Containment Lite: U.S. Policy toward Russia and Its Neighbors, FPIF

Posted December 31, 1999

Categories: Articles, Highlighted, Russia and Eastern Europe

Containment Lite: US policy toward Russia and its neighbors

If the US government had wanted to destroy Russia from the inside out, it couldn’t have devised a more effective policy than the so-called “strategic partnership.” From aggressive foreign policy to misguided economic advice to undemocratic influence-peddling, the U.S. has ushered in a cold peace on the heels of the Cold War.  Containment remains the centerpiece of U.S. policy toward Russia.  But it is a “soft” containment.  It is Containment Lite.

On the foreign policy front, for instance, Containment Lite has consisted of a three-tiered effort to isolate Russia: from its neighbors, from Europe, and from the international community more generally.  The Clinton administration’s policy of “geopolitical pluralism,” designed to strengthen key neighbors such as Ukraine and Kazakhstan, has driven wedges into the loose confederation of post-Soviet states.  By pushing ahead recklessly with expansion of the North Atlantic Treaty Organization (NATO), the US government is deepening the divide that separates Russia  from Europe, effectively building a new Iron Curtain down the middle of Eurasia.  Instead of consulting with Russia over key foreign policy issues such as the Iraq bombings and allied policy toward former Yugoslavia, Washington has attempted to steer Moscow into a diplomatic backwater where it can exert little global influence.

Part of this three-tiered foreign policy of “soft” containment has been to eliminate Russia’s last claim to superpower status – its nuclear arsenal – without providing sufficient funds for mothballing the weapons and without pursuing commensurate reductions in U.S. stockpiles.  By pursuing a missile defense system, the US has put several arms control treaties in jeopardy; by opposing key sales of Russian military technology, the U.S. has applied a double standard on proliferation.  Announcing the largest increase in the military budget since the end of the Cold War, the Clinton administration began 1999 with a clear signal that Russia’s decline would have little effect on the Pentagon’s appetite.

While Russia’s geopolitical fortunes have been grim, its economic position is even grimmer.  In 1992, when implementing the first market reforms, Boris Yeltsin predicted that good times were just around the corner. This corner has retreated further and further into the distance (particularly after the crisis of August 1998 when the ruble went into free fall and Moscow defaulted on its treasury debt).  Today, Russia’s Gross Domestic Product is half what it was ten years ago.  The government is suffocating under $150 billion of foreign debt.  Barter has reemerged as a dominant mode of economic transaction.[1] Workers are paid in kind when they are paid at all.  Poverty is rampant.  Life expectancy is dipping, the population is declining, and Russia is flirting with Third World status.

Economic reform in Russia has not only been unsuccessful, it has been profoundly undemocratic.  By collaborating almost exclusively with Boris Yeltsin and his hand-picked “reformers” – and circumventing Russia’s popularly elected legislature, the Duma — the Clinton administration placed expediency over accountability, transparency, and the checks and balances of a truly democratic system.  The international community poured billions of dollars into Russia, money that didn’t trickle down but rather was diverted into the pockets of a select few.  The result was a crony capitalism far more pronounced than anything on show in Asia:  all the corruption with none of the growth.

With its Cold War containment policy, the United States relied on aggressive rhetoric and military might to confront a powerful Soviet Union.  By contrast, today’s Containment Lite takes advantage of Russia’s economic and military weakness, and at first glance has relied more on carrots than sticks.  In reality, however, the U.S. has wielded these carrots much like cudgels.  The aid and investments, expert advice and high-profile workshops are designed to reduce the military and diplomatic reach of this erstwhile superpower and to remake the Russian economy in the neoliberal image regardless of social costs.  Prodded by these carrots, Russia is moving along a path that has led to economic chaos and escalating resentment.

The Clinton administration is acutely aware of the dangers of a Russian implosion.  Yet the administration has crafted policies that are inexorably leading to the realization of its own worst fears.

