Tainted Transactions: An Exchange

Tainted Transactions: An Exchange

Mini Teaser: Jeffrey Sachs, Anders Aslund, Marek Dabrowski, Peter Reddaway, Igor Aristov, Wayne Merry, Michael Hudson, Daivd Ellerman, Steven Rosefielde, Janine Wedel

by Author(s): Jeffrey D. SachsAnders AslundMarek DabrowskiPeter ReddawayIgor AristovE. Wayne MerryMichael HudsonDavid EllermanSteven RosefieldeJanine R. Wedel

Sometimes, though, Wedel seems aware of her absence of evidence, but
instead of retracting she adds, for instance, ". . . as well as a
number of additional reports and sources in Russia, Ukraine, Sweden
and Washington."

In a review of Collision and Collusion in Comparative Economic
Studies, Jozef van Brabant, an economist who has persistently opposed
radical market reform, concluded: "The book is marred by all too many
other inaccuracies some of which are attributable to the author's

From a personal perspective, I can say that Wedel's portrayal of my
work is simply wrong. She alleges: "?slund seemed at once to
represent and speak on behalf of American, Russian and Swedish
governments and authorities." This statement is absurd. I left the
Swedish foreign service in 1989. I served as economic adviser to the
Russian government from November 1991 until January 1994. I have
never been employed by the U.S. government. Although my employments
have varied over time, they have never involved conflicts of
interest, and I have always made clear what I am doing.

Wedel also complains that "he always presented himself [in op-ed
articles] as an objective analyst, despite his many promotional
roles." When working with the Russian government and later the
Ukrainian government, I always mentioned that. Some may disagree with
me, but I have hardly ever been accused of being unclear about what I
stand for.

Wedel claims: "?slund was also involved in business activities in
Russia and Ukraine", and in her Demokratizatsiya article: "He had
'significant' business investments in Russia." The truth is that
while advising any government, I have never been involved in business
activities or invested in that country, though I have given lectures
and briefings on the state of their economies.

She complains that two of my associates, who worked for Chubais, set
up an investment bank after having finished their work for Chubais.
So what? High U.S. Treasury officials often come from and go to
investment banks.

In her Demokratizatsiya article, Wedel claimed: "?slund helped to
deliver Swedish government monies to the [Russian Privatization
Center]." I would have been happy to do so, but I did not. Wedel
writes that I attended a dacha in Arkhangelskoe when the Gaidar team
prepared its government program there, but I have never visited that
dacha. Nor is it true that my assignment in Ukraine "explicitly
included public relations on behalf of that country."

In public appearances, Wedel has asserted that I have made a huge
amount of money on USAID, but USAID has never financed any advisory
work of mine. Nor have I worked for HIID, which she also has alleged.
My work in Russia was financed by the Swedish government and the Ford
Foundation through the Stockholm Institute of East European Economics.

This is a long list of allegations that I know to be wrong because
they involve me personally. There is no reason to believe that she is
more truthful about anything else, as Wedel's text abounds with
inaccuracies. Aleksander Bevz has never headed the Gaidar Institute.
Maxim Boycko replaced Alfred Kokh as chairman of the State Property
Committee, not the other way around, as Wedel reports. Jeffrey Sachs
and David Lipton were rarely in Moscow together, and so on.

Many of these facts can be easily checked. Most of Wedel's claims
have been made three or four times in almost identical wording, as
she is in the habit of republishing the same article many times, so
it is not a matter of typographical errors.

In short, Wedel's main shortcoming is that she lacks the faculty to
distinguish truth.

Marek Dabrowski, former first deputy minister of finance of Poland,
currently vice chairman of the Center for Social and Economic
Research, Warsaw:

I found Janine Wedel's article deeply wrong in its description and
interpretation of East European and Russian transition processes, and
of the role of foreign aid to this region.

My impression is that the author intentionally and consciously
manipulates facts and sources of information in order to support her
conspiracy theory and address far-fetched and certainly unfair
personal insinuations against key Russian reformers such as Yegor
Gaidar and Anatoly Chubais, and leading Western experts trying to
help Eastern Europe and Russia such as Jeffrey Sachs, David Lipton
and Anders ?slund. Her style of writing and methods of work remind me
of the worst instances of Communist Party propaganda, which I had
occasion to experience not so long ago as an East European national.

