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

* Nowhere in my article do I say that Sachs has investment activities in Russia.

* Sachs makes much of the distance between his project and that of his Harvard colleague, Andrei Shleifer, who continues to be under investigation by the U.S. Department of Justice. However, Sachs, Lipton and Shleifer are listed as the "three senior members" of the Russia advisory project conducted by Jeffrey D. Sachs and Associates, Inc. As I state in the article: "In time, Sachs and Shleifer emerged as rivals and ran largely separate operations in Moscow." However, "they shared the transactorship mode of operating and many contacts in the Chubais Clan", as well as many Western contacts.

* I have never written that ?slund worked for HIID directly. In my book, Collision and Collusion, I did point out that ?slund collaborated with Sachs on HIID's unsolicited proposal to advise Ukraine, the details of which are specified in the 1996 GAO report mentioned earlier. I have never said that he has made a huge amount of money on USAID. However, the grants that Sachs and ?slund received from several sources were substantial.

?slund's advisory project was awarded $642,857 in 1991-92 from the Swedish government. Sachs received $322,728 in salary and fees (not including expenses) for a WIDER Institute-sponsored project billed to Jeffrey D. Sachs and Associates, Inc. The project, the total cost of which was $2,036,122, was funded by the Finnish Ministry of Foreign Affairs and the Sasakawa Foundation.

* Not only do I not claim that ?slund was officially on the payroll of the U.S., Swedish and Russian governments simultaneously, but I wrote that he was a "private" citizen who nevertheless "participated in high-level meetings at the U.S. Treasury and State Departments about U.S. and IMF policies." In addition, he "played a leading role in Swedish policy and aid toward Russia" and "was understood by some Russian officials in Washington to be Chubais' personal envoy." (For example, ?slund was highly influential with Sweden's Prime Minister Carl Bildt, who promoted him in Washington and included him in a high-level official delegation to the White House.) I report that ?slund seemed to speak on behalf of these governments.

* ?slund suggests that there is nothing wrong with serving as an adviser to a country while presenting himself as a disinterested observer. He denies that his role in Ukraine included public relations. ?slund's team member, Marek Dabrowski, is not my only source on the matter. In my interview with Dabrowski of November 27, 1997, he stated that ?slund's "kind of advertising" and "campaigning" creates a "conflict of interest." Contrary to what Dabrowski now alleges, my conversations with him were friendly and, indeed, on the record. I have cited Dabrowski as a source before in print on this subject, and he has never previously disputed its accuracy. I do not know why he has responded now with such a personal attack, but it is a fact that Dabrowski's center has received substantial funding from USAID (and much USAID economic assistance passed through HIID). Both Sachs and ?slund are also listed as members of the advisory council of Dabrowski's center.

* ?slund claims that in writing articles he "always mentioned" his work for the Russian or Ukrainian government. That is simply not the case. For example, in his article "Russia's Success Story" in Foreign Affairs (September/October 1994), ?slund presents himself as a senior associate at the Carnegie Endowment and makes no mention of any relationship with the Russian government.

* ?slund characterizes my work as "repeatedly citing the old-style Soviet communist Leonid Abalkin." But I did not cite Abalkin at all in my article and he is cited but twice in my book, Collision and Collusion, among some 1,750 interviews.

* Finally, ?slund raises a series of irrelevant and diversionary points. He denies being somewhere--Arkhangelskoe--where I never said he had gone. If he is implying that he was not involved when the Gaidar team prepared its program, then that is contradicted by his own writing (see, for example, his book How Russia Became a Market Economy, p. 2). In a similar vein, the order in which Kokh and Boycko chaired the Russian Privatization Center is wholly irrelevant to the issue of their corruption. It was the deputy head of the Gaidar Institute, Dr. Alexei V. Ulyukaev, who said, in a taped interview with Anne Williamson, that "Sachs was never an official adviser to the government, that's his own illusion" [my emphasis]. Sachs and David Lipton had a close working relationship, as evidenced in numerous joint publications and in Lipton's position as vice president of Sachs' consulting firm. However, it was a Russian representative at the IMF who said that "Jeff and David always came [to Russia] together", a point that others have made as well.

As to Sachs/ ?slund's more general comments, former World Bank Chief Economist Joseph Stiglitz is among a growing number of economists who believe that the policies that Sachs and ?slund advocated were misconceived and harmful to Russia and to most of the other post-communist countries. Russia didn't "stumble", as ?slund characterizes it; it was inundated with counterproductive advice from people like himself.

With regard to Poland, although its economy has grown, this success was achieved not by following a radical transition program, but, as Harvard Professor Marshall Goldman has shown, by rejecting key parts of it. Further, high-level corruption has become so institutionalized that the World Bank has urged Poland to begin fighting it. I have not accused Sachs, as ?slund writes, of "having destroyed the Polish economy." On the contrary, I have pointed out that Sachs' role in the Polish transition was largely promotional, a point confirmed by the Polish government in the Financial Times (June 15-16, 1991).

Finally, ?slund manages to cite the only negative review (that I know of) to try to discredit my work. In fact, Collision and Collusion has been widely reviewed in places such as the Wall Street Journal, the Washington Post and Foreign Affairs, and the reviews have been overwhelmingly positive. Former National Security Adviser Zbigniew Brzezinski wrote of the book: "Very critical and troubling analysis of the shortcomings of Western aid policy, particularly to Russia. The implications of Wedel's critical assessment need to be seriously taken into account." The other letters printed above share that view, and I thank their authors for their support.

Essay Types: Essay