 

ROOTS OF US POLICY

 

For the better part of the 20th century, US policy toward the Soviet Union fluctuated between aggressive confrontation and brief attempts at détente.  During their respective eras, Truman and Reagan were bent on containing the Soviet Union and, when possible, rolling back its influence in Eastern Europe and the Third World.  Nixon, without compromising his anti-Communism, managed in the 1970s to ease tensions between East and West with a mixture of arms control measures and modest openings in the East for Western business.  In the Cold War period, confrontation and engagement often followed one another with little breathing room, as in Kennedy’s near-apocalyptic showdown with Khrushchev over Cuba in 1962 followed by the negotiation of the first major arms control treaty with the Soviet Union in 1963.  Whether in confrontation or détente mode, however, successive U.S. administrations sought (often unsuccessfully) to limit Soviet influence in the world and blunt the impact of communism.

Beginning in 1985, when the Soviet Union began a complex dance of reform and decline, the Reagan and Bush administrations did little to encourage the former and much to hasten the latter.  True, Washington slowly came around to supporting glasnost and perestroika rhetorically.  But during this period, the U.S. largely withheld economic support for perestroika while continuing to maintain high levels of military spending and provocative rhetoric.  From 1989 to 1991, the Soviet Union’s terminal stage, Washington switched to damage control mode in order to preserve the newly independent countries of Eastern Europe, pressure the Soviet Union to back German unification, and prevent conflict from flaring up over the secession of the Baltic states.

In 1992, after the official collapse of the Soviet Union, the new Russian president Boris Yeltsin ushered in a “honeymoon” period with the United States.  Yeltsin and his pro-Western foreign minister Andrei Kozyrev proceeded to follow the US lead on arms control, economic reform, and global politics.  The other leaders of the Commonwealth of Independent States (CIS) — notably Ukraine’s Leonid Kravchuk, Georgia’s Eduard Shevardnadze, and Kazakhstan’s Nursultan Nazarbaev —  largely followed suit, each competing for the affections and favors of the United States.  In return, the US promised to help Russia and the other CIS nations integrate into the global economy and later, through the Partnership for Peace, into European security structures.

The honeymoon did not last long.  Russia never received the Marshall Plan it had hoped for.  Nor did the U.S. government make room at the world’s table for the new Russian entity (the seven largest economic powers, G7, extended membership to Russia, but this was largely a symbolic gesture).  As a result, the pro-Western faction in the Russian foreign policy establishment lost influence and Russian national interest became the new organizing principle for the Yeltsin team.  The disastrous 1994 invasion of Chechnya, the refusal to ratify the latest strategic arms reductions, and the elevating of relations with Serbia, Iran, and Iraq signified a change in Russian policy.  For its part, the United States maintained support for Yeltsin personally, but gradually drew back from close bilateral relations.  Washington strengthened relations with the other CIS nations to cover its bets and balance Russian power in the region.

As Sergei Rogov, the head of Moscow’s US and Canada Institute, has remarked, the U.S. government’s rhetoric toward Russia has changed from “strategic partnership” to “pragmatic partnership” to “realistic partnership” to just plain realism – a realism that aims to minimize the impact of Russia’s economic and military collapse on the world at large.[2]  The partnership is gone, and this change in rhetoric is mirrored very concretely in a range of issues from security to economics to politics.

 

SECURITY ISSUES

 

At one time, Russia was the preoccupation of US foreign policy analysts and intelligence agencies.  Beginning in the 1950s, the Soviet Union underwrote anti-colonial disputes throughout the Third World and provided significant aid to countries ranging from Cuba and Angola to Syria and India.  Today, Russia’s importance has dwindled considerably.  It no longer plays a role in the developing world.  It has scant influence in Eastern Europe.  Closer to home it has retained certain ambitions – to maintain the integrity of its own territory (as in Chechnya) and to maintain influence in its “near abroad” (such as Belarus, Ukraine, Georgia, and Moldova).  But its ambitions outstrip its capacity, as the losses in Chechnya and peacekeeping failures in the “near abroad” suggest.

