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

150. Interview with E. Wayne Merry, May 23, 2000.

151. The concept of “transidentities” draws on anthropologist Fredrik Barth’s work exploring “repertoires” of identities and how actors employ different identities depending on the situation. See Fredrik Barth, ed., Ethnic Groups and Boundaries: The Social Organization of Culture Difference, Boston, MA.: Little, Brown, 1969.

152. Documents provided by and interview with auditor Veniamin Sokolov, May 31, 1998.

153. For greater detail, see Anne Williamson, Contagion: The Betrayal of Liberty, chapter 13.

154. Sachs writes that his work in Russia with Anders Åslund “was supported mainly by the Ford Foundation and the Swedish Government. I was not paid by the Russian Government” (letter to Janine Wedel, March 12, 1998). In a later exchange in The National Interest, Sachs writes: “I received my academic salary for my work in Russia, with my leave time from Harvard University covered mainly by the United Nations University in Helsinki in early 1992, and thereafter by the advisory project supported by the Ford Foundation and the Swedish government during 1992-93.” (“Tainted Transactions: An Exchange,” The National Interest, no. 60, Summer 2000, p. 99.) The correspondence does not mention that Sachs’s WIDER Institute-sponsored project, for which he received $322,728 in salary and fees (not including expenses), was paid to Jeffrey D. Sachs and Associates Inc., according to project documents. The project, the total cost of which was $2,036,122, was funded by the Finnish Ministry of Foreign Affairs and the Sasakawa Foundation (project entitled “Transformation of Centrally Planned Economies: The Lessons for Developing Countries” final statement of income and expenditures, June 1990-June 1992; and Finnish Ministry of Foreign Affairs documents, including internal audit of the project above, March 22, 1993).

155. Sachs makes much of the distance between his work and that of his Harvard colleague Shleifer, who is now being sued by the U.S. Department of Justice. Yet Sachs, Lipton, and Shleifer are listed as the “three senior members” of a Russia advisory project paid to Jeffrey D. Sachs and Associates, Inc. In time, Sachs and Shleifer emerged as rivals and ran largely separate operations in Moscow. However, they shared the transactorship mode of operating and many contacts in the Chubais Clan, as well as many crucial Western contacts.

156. See, for example, project documents submitted by Jeffrey D. Sachs and Associates, Inc., to the Finnish government stating that “The [Sachs] team has helped the authorities prepare for negotiations with international financial institutions.” (“World Institute for Development Economic Research Project on the Transformation of Centrally Planned Economies: Report on Activities, First Half of 1991,” p. 7.)

157. See John Helmer, “Russia and the IMF: Who Pays the Piper Calls the Tune,” Johnson’s Russia List, no. 3057, February 17, 1999. Sachs, in his 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) seems to deny that he was in correspondence with the IMF while at the same time advising Gaidar. However, one memorandum in the author’s possession was written by Sachs and David Lipton, dated May 11, 1992, and directed to key Russia decisionmakers at the IMF. It shows that Sachs and Lipton were privy to internal discussion within the Fund and were proffering advice within that context without any mention of their role advising the Russian side. (See “Tainted Transactions: An Exchange,” The National Interest, no. 60, Summer 2000, pp. 98-110.)

158. While providing no documentation for his role, Sachs writes: “I was an official adviser of the Russian Government from December 1991 to January 1994. Together with Anders Åslund I directed the Macroeconomics and Finance Unit (MFU) of the Russian Ministry of Finance, housed within Government offices.” (Letter to Janine Wedel, March 12, 1998). In later correspondence in The National Interest, Sachs further writes: “President Yeltsin officially designated us as advisers during a meeting with us on December 13, 1991 and we received offices in the Council of Ministers during 1992 and in the Ministry of Finance during 1993.” (“Tainted Transactions: An Exchange,” The National Interest, no. 60, Summer 2000, p. 98.)

159. For example, in response to Sachs’s and Åslund’s “resignation” from their advisory role to the Russian government in January 1993, Prime Minister Victor Chernomyrdin, when asked to comment, said (through his spokesman) that he had not used their services, nor had he had any foreign advisers (TASS, “ITAR-TASS Highlights of January 21,” The Russian Information Agency, ITAR-TASS, January 21, 1994). Chernomyrdin added that “The mechanical transfer of Western economic methods to Russian soil has done more harm than good” (Steven Erlanger, “Two Western Economists Quit Russia Posts, The New York Times, January 24, 1994, p. 4).

Similarly, Gaidar Institute deputy head Alexei V. Ulyukaev told journalist Anne Williamson that “Sachs was never an official adviser to the government, that’s his own illusion.” Gaidar, too, described Sachs and Åslund as “insignificant figures.” Williamson reports that “Even Gaidar’s archrival, [Grigory] Yavlinsky, insisted, ‘What we did was not based on even 10 percent of their [Sachs’s and Åslund’s] advice. Gaidar was using those people as loudspeakers for the West, but, in fact, Gaidar did as he wished’” (Anne Williamson, Contagion: The Betrayal of Liberty, Chapter 7).

In addition, U.S. Treasury official Mark Medish said that Sachs and Åslund never had an official position in Russia (Interview with Mark C. Medish, Deputy Assistant Secretary for Eurasia and the Middle East, U.S. Department of Treasury, November 26, 1997).

160. Anne Williamson interview with Jean Foglizzo, February 1, 1994. For further detail, see Anne Williamson, Contagion: The Betrayal of Liberty, chapter 7.

161. Memorandum from Jeffrey Sachs to Ruslan Khasbulatov of November 19, 1992; interviews with Stanford University economist Michael Bernstam of August 21, 1997 and October 17, 1997.

162. See, for example, an Action Memorandum of February 4, 1993 from a State Department official to the secretary of state, in which Sachs requests an appointment with the secretary of state. The memorandum notes that Sachs also has sought appointments with National Security Adviser Anthony Lake, Treasury Under Secretary-designate Larry Summers, and Ambassador designate Strobe Talbott.

163. For example, an Åslund advisory project was awarded $642,857 in 1991-92 from the Swedish government (letter from Swedish Ministry for Foreign Affairs Dag Hartelius, April 7, 2000). Ruth Jacoby, director from 1990 to 1994 of Sweden’s Secretariat for Cooperation with Central and Eastern Europe, reported that the Åslund project “wasn’t particularly transparent. I’m not sure exactly where the money went to.” She further clarified that “It is very difficult to say how this advice took place. Money was accounted for, but the question is what did they do for one and a half years in Moscow?” (Interview with Ruth Jacoby, April 17, 2000.)

164. Sources include Bildt Ministry for Foreign Affairs official Krister Wahlbäck, interview of April 6, 2000, and Swedish Ministry for Foreign Affairs Dag Hartelius (director, and former deputy director, Department of Central and Eastern Europe, Foreign Ministry), interview of April 6, 2000. Carl Bildt acknowledged in the Swedish Parliament, April 21, 1994, that “Anders Åslund is one of my advisors” (Prot. 1993/94:93, April 21, 1994, pp. 31, 37). See also Dan Josefsson, “The Art of Ruining a Country with Some Professional Help from Sweden,” ETC (English Edition), no. 1, Stockholm, Sweden, 1999.