From your point of view, there are three crucial moments in which the split
began to grow between the principals that the U.S. espouses and its behavior
vis-a-vis Yeltsin and Yeltsin's Russia.
He was Chief Political Analyst at the U.S. Embassy in Moscow from
American policy has always declared that what we wanted to see in Russia and
in the other countries of the Soviet Union, was the growth of democracy, civil
society, rule of law, and the growth of a market economy, free enterprise,
capitalism. There's always been a problem in understanding that those two
things don't necessarily go hand in hand. In some cases you may have to choose
one or the other.
And I think what did happen is that by force of circumstance, the U.S.
government was forced to choose. And we chose the economic over the political.
We chose the freeing of prices, privatization of industry, and the creation of
a really un-fettered, unregulated capitalism, and essentially hoped that rule
of law, civil society, and representative democracy would develop somehow
automatically as a result of that.
I mean, part of this was an ideological view, very prevalent in Washington, in
both the Bush and Clinton administrations that capitalism brings democracy as
an inevitable consequence, and this is really an ideological belief, not a
tested demonstrable theory applicable to a place like post-Soviet Russia.
Will you talk what happened in the fall of 1993?
I think the first time when the United States really had to make a choice was
in the political conflict between Yeltsin and his opponents that came to a
crisis level in September and early October of 1993. That confrontation had
been brewing for almost a year. In early 1993, there had been an effort by the
then-Congress of People's Deputies to impeach Yeltsin and remove him. That
Yeltsin then counter-attacked with a national referendum on a series of
political questions, which he won and won fairly handily, and that was supposed
to give him the political momentum to be able to really help transform the
country, but using constitutional legal means.
Unfortunately, despite this new mandate that he received in the April
referendum, in the summer months Yeltsin really sort of lost focus, and the
momentum was lost. And the confrontation then resurfaced in the early fall,
and ultimately Yeltsin basically lost patience with his--with his political
opponents and you ended up with the violent confrontation of early October.
Now, the United States at that point really had its fingers crossed and was
hoping for the best, but clearly its preference lay with Yeltsin. In part,
that was because much of the opposition represented extremely ugly bigoted,
nationalistic, anti-semitic, really hysterical forces that had been left over
from the Soviet period, many of the people demonstrating in support of the
people in the Russian White House and opposed to Yeltsin, had to be seen to be
believed. I mean, these are the kinds of people, for example, that Slobodan
Milosevic has relied on for his political support.
On the other hand, there were many genuine democrats who ultimately were in
opposition against Yeltsin because they had a commitment to constitutionality
and to legal processes of government. This included the then-head of the
constitutional court. This included the man who had been the principal drafter
for a new Russian constitution. Ultimately, they were on the opposite side of
the barricades against Yeltsin.
The United States sided with Yeltsin. I think that was probably justifiable at
the time. I felt it was necessary, but I think Washington did not fully
recognize the price that was paid in the development of a civil society in
Russia by that kind of violent confrontation in which over 150 people were
killed, in which the Parliament Building was gutted through tank fire, and in
which essentially the man occupying the Moscow Kremlin took most of his
opponents and put them into prison where they remained until early the next
year without--without trial.
I think there was a major price to be paid for that, and I think Washington
really never faced up to the price.
So what was Washington's attitude? At least a couple of people
congratulated Yeltsin on his victory after the day of the firing on the White
I think it is worth keeping in mind that Washington's attention at that time
was very distracted by events in Somalia, and in fact the actual open battle
that took place in Moscow on the 3rd and 4th of October was exactly
simultaneous with the killing of the American Rangers in Mogadishu, and
Washington's focus was on the Horn of Africa, not what was going on in
I think also there was a sense by that point that Yeltsin was our guy, and
there was a pretty solid commitment to Yeltsin as a leader and to Yeltsin as
the central figure of a team of what were seen as westernizing reformers, and
many of those were indeed very good people, but I think what was lost sight of
was that Russia's democrats and people in Russia who were committed to the
development of a law-based state, of constitutionality, were divided by those
events of the fall of 1993.
