Janine Wedel - Shadow Elite - How the World's New Power Brokers Undermine Democracy, Government, and the Free Market

Light is quoted in Stephen Barr, “Appointees Everywhere, But Try to Count Them,” Washington Post , Sunday, October 17, 2004, p. C2, http://www.washingtonpost.com/wp-dyn/articles/A38874-2004Oct16.html.

79. For analysis of Obama’s use of signing statements, see Charlie Savage, “Obama’s Embrace of a Bush Tactic Riles Congress,” New York Times , August 8, 2009, http://www.nytimes.com/2009/08/09/us/politics/09signing.html?hpw.

Notes to Chapter 5

1. U.S. economic aid to Russia via the Chubais-Harvard players is also a case of what I have called “transactorship,” a form of collusion between the representatives of parties on opposite sides. Transactorship is a mode of organizing relations between parties (subnational groups, nations, and/or international organizations) that have been separated, culturally, societally, and perhaps geographically. In transactorship, the separated parties have representatives called transactors, whose job is to build bridges between parties. Although transactors may genuinely share the stated goals of the parties they represent (and they uphold at least the appearance of that representation in public), they develop their own additional goals and ways of operating for their own benefit. The additional goals of transactors, advertently or inadvertently, may diverge from those of their parties in such a way that they undermine the key aims of the parties for whom they came together to begin with and on whose behalf they ostensibly act. See Janine R. Wedel, “Le Developpement Pris en Otage: Comment L’Aide Americaine a la Russie a Ete Detournee Par Les ‘Transacteurs’” (Hijacking Development: How Transactors Undermined U.S. Aid to Russia), Laetitia Atlani-Duault, ed., Revue Tiers Monde 193 (January-March 2008), pp. 13–36; “Courtage International et Institutions Floues,” with Siddarth Chandra, ACTES de la Recherche en Sciences Sociales , no. 151–152 (March 2004), pp. 114–125; “Rigging the U.S.-Russia Relationship: Harvard, Chubais, and the Transidentity Game,” Demokratizatsiya: The Journal of Post-Soviet Democratization 7, no. 4 (Fall 1999), pp. 469–500; “Clique-Run Organizations and U.S. Economic Aid: An Institutional Analysis,” Demokratizatsiya: The Journal of Post-Soviet Democratization 4, no. 4 (Fall 1996), pp. 571–602.

2. With regard to Hay, see project documents submitted by Jeffrey D. Sachs and Associates Inc. to the Finnish government, one of the firm’s funders, which state: “Jonathan Hay, a Harvard law student and Rhodes Scholar, traveled to Moscow to conduct a study of the prospects for mass privatization in Russia. He quickly became a trusted advisor to Deputy Prime Minister Anatoly Chubais, and has provided important economic, legal, and logistical analysis to the staff of the State Committee on Privatization [here called the State Property Committee]. In March, Mr. Hay also joined the team sponsored by the Ford Foundation and will continue his work in Russia over the coming year.” (“World Institute for Development Economic Research Project on the Transformation of Centrally Planned Economics: Report on Activities, First Half of 1992,” p. 9.) With regard to Shleifer, see pp. 4 and 7 of the same documents. I obtained these documents from the Finnish government and have put them on my Web site at: http://janinewedel.info/harvardinvestigative.html#3 and http://janinewedel.info/WIDER_Project.pdf.

3. With regard to Shleifer’s and Boycko’s roles as advisers to the State Property Committee (1991 to 1993), see Maxim Boycko, Andrei Shleifer, and Robert W. Vishny, “Voucher Privatization,” Journal of Financial Economics 35 (1994), p. 1, http://www.economics.harvard.edu/faculty/shleifer/files/voucher_privatization.pdf.

With regard to Shleifer advising the Federal Securities Commission, it is “one of the many agencies which USAID paid Shleifer to advise” (David Warsh, “In Which, At Last, We Meet, Perhaps, Andrei Shleifer’s Evil Twin,” Economic Principals , April 16, 2006, available at: http://www.economicprincipals.com/issues/2006.04.16/195.html). With regard to Hay’s workplace, the Boston Globe refers to an interview conducted in Hay’s office “in a high-rise rented by Russia’s Federal Securities Commission.” David Filipov and David L. Marcus, “Probe of Russian Work Shocks Harvard Adviser,” Boston Globe , May 25, 1997, p. A1, available at: http://janinewedel.info/media_bostonglobe3.pdf.

4. Quotes are from Olga Kryshtanovskaya, “The Real Masters of Russia,” Argumenty i Fakty , no. 21 (May 1997), reprinted in Johnson’s Russia List , by David Johnson, Washington, DC, an authoritative newsletter published via e-mail. For analysis of Russian clans, see also the work of economic sociologist Leonid Kosals, “Interim Outcome of the Russian Transition: Clan Capitalism,” Discussion Paper No. 610 (Kyoto, Japan: Kyoto Institute of Economic Research, January 2006); and “Essay on Clan Capitalism in Russia,” Acta Oeconomica 57, no. 1 (7), pp. 67–85. For details and documentation regarding the social and political background of the Chubais Clan, see Janine R. Wedel, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe , 2nd ed. (New York: Palgrave, 2001), pp. 133–135.

5. On Sachs’s projects, see, for example, project documents submitted by Jeffrey D. Sachs and Associates Inc. to the Finnish government: “World Institute for Development Economic Research Project on the Transformation of Centrally Planned Economies: Report on Activities, First Half of 1992.” I obtained these documents from the Finnish government and have put them on my Web site at: http://janinewedel.info/harvardinvestigative.html#3 and http://janinewedel.info/WIDER_Project.pdf.

On Shleifer and Chubais becoming acquainted through Sachs, see Maxim Boycko, Andrei Shleifer, and Robert Vishny, Privatizing Russia (Cambridge, MA: MIT Press, 1995), p. viii. Information from Andrei Shleifer is from my interview with him on September 5, 1996.

6. The administration insider cited is Mark C. Medish, then deputy assistant secretary for Eurasia and the Middle East, U.S. Department of Treasury, author’s interview, November 26, 1997.

7. Lawrence Summers’s biography, as supplied by the U.S. Treasury Department, 1990s.

8. On Summers inspiring Shleifer, see Karen Pennar and Peter Galuszka, “Privatization Expert and Cheerleader,” Business Week , July 19, 1993. Summers and Shleifer received at least one foundation grant together (vita of Andrei Shleifer on file at HIID, Harvard University, 1990s).

While presenting himself as a Harvard professor offering his advice pro bono, Sachs’s little-known consulting firm, Jeffrey D. Sachs and Associates Inc., sometimes solicited fees from clients and would-be clients.

Summers’s quote is from David McClintick, “How Harvard Lost Russia,” Institutional Investor Magazine Online , January 13, 2006, p. 18, http://jboy.chaosnet.org/misc/docs/articles/shleifer.pdf.

9. Facts about Hay’s employment are from vita of Jonathan Hay on file at HIID, Harvard University, 1990s.

10. The Harvard Institute’s first award from USAID for work in Russia came in 1992, during the Bush I administration. Between 1992 and 1997, the Institute received $40.4 million in competitive grants for work in Russia. It was slated to receive another $17.4 million, but USAID suspended its funding in May 1997, citing allegations of misuse of funds. According to USAID’s Deirdre Clifford, since 1992 the Harvard Institute received $40,373,994 in noncompetitive grants under the First Cooperative Agreement (author’s interview, 1996). Another $17,423,090 was designated for Harvard under the Second Cooperative Agreement (a three-year agreement that began on September 30, 1995), of which $4.5 million was obligated (USAID documents and author’s interview, June 11, 1996).