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

103. Katherine Verdery, “Theorizing Socialism: A Prologue to the Transition,” American Ethnologist, vol. 18, no. 3, 1991, pp. 419-439; and What Was Socialism, And What Comes Next? Princeton, NJ: Princeton University Press, 1996.

104. Reported by Blaine Harden, “Poles Sour on Capitalism,” The Washington Post, February 5, 1992, p. A1.

CHAPTER TWO

    1. Interview of July 4, 1994, with Jarmila Hrbáčková of the Department of Foreign Assistance of the Ministry of Foreign Affairs of the Slovak Republic.

    2. Talk before the American Committee for Aid to Poland (ACAP), Washington, D.C., March 12, 1992.

    3. See, for example, Jacek Kalabiński, “The Marriott Brigade in Action,” Gazeta Wyborcza, June 21, 1991, and “The Misfortune of the Marriott Brigade,” Gazeta Wyborcza, October 18, 1991.

    4. For insight into the collision between high-level Central and Eastern European officials and their foreign advisers, especially with regard to macroeconomic agenda, see Adam Smith Goes to Moscow: A Dialogue on Radical Reform (Walter Adams and James W. Brock, Princeton, New Jersey: Princeton University Press, 1993). Though fictionalized, the account rings true in its depiction of the disconnect between a foreign economist, unencumbered by knowledge of the realities of the context to which he hopes to apply his theories, and the recipient of his advice: a prime minister who must implement—and take the blame for—economic policies.

    5. For a detailed definition of “shock therapy,” see, for example, David M. Kotz with Fred Weir, Revolution from Above: The Demise of the Soviet System, London, United Kingdom: Routledge, 1997, pp. 161-163.

    6. Poland is a significant example of this. Sachs has maintained that “I advised the Polish Government at the invitation of Deputy Prime Minister Leszek Balcerowicz. My advisory work extended to several Ministries, and to the Council of Ministers. I also organized many workshops on behalf of various parts of the Polish Government” (letter to Janine Wedel of March 12, 1998). However, in 1991, the Polish government issued this disclaimer in the Financial Times (“Professor Jeffrey Sachs,” June 15-16, 1991): “Professor Jeffrey Sachs of Harvard is not an economic adviser to the Polish Government. Professor Sachs visits Poland often and his visits are welcome but he has no official role with the government.” The Poles who engineered the Polish stabilization plan of January 1, 1990 (“shock therapy”) in which Sachs says he had a hand, including high-level officials in the Ministry of Finance, the head of the National Bank of Poland, and the director of the Institute of Finance, said in 1990 that Sachs was one of many advisers and that his ideas tended to replicate the conventional wisdom of the IMF. Well-placed observers in the U.S. State Department and Congressional Research Service, as well as the director of the European department of the World Bank, said the same thing. Further, Sachs, not the Poles, largely initiated his Polish venture. His funders included George Soros, the Hungarian American philanthropist and investor, and the United Nations University in Helsinki. (For specific sources and details, see Janine R. Wedel, “The Economist Heard ’Round the World, Part II,” World Monitor, October 1990, pp. 33-42.)

While associating himself with reform efforts in countries perceived as successful—Poland, for example—Sachs tends to distance himself from failed reform efforts in countries where he also was active, such as Russia, Ukraine, and Mongolia. (On Russia, see, for example, Sachs’s reply to the author’s article in The National Interest (“Tainted Transactions: Harvard, the Chubais Clan and Russia’s Ruin,”no. 59, Spring 2000, pp. 23-34) published in “Tainted Transactions: An Exchange” [ The National Interest, no. 60, Summer 2000, pp. 98-99].)

    7. Cited in Janine R. Wedel, “The Economist Heard ’Round the World, Part II,” World Monitor, October 1990, p. 38.

    8. Ibid.

    9. Interview with Ryszard Bugaj, March 10, 1990. (For details, see ibid., pp. 33-42.)

  10. Interview with Stefan Kawalec of March 8, 1990 and April 16, 1990. This quote is from March 8, 1990. (For details, see ibid.)

  11. Sociologists Michael Burawoy and Pavel Krotov are among those who argue that the Soviet state disintegrated from within: It was not a “‘revolution,’ but the (long-anticipated!) withering away of the state. ” (Michael Burawoy and Pavel Krotov, “The Soviet Transition from Socialism to Capitalism: Worker Control and Economic Bargaining in the Wood Industry,” American Sociological Review, vol. 5, February 1992, p. 17.)

  12. For example, the GAO reported that “USAID’s initial privatization strategy in Poland was based on the assumption that the privatization process would take only a few years” (United States General Accounting Office, Poland: Economic Restructuring and Donor Assistance, Washington, D.C.: GAO, August 1995, p. 57).

  13. With regard to U.S. assistance to Central and Eastern Europe, nearly three-quarters of all obligations consistently fell under economic restructuring (U.S. Department of State, SEED Act Implementation Report, Fiscal Year 1996, Washington, D.C.: U.S. Department of State, February 1997, tables; U.S. Department of State, SEED Act Implementation Report, Fiscal Year 1998, Washington, D.C.: U.S. Department of State, March 1999, tables). See appendix 1, table 3.

With regard to the former Soviet Union, as of 1995, about one-fourth of U.S. obligations to the region were for private-sector development, economic restructuring and finance, and market reform. (United States General Accounting Office, Former Soviet Union: U.S. Bilateral Program Lacks Effective Coordination, Washington, D.C.: GAO, February 1995, p. 48.) As of 2000, about one-third of U.S. obligations to the former Soviet Union, under the Freedom Support Act, were for energy efficiency and market reform, private-sector initiatives, and economic restructuring and financial reform. With regard to Russia and Ukraine specifically, the portion obligated to Russia was 30 percent between 1992 and 1999, while that to Ukraine was 23 percent. Private-sector initiatives comprised the single largest category of U.S. assistance to both countries. (U.S. Department of State, Office of the Coordinator of U.S. Assistance to the NIS , U.S. Government Assistance to and Cooperative Activities with the New Independent States of the Former Soviet Union, FY 1999 Annual Report, Washington, D.C.: Department of State, January 2000, tables.)

With regard to EU assistance to Central and Eastern Europe, the EU consistently committed about one-fourth of its PHARE program to economic restructuring and private-sector development, including privatization, enterprise support, and aid to the financial and agricultural sectors. (European Commission, The Phare Programme: An Interim Evaluation, Brussels, Belgium: European Commission, 1997, annexes: table A.7, p. 66; and European Commission, The Phare Programme: Annual Report 1998, Brussels, Belgium: European Commission, 2000, p. 85.) See appendix 1, table 4.

With regard to EU assistance to Russia and Ukraine, between 1991 and 1997, TACIS allocated 40 percent of its funds to Russia for restructuring state enterprises and private-sector development and for agriculture, and 32 percent of its funds to Ukraine for the same two categories (“Tacis Funds Allocated by Sector 1991-97,” Tacis Annual Report 1997, European Union Directorate General 1A: http://europa.eu.int/comm/external_relations/nis/tar97/index.htm [May 2000].)