Putin threatens the West?

Yeltsin's reforms! That's a real laugh.

I disagree with many points in this article by Martin Wolf of the Russophobic Financial Times. Michael McFaul and Anders Aslund, two Russia "experts" cited here, are particularly execrable. Russia's GDP declined so astronomically in the 90s precisely because it took the IMF and West's advice to privatize state enterprises before competition and rule of law were in place, liberalize prices (which led to immediate hyperinflation), and open up financial markets before real banks existed and financial controls were in place. All of this resulted in overnight loss of savings and purchasing power by the people, asset stripping by managers and corrupt politicians, and money laundering out of the country.

The Nobel economist Joseph Stiglitz wrote about this quite eloquently in Globalization and Its Discontents. In the future I will scan some relevant chapters from his book, because it is so instructive.

As for lack of democracy in Russia... We can't blame the West, but the West -- and yes, Bill Clinton! -- certainly undermined the legitimacy of democracy in Russians' eyes by supporting corrupt "reformers" like Chubais and Yeltsin. Demokratia (democracy) became known as dermocratia (shitocracy) among ordinary Russians. America in particular was so frightened of a resurgent Communist Party that it was ready to throw money and support at anybody parroting the "free markets" and "democracy" shtick. The tragedy is that the Communist Party was and remains the only real party, by Western standards, in Russia. It could have been encouraged to transform into a modern Social Democratic party on par with many other European democracies, but instead it was marginalized, undermined, and then ignored. The irony is that anybody who was anybody in Russia was a former party member, including Yeltsin.

Poland, which is cited here as a success story, initially followed "shock therapy," but then considerably slowed down the pace of reform, and concentrated on sequencing. As Stiglitz argues, timing and sequencing, not to mention avoiding cookie-cutter approaches advocated by the IMF and World Bank, are the real keys to successful reform.

Unfortunately, many Russians now hold a "conspiracy theory" view of the West's motives in the 90s; they think our real goal was to cripple and emasculate Russia under the guise of smiling friendship. I don't agree with this view, but I can certainly understand why they feel that way. Even more, I can understand why they're telling us now to take our sanctimonious advice about democracy and rule of law and shove it. (Our invading Iraq didn't do much for our moral authority either).

The next U.S. president should first make an apology to Russia for our, er, well-intentioned errors in the 90s. And he should reverse NATO expansion and anti-missile systems on Russia's doorstep. If the next president would do those three things, we'd find Russia -- especially ordinary Russian voters! -- much more receptive to friendly relations and our "expert" advice.