And some very good people ended up being essentially closed out of
participation in the country's politics because they placed loyalty to the law
above loyalty to Boris Yeltsin.
So once the battle was over and, as you said, some of the opponents were
even in fact locked up, were we relieved that the opposition seemed to be
handled, taken care of?
I think Washington was extremely relieved. Washington's main priority was
that Yeltsin's victory be essentially ratified in an election. Yeltsin himself
had the same priority. So they scheduled elections to take place in the middle
of December, and Yeltsin's team and its supporters in Washington, I think, were
completely confident, absolutely cocky, that that would be a ratification, and
that they would obtain overwhelming support from the Russian people in that
The embassy had warned Washington at the end of November that the election had
the potential to be a disaster. I don't think Washington believed it. They
certainly didn't want to believe it, but in point of fact the election that
took place in mid-December was a fairly thorough public rejection, not so much
of the politics that Yeltsin had brought to Russia, as of the economics because
much of what the world saw through CNN was this battle that was fought out on
the streets of Moscow.
It obscured the fact that the policies which Yeltsin's reform team had imposed
had created a real crisis in middle-class and working-class living standards in
Russia in the later part of 1993, and the people who had really struggled in
1990, '91, '92, taking on extra jobs, moonlighting, using up their savings, all
kinds of mechanisms in order to get by and had just scraped by through the huge
mega inflation of 1992 and thought in early 1993 that they were beginning to
get ahead of the game again then got sandbagged by these policies from
Yeltsin's team that created a real, real genuine fear among working class
And I think the result of that was not just the fact that Gaidar's part of
Yeltsin's supporters received so few votes, but this brief immense surge in
support for Zhirinovsky in which he received almost a quarter of the votes
cast, and almost all of those votes came from younger male, blue-collar,
industrial workers in the big cities who frankly were scared about their
So it wasn't these mean nasty crazies that had been on the streets in
October. It was working-class people.
It was working-class people. I mean, I don't think there's much question that
the votes that went to the Communist Party obviously represented people who
still regretted the loss of the Soviet Union and people who had been on the
other side of the barricades, but the real overwhelming defeat that Yeltsin's
team got in that December 1993 election was about economics, and it was a
rejection of this notion of shock therapy, of economic pain, and the monetarist
prescription that led to something in 1993 that I had not seen in Russia since
the final couple of months of 1991, which was real fear.
And it was a remarkable thing that during 1992 when you had 2,000-percent
inflation a month and these enormous economic disruptions, that you did not
actually see fear, that people really were very hard-pressed to adjust, but
they did. But in the fall of 1993, the fear was back, and I think that fear
was reflected in a willingness to listen to a man like Zhirinovsky.
And so obviously the question was how do we react, and unfortunately, when put
to the question of the people have spoken in what was a very legitimate
election and where the voice of the people was, I think, quite clear and
unambiguous, after some consultations over the secure telephone obviously with
the President and other senior officials, the American reaction was to tell the
Russian government, "Let's basically ignore the election and get on with the
So, rather than listening to the voice of the people expressed in what was
undoubted the most legitimate national demonstration of popular preference that
had ever been held in Russia in a thousand years, our view was let's finesse
the election, let's find ways to side-track this new legislature that has been
created by the election, and let's get on with the program. And that created
the basis for really the next 2 years in which American policy was to help
create parallel governmental structures directly under the Kremlin to conduct
policies that would not be accountable to the national legislature in any way
in an effort to essentially evade the constitutional procedures that had just
been created in Yeltsin's new constitution and to evade any kind of control by
a parliament that was accountable to the electorate.
So, essentially, push reform by decree, government by decree...
....Unfortunately--since from Washington's point of view the wrong guys
won--the reaction was rather than trying to find ways of working with this new
legislature--which was a much more complicated body, I think, than people
initially thought, had a lot of people in it who were potentially open-minded
on many issues, but were certainly going to be less willing to go along with
economic policy that impoverished much of the Russian people--rather than
trying to meet these people halfway, the reaction was to find ways to ignore
them and side-track them and to build up new separate parallel government
structures to carry on with the policy.
