Under this approach, we and the Russians could target the highest priority sectors—e.g., agriculture, distribution, consumer products, transportation, financial services for detailed economic development programs, with investments being made in various time frames.

The G-7 countries would sell equipment and other material, thus creating jobs at home and benefitting the Western economies. The incentive for the companies involved would be to gain an equity foothold in a potentially huge market. By targeting specific industries, building in a systematic way from the ground up, and delegating responsibility to the private sector, we would avoid the bureaucratic quagmire that is otherwise certain to occur.

Having made the proposal, bracing in its combination of boldness and simplicity, Greenberg concluded on a note of both patriotism and private sector initiative:

I strongly agree with your often-stated view that we cannot separate domestic issues from foreign policy in today’s world. This is especially true when it comes to an issue of such vital importance to the West as the future of Russia. I believe, Mr. President, that you can seize the moment by exercising the strong leadership that is your trademark.

American business stands ready to help, as I am sure does the private sector in every Western industrialized nation. The United States is the country that rightly should lead this effort. I hope we will.

Nixon concurred. In a letter to Greenberg of March 20, 1992, he called the letter, using a favorite phrase when describing proposals that he supported, “right on target.”

Greenberg got to work that spring, building the relationships and taking the necessary steps to effectuate his vision. In an August 26, 1992 letter, he updated Nixon:

I have just returned from a business trip to Moscow and spent the better part of two days with Uri Skokov. We are working towards the development of a Russian/U.S. Investment Bank and one or more insurance companies. Things are not getting any better there. In fact, there is an ever-growing concern that the Gaidar Plan is failing and that more and more old military-industrial complex managers are coming back into power. Skokov, of course, is one of them, and he continues to indicate there is a limited window of opportunity, as you repeatedly pointed out.

Nixon responded soberly in a letter of September 8, 1992: “I share your concerns with regard to developments in Russia.” Nevertheless, fruits of Greenberg’s toils were emerging by the fall of 1992. In an October 27 letter to Nixon, Greenberg wrote: 

I returned from Moscow last night after an hour and a half meeting with President Yeltsin where he signed the Decree which provides for the first (and only) Russian-American Investment Bank. AIG is the major investor on the U.S. side, along with Chemical Bank, Smith Barney (Frank Zarb), and Wolfensohn Rothschild. On the Russian side, it is a collection of many of the Republics within the Federation that control the vast majority of oil, gas, and other natural resources.

The Pension Fund for Russia as well as the Fund for the benefit of the military and the City of Moscow are shareholders The Investment Bank will be responsible for assisting in privatizing joint ventures, financial advice, and development projects within Russia. Obviously, it is expected that Russian shareholders will use the Bank for the purposes described. It will also be an entry point for many foreign companies wishing to establish relationships with any of the Russian shareholders.

In developing these financial initiatives, it remained the goal to help evolve both Russia’s economy and its political stability. To this end, personalities continued to matter a great deal. Where Greenberg and Nixon had been deeply skeptical of Gorbachev, Yeltsin seemed a promising turn. Greenberg continued in his October 27, 1992 missive:

I believe President Yeltsin is in far better shape politically than the press makes it out to be. The demonstrations that took place in Moscow over the weekend could hardly be noticed, but the press had people believe thousands of thousands of people were demonstrating. Gaidar’s tenure is to be short lived. There will be a change in the Prime Minister probably before the year end.

One of the possible successors will be Uri Skokov (the one with whom I negotiated the Investment Bank). He now has been given the added responsibility for manufacturing and industry and to negotiate with the Republics in the Federation of Russia to develop a new constitution. Skokov is currently Secretary of the Security Council. I get along with him quite well and like him. He is a pragmatist.

Yeltsin spoke very highly about President Bush and is concerned that a Clinton victory, if it occurs, will slow down the progress in US Russian relations but was careful to say that he met with Clinton and the American people have to decide who their President will be. He spoke very highly of you, Mr. President, and pointed out that I was sitting in the same chair you sat in a few weeks ago when you met with President Yeltsin in the Kremlin. He also spoke approvingly of the “Fund for Democracy”. I said we would try to have the Investment Bank work closely with the “Fund for Democracy.”

Nixon replied in a November 2, 1992 letter, as follows:

I found your letter … fascinating. I was particularly pleased that you have gone forward with the Russian-American Investment Bank. Unfortunately, one of the negative fallouts from the present campaign among many is that the most important issue of our time—the survival of democracy in Russia—is on the back burner. I’m sure you were as shocked as I was to see that State Department spokesmen were suggesting that because Yeltsin was not going forward fast enough removing troops from the Baltics, it would be necessary to delay the modest amount of aid provided for in the Freedom Support Act.

What we all have to realize is that there is no acceptable alternative to Yeltsin. We have to stick with him as he makes necessary pragmatic compromises in trying to implement his economic and political programs. If Clinton wins, as most polls predict, hope that some of the Jackson Democrats, who are on the board of the Fund for Democracy and Development, will take him on the mountaintop and convince him that he should play a more positive role in helping Yeltsin survive in this very difficult transition. I intend to continue to address this problem whenever I have the opportunity to do so.

Two days after Clinton’s election, Greenberg’s November 5, 1992 letter to Carter included this update on Russia:

I recently returned from a meeting with President Yeltsin in Moscow, where he signed the decree permitting the establishment of the Russian American Investment Bank, the first and only one of its kind. This institution, in which AIG led the way, will assist in privatizing Russian industries, encouraging joint ventures, etc. But most important is the effort that should be undertaken with a high priority by the new Administration to assist Russia in her conversion from a command to a market economy.

The current effort underway simply won’t work. The approach is too “academic” and lack of experience in institutions so vast as to make it impossible to see any real hope in their current struggle. The likelihood is that they will soon slow down the current process and take more time to achieve a conversion to a market system...

Greenberg wrote to Nixon on November 30, 1992: “I hope the Clinton people don’t take too long in recognizing the importance of [supporting] Russia. When I met with Yeltsin a few weeks ago, he was very concerned that there would be a vacuum for months which would be intolerable from their point of view.”

President Clinton wrote to Greenberg on July 1, 1993: 

Our objective is to support the historic movement toward democracy and free markets that is taking place in that region. As Russia’s first democratically elected leader, President Boris Yeltsin has our support, as does his reform government and all reformers throughout the Russian Federation.

I [recently] announced initiatives that will provide immediate and tangible results for the Russian people. The programs are already funded and are in the process of being implemented. … A productive and prosperous Russia can add billions of dollars in new growth to the global economy. That would mean new jobs and new investment opportunities for Americans. … We are investing not only in the future of Russia but also in the future of America. As we move to create a more prosperous and more democratic world, I appreciate your ideas.

CLINTON’S SENTIMENTS were sound, but this chapter of history differs greatly from that of China in the comparable period. As recounted in The AIG Story:

Yeltsin was poised to adopt an aggressive approach to economic reform, including the rapid transformation of how resources were allocated. Under this radical approach, however, some dark forces emerged as communist era apparatchiks became oligarchs grabbing control of large chunks of the economy. Greenberg urged Yeltsin and other officials to take a more moderate approach, one that centered principally on adopting policies that would attract foreign investment into the country. This meant embracing the principles of private property, freedom of contract, and the rule of law. Greenberg believed that it was important to help Russia attract capital needed to resurrect its collapsed economy, rebuild its eroded infrastructure, and establish a reliable banking system.