Newspaper Article

U.S. Can't Do Much About the Russian Economy

Anatol Lieven. Anatol Lieven, strategic comments editor at the International Institute for Strategic Studies in London, is the author of "Chechnya: Tombstone of Russian Power." James P. Pinkerton is on vacation

1998

Overview

Most of our recent Russia policy has been not only useless but harmful, and there are worrying signs that the [Bill] Clinton administration, at least, has still not really learned from those mistakes. Complicating matters, of course, is that Russia opposed the recent bombing of Iraq and recalled its Washington ambassador. But no one expects this to lead to a serious break in relations. More troubling, though, is Washington's misguided approach to Russia's internal problems. Rapid privatization of the Russian economy - urged by countless western policymakers - has been disastrous. It has produced a monstrously corrupt process in which the state received a pittance in return for abandoning control over its most important sources of revenue. These resources were transferred to various magnates, most of whom have spent the last few years transferring the profits to the West, without reinvesting a single ruble in their own industries. Meanwhile, much of our economic advice was irrelevant. As a recent article by Clifford Gaddy and Barry Ickes makes clear in Foreign Affairs, the Russian economy, to almost the same extent as the former Soviet economy, is based upon principles that have very little in common not just with a market economy but with a modern cash economy.

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