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<text> <title> (Mar. 16, 1992) Is the West Losing Russia? </title> <history> TIME--The Weekly Newsmagazine--1992 Mar. 16, 1992 Jay Leno </history> <article> <source>Time Magazine</source> <hdr> WORLD, Page 34 DIPLOMACY Is the West Losing Russia? </hdr> <body> More than food and financial aid is needed. The reformers must feel that the world is at their side in the struggle for democracy. By Bruce W. Nelan--Reported by James Carney/Moscow and J.F.O. McAllister/Washington, with other bureaus Walking across the White House lawn to his helicopter last week, George Bush paused to tell reporters that his first formal summit meeting with Russian President Boris Yeltsin will take place in Washington on June 16 and 17. As Bush flew off to make a campaign speech in Illinois, briefers quickly explained that the Yeltsin talks would center on nuclear arms control, not on economic aid for Russia, and that no new offers of help were likely. "We've given him about everything we can," said a White House official. No translation from the election-year code book was needed to make that message clear. With recession-sore Americans demanding economic relief and right-wing Republican challenger Pat Buchanan riding an America First bandwagon, Bush is determined not to give anyone the impression that he is being overly generous to foreigners. If that discourages Yeltsin, so be it. But is Bush missing the point? Sure, hundreds of millions, tens of billions of dollars could be spent vainly trying to prevent Russia from falling prey to its own darkest tendencies. Yet as real as the risk of utter failure is the possibility that history will condemn the West for not acting when it had the chance, for not seizing one of those rare opportunities to shape the world for the better. From the end of World War II, the West, and especially the U.S., spent trillions to contain the Soviet Union; that money was, in effect, diverted from the domestic economies to reach this exact point in history. Now the cold war is over and the West has won, but the victory will seem hollow if the peace is lost. The fulfillment of the policy course set in the 1940s arrives not when Russia is on the brink of collapse, but when it enters the community of democratic free-market nations. The communist system has been defeated, but that is no guarantee that Russia will become a lot more liberal and a lot more democratic than it has ever been in its thousand years of history. Which is where the West must come in. The timing may not be ideal for Bush, who does not want U.S. voters to see him adding to the $5.2 billion aid package he has already offered Russia; or for most of Europe and Japan, where recession is also biting. Nevertheless, the argument is compelling that the West must see beyond the moment and do more to assist Russia through its metamorphosis. WEIMAR RUSSIA. Close students of Russian affairs in several countries are warning that the West's business-as-usual approach to the collapse of the Soviet Union is shortsighted and potentially disastrous. They see an epochal struggle ahead to ground democracy and a free economy in the former Soviet republics, and they want to pull out the stops to help it succeed. Think how dangerous it would be, they advise, if Russian fascists and militarists, battening on anger and hunger, seized power from Yeltsin and his fellow reformers. Yeltsin himself has warned that "certain countries" only "talk and talk" about helping, while old Communists and new Nazis circle around his government like wolves. Others speak of a "Weimar Russia" waiting for a Slavic Hitler to appear. An anti-Western, nationalistic regime in Moscow would probably not resemble the old U.S.S.R., but it could stake its claim to superpower status by refurbishing the nuclear arsenal of Russia's still immense armed forces and recharging its military-industrial complex. Then, in the first frost of a new cold war, accusatory voices would rise in the West, demanding to know, "Who lost Russia?" "It would be utterly unforgivable for future generations if, by failing to spend a few tens of billions of dollars in aid over the next few years, suddenly defense spending in the West would start climbing again to meet a renewed threat from Russia," says a senior Western diplomat in Moscow. Of course, Russia is not the West's to win or lose, any more than China was 40 years ago when the question "Who lost China?" was used as a political bludgeon. Nevertheless, most experts argue that the right kinds of aid can make a significant difference to the outcome--mostly by proving to the Russians that they are no longer enemies and are not alone in their efforts to remake themselves in a Western image. "It's rare when one country can profoundly affect the fate of another through aid," says Paul Goble, a senior associate at the Carnegie Endowment for International Peace in Washington. "This is one of those times." Robert Strauss, the U.S. ambassador in Moscow, predicts a traumatic year for Russia and urges Western governments and corporations to step up their investment and technical assistance. "Obviously we cannot be the deciding factor," says a State Department official, "but Western countries can improve the probabilities." Outspoken American advocates of greater efforts look back at the days when the