Encouragingly, a few of Dr. Wedel's "transactors"--for example, Pyotr
Aven, Konstantin Kagalovsky and David Lipton--have in varying degrees
rethought and recanted the neo-Bolshevik social engineering that is
the main cause of this tragic outcome. Others--notably Sachs and
Ã…slund--have not. Ã…slund, indeed, tries to publicly ridicule people
like the former chief economist of the World Bank, Joseph Stiglitz,
who dare to criticize either him or the now exploded "Washington
consensus." Also silent as regards rethinking and self-criticism are
the main architects and implementers of U.S. policy toward Russia:
Strobe Talbott, Lawrence Summers and Al Gore. Their successors will,
tragically, be left with a major, nuclear, long-term "Russia problem."

Igor Aristov, head of the Department for Competition Protection of
the Financial Markets, Ministry for Antimonopoly Policy and
Entrepre-neurship Support, Russia:

It was very useful to learn the details about the Chubais Clan and
its illicit activities from Janine Wedel's article.

It is not possible to overestimate the significance of such an
article. For me personally this information is also very important
because Russian tycoons have used illegal financial inflows for
private purposes and against the national interest of Russia. To
foresee their future intentions we need to understand the structure
of their informal relations. Recent scandals have revealed the
importance of monitoring closely their transactions, property, money
and debts to international organizations. Thank you very much for the
article.

Wayne Merry, director of the Program on European Societies in
Transition, the Atlantic Council of the United States:

Janine Wedel makes a major contribution to the "Who lost Russia?"
debate by pulling back some of the protective covering on how the
U.S. government sought to impose its economic ideology on post-Soviet
Russia. During my years in the political section of the U.S. embassy
in Moscow (1991-94), I also saw close up the basic flaws of our
Russia policy. First came ignorance, as purveyors of "the Washington
consensus" unleashed their dogma on a country they did not understand
and, worse, did not wish to understand. Then came arrogance on many
levels: the belief that "the Washington consensus" embodied ultimate
economic truth (its manifest failures notwithstanding); responding to
any doubts about the dogma with accusations of heresy and disloyalty;
the view of Russia as an economic wasteland (how it had managed to
build all those missiles conveniently ignored) and as a laboratory to
refine economic theory (heedless of the banners carried on the
streets of Moscow by some of the laboratory animals demanding "No
More Experiments").

Next came authoritarianism, as Washington encouraged a willing group
of Russian "reformers" to implement our policies by presidential
decree rather than face the compromises of the legislative process,
and to create extra-constitutional and clandestine structures of
administration to avoid parliamentary oversight or media exposure.

Lastly came hypocrisy, as Washington officials claimed to be
"shocked, shocked" when the government-sanctioned corruption and
theft of public property in Russia could no longer be hidden. They
then piously demanded that Russian governance be all the things the
Treasury and IMF had insured it would not be: honest, accountable,
transparent, law-based, public-spirited.

Thanks are due to Dr. Wedel for her efforts to document this failed
policy process but, sadly, she has so far seen only the tip of the
iceberg--what remains "classified" is much worse.

Michael Hudson, president of the Institute for the Study of Long-term
Economic Trends:

I would like to give a perspective on Dr. Wedel's theory of
transactors as an economist who has worked most of my life for U.S.
international banks and money managers, addressed the Duma on
numerous occasions, and consulted for U.S. government agencies on
U.S.-Russia relations.

I have observed transactorship, and the insider dealings it entails,
first-hand. "Average" U.S. investors were not in a good position to
profit from the corruption that underlay Russia's stock market boom.
One of the leading fund managers (for whom I worked in 1989-90 to
help organize the first global sovereign-debt fund) refrained from
the outset from riding this roller coaster. The firm's managers
didn't trust the visibly corrupt investment climate and, not being
insiders, they saw that "arms-length" speculation probably would end
in disaster.

Institutional investors from firms that did enter the market
explained to me that the safest money to be made was by those who had
inside contacts. Money managers who didn't want to invest directly in
the risky Russian stock market consigned funds to companies such as
Brunswick, which put on promotional shows around the country, in
which Anders ?slund and others tried to convince institutional
investors that they had an inside track. It was no secret that
Russia's market had no legal overseer like our SEC, but that was the
very point of investing in Russia!