The truth is, the Russian military is in dire condition — the size of its armed forces cut by a quarter in 1998, its weapons systems in deteriorating condition, and few funds available for new acquisitions (by 2005, according to current trends, only 5-7 percent of Russian military will be new[3]).  The U.S. State Department acknowledges that the Russian army’s combat readiness is in “rapid decay.”[4]  The morale of the army is even lower now than at the time of the Chechen campaign.  As for Russia’s ability (or desire) to project force beyond its borders, little Estonia recently declared that its neighbor was no longer a military threat.[5]  Even its nuclear arsenal, the one card that keeps Russia in the game, is deteriorating rapidly.  Russia is contained, quite literally, by its own weakness.

The U.S., particularly through the vehicle of NATO expansion, is taking advantage of this weakness.   NATO was designed to deter Soviet expansion into Europe.  The Soviet Union is no more, and Russia desperately wants to join Europe, not invade it.  Yet, without an enemy in sight, NATO is marching right up to Russia’s door.  In April 1999, Poland, Czech Republic, and Hungary became the first new members since Spain in 1982.  Twenty-five countries now belong to the Partnership for Peace (PFP) program, a halfway house for  NATO candidates where they can get help in modernizing their militaries.  Virtually every country in the former Soviet bloc supports NATO expansion, partly because of NATO’s own aggressive public relations campaign and partly as a first step toward benefiting from European economic integration.  The Organization of Security and Cooperation in Europe (OSCE), a far more inclusive institution committed to conflict prevention and the protection of human rights, has been sidelined, largely through U.S. maneuvers to restrict its scope and funding.

Throughout the ups and downs of US-Russian relations in the 1990s, Russia has considered NATO expansion a deliberate provocation, particularly when expansion has potentially included Ukraine and the Baltic states.  The U.S. has responded to Russia’s concerns with two initiatives.  First, it extended membership to Russia in the PFP program.  Then, promising a “special relationship,” NATO concluded an accord with Moscow in May 1997 that established various mechanisms of consultation.  The accord doesn’t give either party the right to veto the actions of the other.  But through the Permanent Joint Council (PJC), the two sides at least meet regularly.

The PJC has been largely window dressing.  The Russians haven’t taken it particularly seriously.  And the U.S. has not used the mechanism to involve Russia in key foreign policy discussions.  Russia has a long list of grievances on this score, for the US did not consult it on air strikes against Libya (1993), Serbs in Bosnia (1994), Iraq (1995, 1996, 1998), and suspected terrorist facilities in Sudan and Afghanistan (1998).

When NATO bombed Yugoslavia in March 1999, the conflict between the United States and Russia approached dangerous proportions.  Angry that U.S. and West European negotiators abandoned efforts to reach a diplomatic solution, Russia recalled its ambassador to NATO and tried unsuccessfully to rally the UN Security Council against the military action.  Anti-American protests flared in Russia, and the Russian government reportedly began to consider re-deploying tactical nuclear weapons in Belarus.

Consultation is not Russia’s only concern.  The expansion of NATO and the Partnership for Peace means a remilitarization along its borders.  The new NATO members will be substantially modernizing their militaries.  PFP members, which include strife-torn Georgia and Moldova, have access to free U.S. “hand-me-downs” that substantially increase the threat of conflict in the region.[6]  From Russia’s perspective, NATO is not just expanding territorially but conceptually as well.  Secretary of State Albright has called for NATO to “move beyond a narrow definition of mutual defense” and take action without Security Council mandate.[7]  She intends to enlarge NATO’s sphere of potential action to include the Middle East and central Africa.[8]  By encroaching even more on UN territory, NATO in its new role would enable the U.S. to act without concern for Russia’s veto in the Security Council.

On the arms control front, meanwhile, the Clinton administration is doing little to balance NATO expansion with a commitment to mutual disarmament.  Russian ratification of the START II treaty, for instance, was one of the many victims of US strikes on Iraq in December 1998. The US government didn’t notify Russia or the UN Security Council before launching the attacks.  In retaliation, the Russian Duma suspended debate mere hours away from ratifying the treaty.  Arms control aside, Russia’s nuclear force is declining daily.  It is estimated that the Russia arsenal will fall below 1,000 warheads simply as systems are retired.  Without START II, which puts a cap of 3,000-3,500 warheads on each side, the US could remain at 6,000 warheads.[9]  With the treaty, the U.S. will destroy warheads and Russia will destroy missiles, an asymmetry that puts Russia at a strategic disadvantage.[10]  While START II is in this sense a double bind for Russia, many Russian politicians still hope to ratify the treaty in order to salvage good relations with the United States, keep the aid flowing, and prepare for more significant disarmament initiatives such as START III.