U.S. had the stomach and pocketbook for big initiatives like the Marshall Plan and contrast that with the cheese-paring, tentative leadership Washington is providing now. James Billington, the Librarian of Congress, says that by overthrowing communism, "the Russians have done something big and heroic. They perceive us as, in effect, not responding except in petty ways. Our response has so far been hesitant in tone, trivial in content and very nearly humiliating in its effect." As one dramatic signal, Billington favors an exchange program that would send 50,000 Russians to the U.S. for training. FAILURE AT THE TOP. If Western aid efforts are moving slowly--and they are--practical problems are hindering them almost as much as political ones. On the Russian side, Yeltsin's reforms have made some headway, but the economy is still in a mess, with production declining and prices rising. "This is the most difficult economic reconstruction job in the history of the world," says Lawrence Summers, vice president and chief economist at the World Bank. Until the accelerating reforms take hold, experts argue, large injections of money would be useless. In the West, though more than $80 billion has been pledged in various forms, only a small fraction of that amount has been delivered. The rest is bogged down in national and international bureaucracies or stalled by confusion in Russia. The European Community has committed $4 billion in humanitarian aid and technical assistance, but less than 10% of it has reached its destination. Out of a total pledge of $5.2 billion, the U.S. has provided $3.5 billion in credit guarantees for grain shipments and $117 million in humanitarian aid, but has spent only $5 million of the $745 million it plans for technical assistance in the next two years. Bush has all along resisted making fast policy moves and quick course corrections. He has been slow to treat Yeltsin as a responsible partner and now hangs back from the conclusion that major new contributions may be necessary to keep his reforms afloat. "Prudence" is how Bush usually describes his decision making. "Timidity," counters Lee Hamilton, chairman of the U.S. House Foreign Affairs subcommittee on Europe. "It's less a matter of money than leadership and implementation." A DETERMINATION TO TRANSFORM. Officials in Washington reject the premise that Russia's reforms are doomed or that Yeltsin's position is in peril. "Are we losing Russia?" asks a senior Administration official. "No. On the contrary, I'm relatively optimistic." Slight progress is showing: according to one of six exchange rates, the ruble's value has improved from 110 to the dollar to 80, and some prices--even for sausage--have actually declined. Russian opinion polls indicate Yeltsin's authority may have strengthened a bit. While those indicators provide encouragement, they do not mean Yeltsin is safely over his major hurdles. Inflation will surge as more prices are decontrolled this month and the cost of oil, coal and gas is allowed to rise in April. "Reform is working," Deputy Prime Minister Yegor Gaidar, Yeltsin's chief economic adviser, told Russians last week on television. Then he added, "It is working slowly and badly. We may know better than anyone else how unsteady are these very, very weak signs of stabilization that have taken shape." In a personal appeal published last week in London's Financial Times, Gaidar declared, "Our basic task is this: we must conquer a powerful inflation bequeathed by the old system, while at the same time rapidly introducing market forces and private ownership." Those policies are coming into place, he wrote, so "if the West wants to help us, now is the time." What he and Yeltsin have in mind is a large and coherent plan to stabilize the Russian economy while it transforms itself and begins to earn foreign exchange with its exports, especially oil and natural gas. Among the plan's elements: -- To build faith in the Russian ruble--something it has not enjoyed since the 1920s--Moscow wants the seven industrial powers to put up $5 billion. This fund would, in theory, stabilize the currency by being available to support it at a single, reasonable exchange rate; Gaidar hopes for about 50 to the dollar compared with the current free-market rate of 170. If the fund works properly, it should not have to be spent. -- Yeltsin and Gaidar are asking for $6 billion this year in food and medicine. Russia's supplies are likely to be worse next winter, and stocks of basic needs like aspirin and syringes are critically short. -- They want another $6 billion to pay for imports of spare parts and materials needed to keep factories working and to revitalize key industries. -- Finally, Russia would like the West to postpone or cancel much of Russia's $61.5 billion debt to foreign banks and governments until the reforms are working. The Russians do not just loft these requests into the blue. They have been negotiating deals with the International Monetary Fund and the World Bank that will put some of them within reach. Russia, now an associate member of the IMF, is expected to be granted full membership at the end of April, probably along with several other former Soviet republics. At the same time, Yeltsin has pledged to enforce a stiff regime of deficit reduction, tax collections and credit restrictions. Once this austerity