Based on discussions I had with U.S. global investors during the
1990s, I think I am in a good position to point out why many of them
preferred to see major Russian companies pass into just a few corrupt
hands. If a few Russian insiders could buy out Russian oil fields and
other firms at only 1 or 2 cents on the dollar, they probably would
be willing to sell their takings to U.S. and other international
investors for 2 to 4 cents. This would enable them to double their
money, while providing foreigners with what they wanted: inexpensive
ownership of Russia's potentially lucrative mineral wealth and public
utilities, as well as its real estate (or, more specifically, its
land).

Thus, one reason the U.S. government welcomed the Chubais-HIID mode
of "reform" was because of pressure from large investors. If Wall
Street investment bankers wanted to take an investment position in
Russia, they could do so most easily--and at a much lower price--if
only a few "oligarchs" gained ownership of Russia's prize assets.
However, if the Russian government or other parties retained control
over these assets, they would not be sold as rapidly, and probably
would be sold at a higher price.

And so a symbiosis developed between the largest U.S. investors and
Russian oligarchs. The largest U.S. investors realized that the
kleptocrats for their part wanted to transfer their fortunes abroad.
This is what all thieves want to do, for a simple reason: if they
keep their money at home, it can be seized by true market reformers.
Hence, Russian appropriators sought to move their money to Cyprus,
Switzerland and other offshore banking centers, topped by the United
States.

To do this, they needed security from Western prosecution. The
traditional way to achieve this is to go into partnership with
well-placed Westerners. Partnership agreements accordingly were
sealed by selling part of their stock ownership to Western investors.
Such sales in fact were the only way in which the privatizers were
able to realize financial value for their control, for there was no
purchasing power within Russia itself to buy their shares. To raise
money off the shares they had obtained, Russians needed to sell
abroad.

This was well recognized by international investors. It explains why
they turned a blind eye to the abuses by Chubais and other insiders,
for they knew that they themselves would be the beneficiaries.

Was the subsequent economic devastation directly intended, as a means of "hurting Russia" and thereby disabling it from posing a future threat to the United States and other countries? I believe not. Rather, it was the consequence of the game plan by Western investors (mainly in the United States) to get rich quickly off Russia. The shrinkage of the Russian economy in consequence was a form of "collateral damage", not the intention of the programs themselves. It is the same sort of damage caused by IMF austerity programs imposed on hapless Third World debtors.

My conclusion is that the U.S. government is guilty of gross negligence as to the consequences of the reformers' privatization plans it backed. It didn't mean to kill Russia. It just wanted to take its money and property. Russia's economy got killed in the process. I suppose you might call this second or third-degree murder, not first-degree murder. But that is all that Wedel's article claimed, in my reading. What is ironic is that the "free-market" strategy that has been followed excludes from the market precisely the arms-length investors that U.S. policy has claimed to attempt to attract as the mainspring in allocating Western capital funds.

David Ellerman, economic adviser to the chief economist, the World Bank:

...My only "problem" with Professor Wedel's article is that it attempts to tell the story in such detail that it will allow those who intellectually sponsored what is, in my personal opinion, one of the biggest debacles of the last half of the twentieth century to continue to avoid analyzing the forest by bickering over the details of the bark on the trees.

Steven Rosefielde, professor of economics, University of North Carolina, Chapel Hill:

Janine Wedel's "Tainted Transactions" makes an important contribution to the "Who lost Russia?" saga by investigating the nexus between "radical" economic transition theory and Western foreign assistance....A few facts and comments might prove illuminating.

First and foremost, it needs to be stated bluntly that there is no scientific theory of how to transform a command economy efficiently into a well-functioning competitive market system. Theorists cannot even demonstrate the necessity of general equilibrium with a production sector under perfect competition, so there certainly isn't a shred of justification for suggesting that Yegor Gaidar's and Anatoly Chubais' radical reforms should have produced good results. The policies they adopted, often called "shock therapy", were analogous to removing the control rods from a nuclear reactor, and insisting that the ensuing chain reaction would create a better power system.