And many of these parallel government structures that were set up, often
directly with American participation, were remarkably similar to the role that
the Soviet Communist Party had played for so many years in which you had
You had a government which was the facade of power and you had the party which
was the reality of power, and by helping to create these parallel structures
under Yeltsin's Kremlin, what essentially the United States participated in was
perpetualization of this type of non-accountable authority in Russia.
And a structure that was familiar to the Russian people.
Not just familiar to the Russian people, but more particularly a structure
that the so-called reformers felt very comfortable with. It was something that
they had all participated in, in the Soviet era, and for them, it was as
comfortable as putting on a pair of old gloves to engage in government by
executive order and by decree, rather than the much more complex, much more
challenging process of dealing with government that involves a representative
And I think that was particularly demonstrated by the extent to which many of
the reformers who were elected to the State Duma just failed to participate in
its activities, and many of the most prominent westernizers, even though they
had been elected to this representative body, almost never showed up.
In the case of Andrei Kozyrev, it was almost 2 years before he even bothered to
pick up his ID card, and he almost never participated in the work of the
So this is the second time that the U.S. is faced with choice of the rule
of law or our team?
I think so. I think the election of December 1993 was a clear and legitimate
expression of Russian popular will and a rejection of the economic policies
that Washington and the Treasury Department and the IMF had pushed on Russia.
And when faced with popular rejection, the choice was to ignore popular will
and to press on with the policy, and I think there was a huge cost on the
long-term development of rule of law and constitutional government in Russia
for making that choice.
And a huge cost in our reputation, if you will, as a government that was
preaching principle and rule of law in that?
I think we never fully understood the extent to which Russian democrats are
complicated and a fractious bunch, and many of the people who were supporting
Yeltsin were more interested in the development of a particular economic
structure than they were of a democratic structure.
Many of the people who were more committed to legal reform, constitutional
reform, protection of civil liberties, individual rights, were much less
interested in the economic questions, perhaps much less optimistic of the
ability of Russia to make very rapid economic changes, and sometimes you simply
had to choose. And unfortunately, with each passing crisis in post-Soviet
Russian politics, the number of the genuine democrats who became disillusioned
with American policy grew and grew, and ultimately I think we lost most of them
on the issue of the first war in Chechnya.
Tell me about the first war in Chechnya.
Keep in mind that the Yeltsin government had been wrestling with the problem of
Chechnya since its really very first days, and the first occasion when Yeltsin
tried to use military force in Chechnya was in late 1991, when a battalion of
interior ministry troops were sent to Grozny on what was supposed to be an easy
retaking of government authority there, and it turned into a fiasco.
In the three years that then passed, the Moscow government tried through a
variety of surrogates, of trying to subsidize various political parties in
Chechnya, trying to find different mechanisms of subversion, coercion,
economic sanctions, anything they could think of to try to get a handle on the
Chechnyan problem. All of these efforts failed, and in late 1994, after a
series of hijackings, of buses and kidnappings and really a very, very serious
problem of lawlessness in the Northern Caucuses, much of it sources to
Chechnya, they resorted to large-scale military operations.
This was, I think, unquestionably the greatest single mistake of Boris
Yeltsin's political career, and the one thing from which his reputation
historically will never fully recover. I mean, this was Boris Yeltsin's
Vietnam, and the brutality and ruthlessness of the first Chechnyan campaign was
so great that he had alienated almost all genuine democrats in the country from
their own government, and then came the question--what will be the reaction of
the United States.
I think Washington very badly misunderstood what Chechnya was all about. I
think it believed that the military campaign would probably be short, brutal,
ruthless, but successful. I think it greatly underestimated the staying power,
endurance, and the commitment of the Chechnyans. I think it greatly
underestimated the brutality that the Russian forces would use within their own
And Washington's reactions was to commit ourselves to a policy of Russia's
territorial integrity, all of these kind of buzz words that are used by
diplomats that don't really have much meaning, and this really most unfortunate
comparison that the Clinton administration made of what Boris Yeltsin was doing
in Chechnya with Abraham Lincoln's conduct during the American Civil War.