Another challenge to current and future reductions in strategic arms is the Clinton administration’s desire to modify – or perhaps even scuttle — the Anti-Ballistic Missile treaty in order to pave the way for a new national missile defense system.  Many Russian experts have declared the ABM treaty linked to START II – if the first dies, so will the second.[11]  The Clinton administration favors “modification” while opponents such as powerful Republican Senator Jesse Helms have called for scrapping the treaty.[12]  The Pentagon reportedly offered Moscow a disturbing quid pro quo on the ABM issue: if Russia looks the other way while the US develops a missile defense system, Washington will allow Russia to deploy new strategic missiles with three warheads.[13]  Although at peace with one another, the two countries are paradoxically moving away from arms control and towards arms augmentation.

Meanwhile, the lion’s share of US aid to Russia is directed toward the containment and dismantling of its weapons, much of it through the Cooperative Threat Reduction (CTR) program.  In his 1999 State of the Union address, Clinton called for a 70 percent increase in funds to help Russia dismantle  nuclear warheads and better control fissionable material.[14]  The U.S. government is understandably concerned about the potential for Russia’s nuclear weapons to circulate on the world’s black market.  Disarmament communities in both countries are justifiably delighted to witness the destruction and not mere limitation of nuclear weapons.  The opportunity for disarmament is breathtaking.  But the funds provided by the Clinton administration are not sufficient even to pay for the implementation of START II, much less the full range of arms control measures that the U.S and Russia are or should be considering.  Which means that a cash-strapped Russia must pay for its own humbling and the disarmament process is regrettably slowed .

 

ECONOMIC COLLAPSE

 

The economic system bequeathed by the Soviet Union to Russia was more a burden than a benefit.  While the Soviet Union had achieved remarkable growth rates in the immediate postwar era, the economy entered a long period of stagnation in the 1970s that lasted into the Gorbachev era.  Gorbachev unshackled Soviet culture and injected new life into the Soviet political system.  But he was not successful in reviving the Soviet economy, which had deteriorated into barter, corruption, inefficiency, and mismanagement.

With the collapse of the Soviet Union and the rise of Russia came the promise of a new beginning.  In 1992, after introducing market reforms virtually over night, Boris Yeltsin predicted results in less than a year.  The U.S. government joined in the chorus of support.  Despite rosy predictions, the Russian economy has only gone downhill since.  Industrial production has plummeted as has the standard of living for most Russians.  A sharp divide between rich and poor has opened up, with 70-80 percent of Russians at or below subsistence level.  Homelessness, particularly of children, is widespread in the large cities, and pensioners have grave problems making ends meet.  And if it’s bad in the big cities, it’s even worse in most regions where public services have fallen apart and the population has been thrown back into the 19th century.

In August 1998, with oil prices plummeting, the Asian financial crisis dealt yet another blow to the Russian economy.  Real GDP fell by nearly 5 percent in 1998, with a similar drop expected in 1999.[15]  Annual inflation is expected to go into triple digits in 1999.[16]  Even nature has not cooperated:  in 1998, Russia suffered its worst harvest in over 40 years.[17]  In the wake of the August crisis, the International Monetary Fund (IMF) suspended its latest package of aid (and in February 1999, Standard and Poor’s gave Russia a de facto default rating because it didn’t meet its interest payments[18]).  By early 1999 it had gotten so bad that many Russians viewed the Brezhnev period, a notorious era of stagnation, as a “golden age.”[19]