The best example of such practices is footnote 33 of her article
where she quotes me as the source of the opinion that ". . . Ã…slund
was engaged in public relations activities. His assignment in
Ukraine, where he was funded by George Soros, explicitly included
public relations on behalf of that country, according to other
Soros-funded consultants who worked with ?slund there."

It is true that I worked with Anders ?slund in Ukraine (and in
Russia), but I did not formulate such an opinion, and, what is more
important, I never gave Wedel permission to use any fragment of our
two conversations as the source of quotation in her publications.

Wedel met me once in 1995 with the purported reason to ask me about a
paper I had presented on foreign assistance to transition countries.
It seemed a normal academic conversation. Then, she called me on the
phone several months later. When she started to put her questions, I
quickly realized that she was in the grip of some conspiracy theory,
and she tried to provoke me to speak against Jeffrey Sachs and David
Lipton. She was not ready to listen to my answers because she knew
better what the "truth" was, and she wanted me only to confirm her
crazy interpretation of events. At the beginning I tried to convince
her that she was wrong, but when I realized that this was a hopeless
task, I stopped the conversation. I asked her never to call me again,
and not to use any part of our conversation in her work, a request
she has not respected.

Peter Reddaway, professor of political science, George Washington University:

Janine Wedel's powerful article focuses mainly on the negative
effects of "transactorship" on Russian-Western relations. These
contributed to other problems that, taken together, mean that the
West has helped to create in Russia a much bigger long-term problem
for our foreign policy than most observers have yet grasped.

In my view, the attempted imposition of shock therapy (or "the
Washington consensus") on Russia by Boris Yeltsin and the West has
been a textbook example of doctrinaire social engineering. It has
been based on a mixture of ignorance and arrogance. As I have argued
since before the process began in 1991, such an approach was
bound--given the legacy of Russian and Soviet history--to be, at the
least, premature and dangerous. Russia is not Poland or Estonia. No
matter what tricks Yeltsin and his foreign backers used, it was
politically impossible to fully apply shock therapy in the Russia of
the early 1990s. Any government that might have tried to do so would
have provoked chaos and fierce opposition--and been thrown out.
Governments do not deliberately commit suicide. The repeated
complaints of people like Jeffrey Sachs and Anders ?slund that
Yeltsin and Yegor Gaidar "lacked the political will to go the whole
way" demonstrate, at best, political naivety. At worst, the
complaints look like an attempt to divert attention from the
incompetence of the advice given by these individuals to the Kremlin,
the IMF and Western governments.

The second part of the tragedy is that when, by 1994, it was crystal
clear that the "reforms" were not working, the IMF, the G-7, Sachs,
?slund and others continued--for four more long years--to pressure
Yeltsin into largely futile efforts to push ahead with them. This
compounded failure. For most Russians, such doctrinaire obstinacy put
an end to the hopes of better living conditions that had been aroused
by the fall of communism.

The pattern was this: the West kept offering loans in return for
Kremlin promises to reduce inflation and the budget deficit,
privatize industry, appoint Anatoly Chubais to run the economy,
circumvent the parliament through presidential decrees, and so on.
However, as Dmitri Glinski and I will show in our forthcoming book,
The Tragedy of Russia's Reforms: Market Bolshevism Against Democracy
(2000), not only did these Western recipes fail to stabilize the
ruble, halt the steep plunge in investment, and get workers paid on
time; they also created a humiliating dependency on the West's aid
and foreign policy, promoted crony capitalism, fostered massive
crime, corruption and capital flight, eroded state capacity all
around, and destroyed what basis remained for achieving a modicum of
social justice.

The devastating effect of all this in terms of values is that the
majority of Russians, who a decade ago saw democracy and free markets
as beacons of hope, now see before their eyes ugly perversions of
these institutions, and wonder if they just won't work in Russia.
Opinion polls repeatedly show profound doubt and even despair about
Russia's future. They also show that anti-Americanism has permeated
the whole society and is probably now deeper than at any time in
Russia's history. A substantial majority believe that the United
States and the West have weakened Russia deliberately, in order to
exploit and humiliate it.

Essay Types: Essay