In that, we lost our credibility, I think, with almost all of the democratic
forces in Russia.
What is the attitude towards the United States today?
I would say disillusion, disillusion in part because much of the expectations
that many people in Russia had of us in the late '80s and early '90s were
illusionary. I think there was almost a fantasy notion that the kind of
generosity, the kind of outpouring of assistance that the United States
practiced during the Marshall Plan even towards our defeated enemies, Germany
and Japan, would somehow in a very short order transform Russia into the kind
of almost garden of Eden that came to exist in Germany, in Western Europe. I
think there was a great deal of expectations that could never have been
satisfied, never have been fulfilled.
I think there was a great deal of a sense that the Americans whom they had
perceived to be idealistic, principled, and things in fact no government ever
actually is were then increasingly seen to be unprincipled, conspiratorial,
manipulative, and excessively identified with whatever were the actual power
centers in Russia which, of course, was largely centered on Boris Yeltsin, but
I think our very close association with the government of Viktor Chernomyrdin
did us very great harm in terms of the legitimacy we had in much Russian public
opinion. Whatever he may have been--his administrative skills--nobody in
Russia, I think, was under any great illusions about Viktor Chernomyrdin's
background with the natural gas monopoly or his commitment to any kind of
genuine democratic government.
I mean, this was demonstrated that every time Chernomyrdin or his political
party had to go to the polls, they were annihilated. Nobody voted for them,
for very good reasons, but the fact that the American government and the
American Vice President in particular were so close to Viktor Chernomyrdin and
his government, I think created the impression that what the Americans were
basically interested was in dealing with people in power in order to serve
American interests rather than a commitment to the long-term democratic
development of Russia.
The elections of December of '93. You have said and written that there was
from your point of view-- inside the embassy in Moscow--an unmistakable shift
in the kind of reporting that was expected.
I think as Washington became increasingly committed to a particular
programmatic relationship with Russia, built around what is sometimes called
shock therapy, monetarist policies, particular economic prescriptions that
ignored legal reform, ignored development of representative institutions,
ignored sort of the development of constitutional government and focussed
almost exclusively on monetarist and price mechanisms, that the U.S.
government, not just the embassy, but the government as a whole really divided
into those who were participants and committed to and often the believers in
these programs on the policies, and those people who generally had had a longer
personal and professional association with Russia who were frequently very
skeptical about the applicability of these policies to Russia, very skeptical
about the motivations of many people in Moscow were participating in these
reforms. And I think what you got was a battle in some ways--I know this
oversimplifies--between the Russia hands and the economists.
That does overstate things because there were many people who were involved in
economic affairs who were themselves very skeptical about the policies and very
dubious about what we were doing, but I think in general, you could say that
not just in the embassy, but in the State Department, in CIA, in other parts of
the government that dealt with Russia, there was a division between those
people whose focus was on a particular economic ideology and those people whose
focus was on a social, political, economic entity called "Russia." And I think
the two really were incapable of coming to a meeting of minds because their
general approach was so different.
And one of your former colleagues in the embassy has said that basically
open warfare broke out between the political divisions and the economic
I think that's not an overstatement. There were personality aspects
associated with that. I was part of that, which I certainly recognize, but
beyond the personality, I think, was this broader analytical issue. Are these
policies right for Russia? Is Russia the right country for these policies?
And many of the people who were committed to the programs and the policies were
also institutionally responsible for evaluating their success, and not too
surprisingly, as in any government, when people are responsible for evaluating
the success or failures of their own programs, the evaluations always
pronounced the programs as successful. Whereas, other people who had
analytical reporting responsibilities that were not attached to the programs
frequently were much more negative, much more skeptical about what we were
doing, and not just about the success or failure of the economic programs and
policies, but what would be the long-term impact on broader American national
interests from carrying out policies which Russia simply could not adapt to its
You were involved in writing one particular report, but this report was not
allowed to be sent from the embassy. Tell me about that.