program is in place, Russia will have the IMF seal of approval and will be able to approach other governments and private lenders for new money in addition to what it can draw from the IMF itself. In their first year of membership, the former republics hope to call on several billion dollars from the fund. THE POLITICS OF AID. U.S. policymaking is particularly vulnerable to domestic politics this election year. U.S. Treasury Secretary Nicholas Brady told a House Appropriations Subcommittee that the Administration wants Congress to approve an extra $12 billion contribution to the IMF, so that it can increase its lending to Russia and other states. "Some have said the Administration has not pushed hard enough," Brady testified. "Nothing can be further from the truth." That was not good enough for subcommittee chairman David Obey, a Democrat, who recalled that Republicans had in the past attacked his party for its support of the IMF. Congress would approve this contribution, Obey said, only if President Bush were to "state to the country in a very public way why these actions are necessary." But Brady also repeated the consistent U.S. rejection of Gaidar's call for the $5 billion fund to support the ruble, arguing that the Russian economy is still too shaken by inflation and unsecured credit to fix a firm value on the currency. Still, Washington is pondering future moves, and some calculations appear to go beyond Election Day in November. "To those who want us to write the check today," says a senior official, "I say I understand that supporting Yeltsin is important. But if you hand the money to the Russian government before its program is complete, you will lose it all fast, and you won't get a second chance." The IMF could soon be doubly useful: it would provide an international cover for a politically risky increase in help from the U.S. and an impersonal institution that can insist on austerity in ways less damaging to Russian pride than peremptory instructions from teams of Western experts. In fact, many analysts urge that whatever form aid takes, it should neither humiliate Russians nor imply that they are no longer responsible for their own successes and failures. Michel Tatu, Le Monde's veteran Soviet expert, says, "The role of the West should not be overstated. In the end, it is the Russians who are going to have to do all the work." Thoughtful Russian leaders share that view. "The West can, no doubt, contribute greatly to our transition toward a market and democracy," says Oleg Bogomolov, director of Moscow's Institute for Political and Economic Research. "But the West should not in general substitute its help for our own strength. This balance is a very narrow thing." THE VISION THING. With all the proper qualifications, the experts still agree that the West is faltering at the highest level: the perception of vision by which history will judge its conduct. On that level, the West must succeed in showing more concern and visible support for Russia. The tenor of assistance has to change from the immediate to the long-term. Food and medicine will still be needed, but "the hunger and thirst for technical assistance is much greater," says Richard Armitage, who has been put in charge of American assistance to the former Soviet Union. Russia needs help in creating and solidifying the institutions essential to a stable democracy, from functioning financial operations to an independent judiciary, a coherent parliamentary system and wholesale and retail markets. Virtually none of these pillars of the Western life-style exist in Russia; reformers are starting from scratch. The U.S. can begin, of course, by spending some of the $745 million in technical aid that Washington has planned for the next two years. The real payoff, says Blair Ruble, director of the Kennan Institute for Advanced Russian Studies in Washington, may eventually come "from small-scale private initiatives. But I also think we need to commit ourselves in a visible way, so the world understands we are engaged in the process of democratization in the former Soviet Union." That high-profile engagement is what is most clearly lacking. The U.S. has not devoted "nearly the effort" it put into the gulf war to the transition in Russia, says Jack Matlock, a former ambassador to Moscow. "This is infinitely more important for the future. It will determine the whole political and economic geography of the 21st century." The country seems to be "cowering," he says. "As far as I can see, the White House is just afraid of being accused of giving money to foreigners." Leadership on a foreign policy question as vast, vital and expensive as this one can only come from the U.S. President. Bush, a Chief Executive who prides himself on his skill in international affairs, ought to be perfectly suited to provide it. But so far, he has been unwilling to use his position of authority to explain the historic moment to Americans and persuade them to act accordingly. Under the pressure of election politics, Bush has led from the rear. If Russia's struggle for democracy fails, it will mark a failure of Western democracy as well. It is one of the century's great turning points, and if the U.S. is to prove itself a superpower in more than military terms, it must meet the challenge with the full commitment it deserves. </body> </article> </text>