In September 1998, former foreign minister Yevgeny Primakov took over the reins of power.  Considered a consummate politician with a preference for state intervention in the economy, Primakov is hard pressed to use the mechanisms of the central government to solve Russia’s problems.  With a huge foreign debt, a good portion inherited from the Soviet days, Russia is caught in the Third World development trap of always being behind in debt service.  The international community, led by the United States, is dictating fiscal conservatism, which makes Keynesian deficit-spending impossible.  Meanwhile, the federal government can’t collect the taxes necessary to keep it afloat (the major players are the worst offenders — the huge energy company Gazprom, for instance, owed the federal government approximately $1.9 billion as of July 1998[20]).  Although criticized in the West for its creeping statism, the Primakov government often tilts in the supply-side direction:  its most recent economic plan calls for reducing the profit tax from 35 percent to 30 percent and cutting the Value Added Tax (VAT).

The U.S. government isn’t doing much to help Russia rebuild its industries.  For instance, the Clinton administration has threatened to restrict imports of cheap Russian steel, which will cost the Russian steel industry an estimated $1 billion in sales.[21]  The U.S. has threatened to undercut the Russian space industry, one of the few world-class showpieces it has left, and has sought to contain the expansion of Russia’s energy interests in the Caspian region.  While US sanctions against Russia for selling military technology to Iran are laudable from the point of view of non-proliferation, the US government has simply not provided enough in conversion assistance so that Russia’s military-industrial complex can redirect its production toward domestic needs.

Whenever the Primakov administration has made noises about reining in the more destructive aspects of markets, Washington has provided stern lectures.[22]  Secretary of State Madeleine Albright, for instance, wondered aloud to a business group in October 1998 whether the Primakov team, in “turning back the clock,” truly understood “the basic arithmetic of the global economy.”[23]  The “basic arithmetic” in this case applied not only to the laws of supply and demand but to the sheer amount of money the U.S. can withhold should Primakov and company depart from the IMF recipe.

In urging remedial economics courses and praising the IMF’s role in the last seven years of Russian reform, Albright and company seem to have forgotten that they’d already identified a group of radical market enthusiasts willing to abide by the international community’s guidelines.  Indeed, with their intimate knowledge of the basic arithmetic of the global economy, these Russian reformers robbed the international lenders blind.

This clique of Russian economists and bureaucrats came to the fore in 1992 when the West applied the policies of “shock therapy” developed in Eastern Europe to the already shaky post-Soviet economy.  Shock therapy involved a rapid destruction of the old system and the substitution of neo-liberalism (also known as the “Washington consensus”).  Price controls were lifted practically overnight.  Because the state did not simultaneously break up the monopolized production and distribution system, the result was hyperinflation and the destruction of personal savings.  Incomes fell.  Russian industry had its feet knocked out from under it.  Agricultural production dropped.  Imports came flooding in, which few could afford.

The shock therapists, who administered all shock and very little therapy, were a select crew.  On the American side: Jeffrey Sachs, one of the architects of Polish shock therapy and later director of the Harvard Institute for International Development, and his multiple contacts in the Clinton administration.[24]   Chief among the Russian “reformers” was Anatoly Chubais.  The Harvard Project  helped to write the new Russian laws; Chubais and his cronies happily bilked the Russian public.  Political analyst Boris Kagarlitsky, in testimony before the US Congress after the August crisis, cited many examples of this misuse of international funds including the Russian Central Bank’s “bacchanalia of waste” and the $5 billion from the World Bank to restructure the coal industry that “simply disappeared.”[25]  In February 1999, Moscow was abuzz with news of up to $50 billion that the Russian Central Bank had secreted overseas in a shell company on the island of Jersey.[26]

The newly emerging business sector also participated in the “bacchanalia.”  One mechanism for this monumental theft was the hand-over of thousands of enterprises to insiders rather than to the public at large.  In 1995, Chubais presided over this loans-for-shares privatization that distributed Russia’s best and brightest enterprises to its worst and most corrupt “red capitalists.”  Oil companies like Surgutneftegaz and Sidanko went for bargain-basement prices.  Many privatized companies fell to the control of organized crime syndicates.  Chubais’s attitude toward the siphoning off of aid to shadowy business types was to “let them steal,” for money would transform the crooks into legitimate capitalists.[27]   As with the Russian Central Bank’s Jersey scheme, much of this “stolen” money disappeared overseas:  estimates of capital flight over the last seven years begin at $50 billion and go as high as $230 billion.[28]

