Janine Wedel - Collision and Collusion - The Strange Case of Western Aid to Eastern Europe

The Chubais transactors appear unlikely to disappear in Vladimir Putin’s Russia. In fact, Putin has long been intertwined with them. An operative in the KGB and briefly head of its successor agency, Putin, like most associates of the Chubais Clan, hails from St. Petersburg and was intimately involved in the “reforms” there. After moving to Moscow to work with Chubais, Putin helped to suppress criminal investigations that implicated Yeltsin and members of his family—as well as Chubais himself.205 Chubais, in addition to his current role as chief of the country’s electricity conglomerate, helped to run Putin’s spring 2000 presidential campaign.206

FOLLOWING IN COMMUNISM’S FOOTSTEPS

To appreciate the full implications of donors playing favorites, it is necessary to understand the effect that the legacies of communist social organization and suspicion had on the role of aid after the breakup of the Soviet Union. To legitimize themselves and increase their power at the local and national levels, the new Russian leaders needed to supply the goods and services that the former communists had provided. Because demand invariably exceeded supply in the “shortage economies”207 of socialism, command over resources guaranteed state control and also the development of informal patronage networks to allocate resources. With the breakdown of the command economy, there were fewer resources to distribute and many more potential channels of distribution. This new scenario weakened the influence of the state at a time that people continued to expect it to provide. Aid from the West offered a way to meet these expectations: It became a political resource for Russian reformers to allocate in the communist tradition, through patronage networks like those that virtually ran various regions of the Soviet Union.208

Yet by following in communism’s footsteps, Russian politicians and aid recipients opened themselves to a barrage of criticism and a great deal of suspicion. The fact that the chosen “reformer” group had as much to do with politics as with activities in support of market reform further contributed to the cynicism Russians felt about aid efforts. So did the narrow way in which the United States seemed to have chosen the Chubais Clan as its partner for achieving its market-reform agenda. Although members of this group occupied some key roles in government early on and were talented, they also clearly made themselves available, appealing, and apparent to influential Western contacts. Although the Chubais Clan was organized so that its members knew, supported, and promoted one another, Western decision makers tended to see individual “reformers” and often were not aware of the extent to which members of the Clan were associated with one another and the importance of the group’s internal organizing in establishing itself vis-à-vis the West. By proclaiming themselves reformers, members of the Clan established a reputation as the West’s most suitable Russian partners. In turn, by anointing Chubais as a chosen reformer, U.S. assistance helped him to develop an international reputation.

Because the Chubais Clan monopolized U.S. aid much earlier and more completely than any other clan, there was little direct competition among clans for aid resources. But there was much resentment. The disillusionment of those who were not young or glib or “Western” enough to be chosen was candidly expressed by a spokesman for Aleksandr Lebed, Russia’s former national security chief: “We [are] disappointed by the way you Americans find friends in Russia. Criminal and corrupted men use all new opportunities with success, but men of work and honor cannot advertise themselves. If you do not want crisis in Russia, if you want [a] free, wealthy, democratic Russia, try to find friends that really can work on market reforms.”209

By largely putting their eggs in one basket and allowing much aid to be used as the tool of one group, aid planners and politicians alienated non-Western-oriented reformers and opened themselves to suspicion and cynicism about aid programs, capitalism, and the West. Along with accusations that the West was playing colonialist politics, foreign advisers working with the Chubais Clan also were subject to criticism. “Too much” foreign involvement presented issues of credibility with the Duma. The response, both on the part of USAID and the Russian government, was to diminish USAID’s visibility and to “Russify” aid projects to show that they were under Russian, not foreign, control. But because the Russians who assumed control often were linked to the Chubais group, the old suspicions were fueled.

Aid to Russia may have served to revive the old idea, nurtured under communism, of the West as an imperialist and colonialist demon. The fact that much Western aid—especially high-visibility privatization aid—led to inequitable results and was explicitly political, directed to supporting those deemed by Western and development communities to be “reformers,” contributed to this perception. For instance, an article in the popular Russian daily Komsomolskaya Pravda alleged that Anatoly Chubais had robbed Russia of millions of dollars, that Harvard Institute’s Jonathan Hay was a CIA agent, and that U.S. advisers in general “were effectively collecting economic information about the situation in the Russian economy” that “ends up in the hands of American financial-industrial corporations.”210 A USAID contractor in Russia, Ronald Childress, recounted how his Russian hosts, having gotten to know and trust him after several years, each asked: “Ron, why are you really here? I think you are sincere, but your government has something else [a hidden purpose for your presence here].… Western policy was designed to break us up and to make sure we never, ever come up again.”211

As long as suspicion of Western motives remained pervasive, politicians unfriendly to the United States were able to mobilize popular support by showing that the Russian government was subject to undue foreign influence. Members of the Duma, after an investigation, issued a report decrying the “dozens if not hundreds of American organizations operating in Russia within the framework of various assistance and cooperation programs.” The report concluded that “intelligence and other operations are performed by such organizations, including the Peace Corps, which has nothing to do with the goals proclaimed by these organizations.”212

A REPEAT PERFORMANCE IN UKRAINE?

As Ukraine began to enjoy more Western press and political attention in 1994 and 1995, following President Leonid Kuchma’s economic reforms, that nation became the target of much assistance, partially as a reward for its perceived advances. Aid to Ukraine also was seen as an alternative to aid to Russia, which was threatened to be cut back following that country’s assault on Chechnya and its suspected sales of nuclear technology to Iran. By 1996, Ukraine, which faced (and at this writing still faces) severe financial crisis, was the third-largest recipient of U.S. assistance (after Israel and Egypt).

U.S. policymakers were inclined to emulate the Russian aid model in Ukraine; that is, to look for “reformers.” As USAID’s assistant administrator Dine has expressed it:

The reformers are the performers. USAID supports the activities of key economic reform leaders.… For example, USAID staff work closely with Russia’s first deputy prime minister, Anatolii Chubais.… Chubais and his proteges are the Adam Smiths of Russian reform economics. USAID is also working with Ukrainian economy minister Roman Shpek, whom President Kuchma tapped to help lead an independent Ukraine out of three years of decline.213

U.S. support for the Harvard Institute in Ukraine was steadfast. Thus, while Jonathan Hay and Andrei Shleifer were lobbying for aid dollars in Russia, their globe-trotting colleague Jeffrey Sachs, head of the Harvard Institute since the summer of 1995, turned his attention to Ukraine. Sachs’s prescriptions had rendered him an anathema in Russia, but Ukraine was the new economic reform frontier.