There had actually been a great deal of reporting and analysis out of the
embassy that was, shall we say, internally contradictory in which different
parts of the embassy were reporting the different, different things.
One thing that the Moscow embassy has is a long-term practice of allowing
individual officers to send in statements of individual viewpoint that are not
fully cleared, that don't represent the views of the ambassador of the mission,
but are the views of the individual. And that was a fairly hallowed tradition
at the Moscow embassy, and it exists in very few American embassies that I'm
And that had been practiced under both Ambassadors Straus and Pickering, and a
number of people made use of that. I was one of them. I was allowed to send
in a number of messages expressing my own views, my own skepticism about much
of what U.S. policy was trying to achieve in Russia, and those were clearly
labeled as my individual views.
In early 1994, I wrote another such message. There was a great deal of debate
within the embassy about it. It was not well received in the economic
The ambassador, however, was prepared to send the message in as an expression
of individual views, but met very strong objections to that, particularly from
the Treasury representative and the economic section. And ultimately, the
message went in by--under a separate channel in the State Department that is
known as dissent channel which is a formal mechanism that exists to allow
people to express dissenting views, but also guarantees that those views will
not be very widely disseminated in the government because most embassy
reporting goes not just to the State Department, but it goes to the White
House, CIA, Defense Department, Treasury Department, Commerce Department, all
over the place. Dissent channel messages are very, very carefully kept within
the State Department and very, very limited in their distribution in the State
So, in a sense, dissent channel allows you to say anything you want to say, but
make sure that not very many people hear it.
And what was the gist of the message that you first tried to send in the
normal channel--through the normal channels?
The argument was essentially that the economic policies we were trying to
foist on Russia would fail because Russia could not adapt them, and that we
had--and that we had our priorities backwards, that it was really irrelevant to
the interest of the United States how Russia organized its own domestic
household, what mixture of market or statist economic mechanisms it used. It
was really irrelevant to us.
What was important is that Russia be a responsible partner with the United
States on the world stage, and that we be able to deal with it in a cooperative
way on a wide range of international questions that are of interest to both
countries, and my argument was that by putting all of our priority on trying to
transform Russia into our idea, our model of an appropriate economic system, we
would so alienate the Russian electorate, the Russian political elite, that it
would be impossible for us then to cooperate with them on the world stage, and
that this was a reversal of real American priorities.
And what was the argument that the Treasury representative used to squash
Well, these discussions took place some years ago, and it's hard for me to
remember all the details of it. What I do remember most vividly is the
statement that this message would give Larry Summers a heart attack, and I
think just a general feeling that my views on the economic policies, on the
appropriateness of these types of monetarist reforms in Russia was heresy, and
that heresy should not be allowed.
What all of this is telling us is that even back as early as 1994, 1993,
Washington was certainly getting the reporting that said this isn't
It was getting that reporting from many sources, not just from internal
classified government sources. There was a good deal of press that was
revealing some of the problems.
I mean, there was a good deal of analytical attention to this within various
parts of the intelligence community, particularly at CIA. This was by no means
a question of one individual crying out that the emperor had no clothes on.
There were a lot of people who knew a lot about Russia, many of them in
academia, many of them in business, many of them in journalism, many of them in
different parts of the government who were very, very skeptical about what the
U.S. government was trying to do.
I don't think there's any question that if people in Washington wanted to
listen to doubting viewpoints that there were plenty of doubting viewpoints to
You've been quoted as saying the question of 'who lost Russia' is not the
right question, but the question of 'who robbed Russia' is the legitimate
question to ask. Talk to me a bit about that.
Well, the 'who lost Russia' is really a very conceited reflection of a notion
that somehow Russia is ours to lose.