The shell game continues today.  As political scientist Michael McFaul writes, “Through complex arbitrage schemes, the withholding of wages, and the use of parasitic “offshore” companies…directors can amass individual wealth while their companies continue to operate in the red.”[29]  No wonder that the average Russian thinks that capitalism is by definition dikii, or savage.  And the culprits?  The U.S. General Accounting Office, investigating the Harvard Project’s activities in Russia and Ukraine in 1996, determined that the Project’s management was lax.  The U.S. Agency for International Development later cut off funding to the project citing evidence that at least two directors – Andre Shleifer and Jonathan Hay – had used their inside connections for personal profit (both were fired).  Chubais, meanwhile, became head of Russia’s electricity monopoly, United Energy Systems of Russia.

The motives for the U.S. government’s insistence on Russia’s swift, monetarist transition to capitalism are complex.  U.S. economists and politicians, in cooperation with the IMF, focused on a single method for moving away from communism, a model developed and applied in Poland with mixed success.  The Bush and Clinton administrations were also suspicious of allowing the Russian state a stronger role to play in economic recovery because of residual antipathy toward any state authority emanating from the Kremlin.  By acting quickly, the Western advisors expected to get the worst of the transition over before the public could vote the “reformers” out of office (economic pain is rarely popular at the polls).  And the U.S. government, pressured by business interests, wanted to establish a playing field in Russia that benefited U.S. commercial interests (particularly in the energy and mining sectors).

U.S. businesses are interested in Russia for very good reasons.  Russia has an educated workforce, a strategic location straddling two continents, and a generous supply of natural resources, including gold and timber.  But energy is the true jewel in the Russian crown.  Oil and natural gas currently represent 60 percent of Russian exports and 25 percent of federal revenues.  Even with the fall in energy prices, Russia can parlay its resources into hard currency – if the profits don’t accrue principally to foreign companies.  And if the U.S. government stops trying to undercut the future expansion of Russian energy interests in the Caspian Sea.

A good deal of oil lies beneath the Caspian Sea.  The problems in getting that oil to market are manifold, not the least being the countries surrounding the potential fields – Azerbaijan, Iran, Kazakhstan, and Turkmenistan.  Russia wants to work with the latter three countries to build a pipeline that at least in part runs through Russia.  In that way, Russia can maintain an interest in the region.  The US, meanwhile, has exerted heavy pressure on a consortium of eleven major oil companies to build a 1,400 mile pipeline from Baku in Azerbaijan to Ceyhan in southern Turkey that skirts Russia altogether.

The U.S. plan suffers from numerous problems.  The original estimates of 178 billion barrels are now thought by independent experts to be closer to 17.8 billion (a problem compounded by the current buyers’ market).  The cost of the pipeline has recently risen by another $1 billion.  The pipeline would pass through a very unstable Georgia, home to major insurgencies in Abkhazia and South Ossetia.  The U.S. project also necessitates paying off Turkey, a strategic ally, and continuing to overlook this NATO member’s continuing human rights abuses.[30]

But the most important failing is that it denies Russia any piece of the pie.  Russia believes it has natural interests in this region that the U.S., half way around the world, does not.

 

THE CIS

 

To counterbalance Russia’s residual tendencies toward imperialism, the U.S. has attempted to strengthen the other countries of the Commonwealth of Independent States.  On the face of it, this is an even-handed, sensible policy.  However, “geopolitical pluralism” has forced the Clinton administration to support some of the most authoritarian leaders in the region.

