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Jewish World Review Sept. 8, 1999 /27 Elul, 5759

Mort Zuckerman

Mort Zuckerman
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Econophone

Though plundered and confused, Russia can solve its problems

http://www.jewishworldreview.com -- PITY THE RUSSIAN PEOPLE. They have gone from living under communist barbarism to capitalist barbarism without any civilized system in between. The United States thought that its advice and money could transform Russia from a command, socialist economy to a free-enterprise, market economy. Instead, it has been transformed into a gangster state of staggering corruption. Current headlines about billions in looted money being channeled through U.S. banks are a glimpse of what has been going on. The oligarchs have literally stolen the country in the crime of the century.

Boris Yeltsin, once the hero of the people's revolt, is a caricature of a president. His puffy, slow movements and bouts of drunkenness personify a desperately unhealthy nation. The clique around him has taken control of Russia's most cash-rich agencies. At least five of his current or former ministers are being investigated for corruption, including his daughter. The state auditor is trying to find out what happened to the $488 million used to refurbish Yeltsin's residence. The central bank was accused of transferring currency reserves to an offshore company so that insiders could reinvest them in Russia's short-term treasury bond market, for personal profit. Honest men who resist the gangsters have to ponder a "silver or lead" option, which translates: You take 30 pieces of silver or you get shot. No individual or branch of government commands sufficient respect to govern effectively.

The legislature is paralyzed, the judiciary ineffectual, the police impotent. The financial system is in such shambles that the ruble is a joke and over two thirds of the economy operates on barter. Because it cannot collect taxes, the state can barely perform its basic functions in health, security, and education. On the "private" side, vast, unaccountable power is wielded by the men who got control of the assets of the state and its natural resources. These oligarchs–the nomenklatura capitalists–transfer their winnings abroad. Capital flight is believed to have exceeded well over $200 billion in the past seven years–three times what flowed out of Mexico in the 1980s.

The average Russian meanwhile has got poorer. GDP is off by 50 percent since 1989, unemployment and poverty are widespread, and the death rate among men is staggering. Russians associate democracy with political arrogance and market capitalism with cronyism. We sent money to support Yeltsin in the face of a communist alternative. It was the evil of two lessers. But ordinary Russians have convinced themselves that the collapse of the country is largely the result of American machinations. What we did not fully appreciate was the extent to which seven decades of communism had crippled the country. Now Americans are also wondering how to come to terms with the disaster.

The most absurd question being asked is, "Who lost Russia?"–as if somebody in America was to blame. Russia is not lost. It is still a much better friend of the West than it was under communism and is certainly not our enemy. The Russians have cast off communism. They have a constitution with contending political forces instead of a secret one- party rule. They have a contentious press, the beginnings of a market economy, and in the provinces a new generation of entrepreneurs and political leaders.

The Russians have, in fact, demonstrated an extraordinary resilience. Despite their privations and their betrayal by the oligarchs, there have been no demonstrations, no sympathy strikes, no marches. The impending elections to the Duma and the presidency offer the prospect that largely centrist politics will dominate without the reds and browns on left and right being able to block progress.

The United States and the West will have to appreciate that Russia can only solve its problems its own way. We must keep in mind that the West's financial aid, much of which was misspent or stolen, may well have delayed the necessary reforms in Russia. We have to step back, support democracy when we can, but focus primarily on the security issues we share, of which the gravest remains the thousands of nuclear weapons–the "loose nukes" in the phrase of Harvard's Graham Allison.

Humility will serve us well. Not everybody needs to be like us. Not everybody can be.



JWR contributor Mort Zuckerman is editor-in-chief and publisher of U.S. News and World Report. Send your comments to him by clicking here.

Up

08/31/99: The military should spend more on forces and less on facilities
08/05/99: Squandering the surplus
07/06/99: More than ever, America's unique promise is a reality
06/24/99: The time has come to hit the brakes on affirmative action
06/15/99: America should take pride in honoring its responsibilities
06/02/99: The Middle Kingdom shows its antagonistic side
05/11/99: Technology's transforming power is giving a lift to everything
05/04/99: The big game gets bigger
04/30/99: On Kosovo, Russia talked loudly and carried a small stick
04/21/99: No time to go wobbly
04/13/99: The Evil of two lessers

©1999, Mortimer Zuckerman