What we had to lose in our relations with Russia were our own national
interests, and obviously the way we conducted ourselves with Russia would
determine whether or not Russia would be willing to cooperate with us on the
world stage, but the broader question of the nature of economic reform in that
country was one in which the United States played an important role and we
created a virtual open shop for thievery at a national level and for capital
flight in terms of hundreds of billions of dollars, and the raping of natural
resources and industries on a scale which I doubt has ever taken place in human
And I think it must be kept in mind that the robbing of Russia was not
conducted solely and exclusively by Russians, but there was a lot of foreign
participation. I mean, we've recently seen some of the scandals involving some
of the money-laundering that took place in New York, but colossal sums of money
left Russia into places like Singapore and Switzerland and Cyprus and the
Bahamas and the South of France and all sorts of places.
And, for example, overnight, some of the Baltic republics became major
exporters of commodities that they did not even produce, and it was large,
large amounts of things like nickel and chromium and diamonds and timber and
other commodities--started appearing in world markets through all kinds of
nefarious mechanisms in which enormous numbers of people made enormous amounts
And a lot of that money is not in Russian hands. It's in foreign hands. A lot
of people around the world profited enormously from the raping of the Russian
I think many people in Russia sense that that is true, and so much of the
resentment in the Russian electorate against these economic policies is divided
between the anger that they feel towards some of their own oligarchs, their own
political leaders, and the anger they feel towards the outside world.
And you've said that we push policies that essentially said greed is
I think our attitude was that what Russia really needed in its culture was the
idea of greed, that the Soviet Communist egalitarian leveling approach had been
so deadening to enterprise, so deadening to individual initiative that I think
there was a view that a little greed would be a very healthy thing in
I think what many of these people did not understand was that greed had been
part and parcel of the Soviet Communist system. It had simply operated under
the counter. Nobody got along according to the rules in the Soviet Union, and
that in fact the basis for a very large-scale organized crime existed well back
in the Soviet period and began to flourish enormously during perestroika, and
once all the controls were off within the end of the Soviet Union, these
criminal gangs and many of their new associates in business suits had the
ability to rob what is still an enormously rich country and make fantastic sums
I don't think that in post-Soviet Russia the real problem was a lack of greed.
The problem was a lack of genuine law because, in the Soviet period, what
passed for law, what passed for legality, what passed for law enforcement were
so discredited in the minds of the Russian people, and quite legitimately
discredited, that what was really needed in the post-Soviet Russia was a new
culture of law, a new culture of civic society, not a culture of greed.
What if anything did our policies have to do with creating the
I think our policies had a great deal to do with creating the oligarchs. I
know there has been more recent tendency by the spokesmen from the IMF, from
the US Treasury to claim that this was really all things Russia did to itself.
But in the early post-Soviet era Washington, both through the IMF and US
Treasury, played an enormous role in determining what kinds of economic
policies would be created, what kind of winners and losers there would be.
Some of the people who later came to be called the oligarchs were among the
most favored private businessmen in terms of doing all kinds of contractual
relationships and in having the kind of political access that made it possible
for them to create these enormous financial institutions and engage in all
kinds of nefarious economic and political activities. The idea that we in the
West, we Americans or the international financial institutions or some of the
big European financial institutions have clean hands in this matter, I think,
is is simply wrong.
How were the policies that we were pushing create incentives to these
In part our policies were opening up opportunities for almost unbridled robber
baron capitalism with no counterweight in terms of legal controls, oversight by
regulatory agencies or any practical oversight by the central bank. Indeed the
Russian central bank has become fairly widely known now became part of the
problem because it engaged in all kinds of off shore financial dealings in
order artificially to inflate its own books to try to meet the arbitrary
financial goals that had been laid down by the IMF and other Western lenders.
I think also there's no question that the West had an opportunity as these
huge commodity sales abroad were taking place to either exercise law
enforcement on our own territories or around the world, not in Russia but in
the rest of the world, or not to exercise law enforcement. We could either
look the other way while deals of colossal scale that simply could NOT be legal
were taking place, or we could energetically try to investigate what was really
going on. It's only really in the last few years that we've begun looking into
some of these particularly money-laundering deals when they've touched, when
they've touched our own territory. But transactions of that type have been
taking place really since the late 1980s, I mean even in the late Gorbachov era
this was starting. There were certain warnings within the U.S. government,
particularly from the CIA in as early as the late 1980s that this kind of
activity was going on.