As noted above, oil dictates the U.S. position in the Caucasus.  To strengthen the relationship with Georgia and Azerbaijan, the US has lavished aid and assistance to countries where the human rights situations are dire.  With Azerbaijan in particular, the US has sought to include it in major international organizations (WTO, NATO’s Partnership for Peace); this interest parallels the sheer amount of money pouring into the country for oil exploration ($40 billion from contracts with multinationals).[31]  Azerbaijan has also announced that it would like to host U.S. and Turkish military bases to counter Russia and Armenia’s warming relations.  The U.S. government has fortunately decided to treat the invitation as a joke.[32]

In Central Asia, the US State Department has routinely criticized the authoritarian governments on paper, but the Clinton administration has increased government aid in order to consolidate US influence at the expense of Moscow. [33]  In Kyrgyzstan, for instance, U.S. aid increased from $24 to $31 million from 1998 to 1999, despite a worsening human rights situation that included government involvement in the trafficking of women.[34]  A similar increase in U.S. aid for Uzbekistan occurred over the same period, though the government of Islam Karimov engaged in systematic human rights violations.[35]  US appropriations for Turkmenistan nearly tripled from 1998 to 1999, because of potential cooperation in the energy sector.  Indeed, after the US government provided credits to Exxon for pipeline exploration in Turkmenistan, the White House announced that the government was “committed to strengthening the rule of law and political pluralism” – this in a country with no political opposition, no freedom of assembly, and considerable repression of the few dissidents who have stood up to the dictatorial president Saparmurat Niyazov.[36]

Ukraine represents the most likely counterbalance to Russian power.  The problem, from the Clinton administration’s point of view, is that a large number of Ukrainian leaders and a substantial portion of the population still hope for some sort of union with Russia.  The recently ratified Friendship and Cooperation treaty between Russia and Ukraine is a positive sign that Russia recognizes Ukrainian sovereignty; as relations improve, leaders on both sides hope that the treaty marks closer rapprochement rather than a more marked divide.  The U.S., meanwhile, has tried to woo Ukraine on the cheap, through some loans and good press (even though President Leonid Kuchma’s administration suffers the same problems of corruption and lack of transparency as its neighbors).  Ukraine has grumbled at the meagerness of US overtures.  For instance, Kuchma’s administration has supported and thereby greatly facilitated NATO expansion, but hasn’t received much in the way of actual commitments. The U.S. has pressured Ukraine to stand back from the Russian-Iranian nuclear deal.  Ukraine’s market is flooded with imports but its major exports still can’t break into foreign markets, particularly food into Europe and clothes into the U.S.[37]

The country for whom the U.S. government reserves most of its scorn is Belarus.  Under the authoritarian leadership of Aleksandr Lukashenka, Belarus has maintained a close relationship with Russia, refused to implement neo-liberal economic reform, and managed to sustain economic growth even as its post-Soviet neighbors have sunk into economic despondency.  The U.S. has rightly criticized Lukashenka’s human rights record.  But the situation in Belarus is no worse than in Turkmenistan, which the U.S. has praised.   This dangerous double standard arises from Turkmenistan’s strategic resources and the U.S. government  frustration over Belarus’s refusal to play by the rules of the “Washington consensus.”

The CIS as an entity is in trouble.  The collective security treaty at the heart of the commonwealth is under criticism from Uzbekistan, Azerbaijan, and Ukraine.  Most members grumble at Russia’s hegemonic economic policies.  A likely result of the ongoing negotiations between Moscow and the twelve CIS countries will be a weakening of security provisions (diminishing Russia’s influence in the affairs of its neighbors) but increasing economic cooperation (for Russia is still both a major market and supplier).[38]

From Central Asia to Eastern Europe, the US policy of “geopolitical pluralism” has done little to promote human rights, democracy, or economic progress in the countries surrounding Russia.   Nor has US policy helped to make the CIS an effective commonwealth of equals.  As with NATO expansion, clumsy US overtures have alienated Russia and gained few true allies.

