace negotiations with Russia.
U.S. neocons versus global peace
Looking back on the events around 1991 to 1993, and to the events that followed, it is clear that the U.S. was determined to say no to Russia’s aspirations for peaceful and mutually respectful integration of Russia and the West. The end of the Soviet period and the beginning of the Yeltsin presidency occasioned the rise of the neoconservatives to power in the United States. The neocons did not and do not want a mutually respectful relationship with Russia. They sought and until today seek a unipolar world led by a hegemonic U.S., in which Russia and other nations will be subservient.
In this U.S.-led world order, the neocons envisioned that the U.S. and the U.S. alone will determine the utilization of the dollar-based banking system, the placement of overseas U.S. military bases, the extent of NATO membership, and the deployment of U.S. missile systems, without any veto or say by other countries, certainly including Russia. That arrogant foreign policy has led to several wars and to a widening rupture of relations between the U.S.-led bloc of nations and the rest of the world. As an adviser to Russia from late-1991 to late-1993, I experienced first-hand the early days of neoconservatism applied to Russia, though it would take many years of events afterward to recognize the full extent of the new and dangerous turn in U.S. foreign policy that began in the early 1990s.
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