So it's disingenuous to argue that we didn't know or couldn't have known
what was going on.
Certainly people who wanted to know could have known. Even if they'd had
access of only to the public press. And in the early 1990s the Russian
press---which was really feeling its oats---often did a superb job in drawing
attention to potential corruption scandals, malfeasance, all kinds of
questionable activities. I don't think there was any lack of information,
there was a lack of attention, and I think a lack of recognition that letting
this problem grow was going to have some fairly important negative
consequences, not just for economic reform in Russia but for the whole course
of Russian democracy.
How do you make it make sense to yourself, that U.S. policies were going
pretty far wrong and yet there was no mid-course correction?
I think you have to recognize that U.S. policy toward Russia was really part
and parcel of a broader policy towards the entire developing world which was
dominated by ... the so-called "Washington Consensus" view on economic
reforms. And this is built around things that have been called "shock
therapy," privatization, price control, various monitors. These were applied
in places as widely spread as Indonesia and Thailand, Latin America, Russia and
Ukraine. Without very much sense as to what the different local
characteristics were and what the .......ability and adaptability of these
I don't think the United States government had an economic policy for Russia.
We had an economic policy for the non-developed world and we pushed it with an
almost religious zeal. And an unwillingness to respond to the argument that
different countries do have different histories, different capabilities,
different national cultures. And a real unwillingness to recognize how much of
our own prosperity and the prosperity of other developed countries is built
not on greed, but on the basis of established law and contractual
obligation. And that those basic foundations of modern market capitalism don't
exist in many other countries. And until they're at least laid and begun to
develop you cannot expect the capitalism in the sense we understand it can
actually develop either.
Has there come a point where we just had to say that our policy was working
even if we knew it wasn't because we had staked so much on t his policy?
In government there is always an inclination to think the policies are
successful or working regardless of the reality. This I think became not just
a bureaucratic impulse, this became a very high level political impulse partly
because the United States had committed so much political prestige at the very
highest level not just to the relationship with Russia, that's perfectly
understandable and I think quite justifiable, but to particular programmatic
solutions, particular policy orientations, and to particular constituent groups
in Russia, not Boris Yeltsin necessarily, but Viktor Chernomyrdin, Anatoli
Chubais, other people, other institutions, constituents who were our favored
And I think you cannot but recognize that, once many people on the American
side, particularly in the Treasury Department, parts of the State Department
and the White House, became professionally and personally committed to the
success of particular constituents groups in Moscow, that we had greatly
overstepped the extent to which our involvement was serving our broad national
Ultimately, between governments, there should be a degree of neutrality when
you're dealing with issues that involve money. And I think that the kinds of
normal discretion that anyone would practice, say, between Washington and
Tokyo, between Washington and London, simply were not put into practice between
Moscow and Washington and we paid, we paid a very high price for that.
And the Russians are paying, too, arguably?
The Russians are paying objectively a greater price, but we pay the secondary
price of the extent to which we are blamed for much of the pain that the
Russian people are now suffering.
And what about the connection with Yeltsin? Even as Yeltsin's reformist
credentials began to disappear and his popularity plummeted, he was still the
person that we supported unquestioningly.
Well, Boris Yeltsin has many positive qualities. Understanding of modern
economics is not one of them. I don't think anyone could reasonably be under
the illusion that Yeltsin had much grasp of what many people in his team were
doing. I don't think he had more than a fleeting comprehension of the
mechanisms that were being discussed between his reform team and the west.
He had, I think, a very great faith both in many of the younger people who had
supported him during his battle with Gorbachev. I think he had a very deep
perception that the Soviet economic system was not reformable and had to be
junked and had to be replaced. I think he had very little comprehension of the
extent to which some of the mechanisms being imported from the west were going
to work in Russia.
In this regard, he was a man of his generation. I don't think any Russian from
his political background in the Soviet Communist Party could be expected to
comprehend the nature of the economic reforms that were being tried. But as
the elected president, he ultimately, of course, was responsible.
I think the United States came to have a commitment to Boris Yeltsin, which was
almost as much symbolic as substantive, because the people we were dealing with
on economic reform were other people, many of whom, I think, did not tell
Yeltsin very much about what was going on. They certainly never successfully
explained to Yeltsin any of the realities of monetary policy, let along of some
of the realities of the privatization programs and the other so-called reforms
that led to such scandals.
But I think the United States became so committed to the person and the symbol
of Boris Yeltsin that, even when we were confronted with the carnage of the war
in Chechnya, it was very difficult for Washington to try to back away from
What has Russia become?
Russia has become, I think, in many ways something of a replica of what it was
before the Soviet era. There's a great deal about Russia in the Year 2000 that
is very similar of the Russia of the year 1900, I mean, some of the same basic
What are the appropriate relationships between executive power and legislative
and legal power? What is the relative balance between central power and
regional and local power? How do you deal with the problem of the land, of
agriculture and the peasantry? What is the relative role of domestic capital
versus foreign capital? How much does Russia want to be like the West? How
much does it want to maintain an adherence to its own cultural roots and
traditions? How is Russia different from the west? How is Russia to be
integrated with the West?
Those questions existed in Russia long before the Bolshevik Revolution and I
think, in my own view, most of the 20th century for Russia has been almost lost
time; they went down this terribly wrong road during the Soviet period, where
many achievements obviously were made. Huge human costs were paid and
ultimately, at the end of the century, they're dealing with most of the same
questions that they faced at the beginning of the century.
So, I think the 21st century for Russia is going to be trying to really deal
with some of the problems that never got settled in the 20th.
And why should we care?
We should care not only because Russia possesses the world's second largest
arsenal of weapons of mass destruction, though that is a perfectly legitimate
reason. We should care because any country that occupies as much of the
political space of the world as Russia does is going to be an important player
in the world.
The fact that the Russian economy is currently weak, that Russian public health
is a disaster, these are not going to change the fact that, in the 21st
century, Russia and its periphery, the other countries that used to be in the
Russian-Soviet Empire, are going to be where much of the instability, the
conflict, the competitions over natural resources, the competitions between
east and west, north and south are going to take place.
In fact, the very worst thing that could happen for American national interests
throughout the whole Eurasian land mass is, if Russia were a complete failed
state, to have a vacuum of any kind of effective political economic authority
over 11 time zones is a prescription for nothing, nothing but trouble. And in
the same way that the collapse of the Ottoman Empire and the Hapsburg Empires
and other empires created many of the problems throughout the middle east, the
Balkans, the third world that we've been dealing with for the past hundred
years, the collapse of the Soviet-Russian Empire is going to create many of the
problems we and the rest of the world will be dealing with for the next hundred
In the late '80s, early '90s, there seemed a world of possibilities. I'm
asking you to over-simply, I understand. But what went wrong?
What went wrong in Russia is a question that people are going to be writing
libraries about and there's certainly no simply answer to the question.
I think that what went wrong fundamentally was, that people who understood that
the Soviet Union had been a great failed experiment, sought to correct it by
another series of experimentation, rather than by the slow, patient, block by
block building up of a civil society.
I remember, in the early '90s, I think the most poignant slogan that you saw in
Russia during the demonstrations was, "no more experiments." The people were
terribly tired of being treated like laboratory rats. This effort to build the
new socialist man, scientific socialism had left people feeling completely
alienated from their authorities. And the one thing the Russian people wanted
was, not to be treated like experimental material.
And unfortunately, what they got in the 1990s was, another series of
experiments, where many of the scientists conducting the experiments were not
even Russians, but were people sitting in offices in Washington, in the U. S.
Treasury and the IMF. And I think much of the disillusion with the West, much
of the hostility that Russians now feel, particularly towards the United
States, is reaction to what they feel was another series of failed experiments.
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