 

POLITICS

 

From the perspective of Washington, Boris Yeltsin was the leader who could do no wrong.  He concentrated power in his own hands through the 1993 constitution, ruled by decree, bombed his own parliament, effectively stole the 1996 presidential election, brutalized the entire nation of Chechnya, presided over a monumental and largely opaque transfer of public wealth into private hands, and still the United States stood by him.  For, despite his liabilities and chronic illnesses, Yeltsin was actually quite compliant.  He could be influenced on personnel decisions (for instance, Clinton pressured him to retain the corrupt Chubais[39]).  More critically, as Dimitri Simes has argued, Yeltsin “was prepared to subordinate Russian foreign policy interests to Western, and especially American, preferences to a much greater extent than the parliament or the Russian public at large.”[40]  (It is only recently — with Yeltsin’s mind wandering, his grip on politics weakening, his critics pushing for impeachment – that the Clinton administration has finally stepped back to consider political alternatives in Moscow).

Yeltsin’s anti-democratic tendencies have taken a large toll on the Russian body politic.  Weak parties, a weak civil society, and a weak judiciary all characterize the Russian political scene.  The press, while nominally free, is increasingly controlled by business interests.  Assassination of public figures and of journalists is an all too frequent expression of political opposition.  On the bright side, Yeltsin’s health and the financial crisis have both heralded a shift of power away from the presidency and toward the parliament, the government, and the regions.[41]

One reason for both the Yeltsin and Clinton administrations’ lack of enthusiasm for democracy in Russia today is the enduring strength of the Russian Communist Party.   The Communists are frontrunners in several polls, and Party leader Gennady Zyuganov is a strong candidate to succeed Yeltsin.[42] Elections to the Duma will be held by the end of 1999 and left-wing parties will probably do well.  Public dissatisfaction with market reforms and Yeltsin’s leadership has been high for many years though it hasn’t found a viable political outlet.  Entire sectors of the workforce have turned out on strike, including most recently miners and teachers.  Although the Communist Party expected a larger turnout for its anti-Yeltsin crusade in October, a million people in the end took to the streets.[43]  The Party, if it can figure out how to mobilize its nationalist, progressive, and Stalinist factions, might very well return to power – democratically.

In the wake of the August 1998 financial crisis, new prime minister Yevgeny Primakov managed within a short period to secure a rough political consensus.  He appointed a Communist deputy, Yuri Maslyukov, to be chief deputy minister for economics and thus received the Party’s support for an austere economic recovery plan.  Primakov is well-positioned to maintain a middle ground between pro-Western and nationalist voices as well as between statist and radical reform positions on the economy.  His primary challenge is to maintain sufficient political consensus to pull the Russian economy out of its hole.  Part of this challenge is to enlist the support of Russia’s regions.

Russia is a country of 89 regions.  At present, Moscow has power-sharing arrangements with more than half of Russia’s regions.  Only ten of the 89 regions are net donors; the rest are dependent on subsidies.[44]  The federal government has an informal arrangement with the regions – the center will ignore human rights violations and corruption on the periphery if the periphery promises not to secede and acknowledges, if only rhetorically, the validity of federal policy.[45]  Primakov’s task will be to figure out how to persuade (rather than force) Russians and non-Russians outside the center to contribute to the federal strategy of reconstruction.

Challenging the notion of a harmonious multiethnic Russia has been a profusion of extreme nationalist, racist and anti-Semitic organizations.  Quasi-fascist groups such as the Russian National Unity movement (RNE) have thrived in an atmosphere of lawlessness and anti-government sentiment.  Not only has the Yeltsin administration until recently neglected this worrisome phenomenon, but the Ministry of Internal Affairs, local authorities and military units have occasionally acted in concert with the RNE.[46]  The influence of these groups is difficult to measure – they receive a good deal of attention in the Russian press but the actual number of followers remains low.  Because of the recent rise in anti-Semitism (as well as the general economic crisis), Jewish emigration has increased.    Meanwhile, in Moscow, the level of racist violence has increased, both by skinheads and by the police.  The US government spoke out on this issue only when a US Marine was the victim of assault.[47]

 

RECOMMENDATIONS

 

The Clinton administration has responded to the prolonged Russian crisis with some good initiatives: it has provided a measure of humanitarian assistance, has helped support the free press, has devoted a considerable amount of money to help Russia decommission its nuclear weapons.  It has developed useful projects such as the Congressional Research Service program to train library and research staff for newly created legislatures.  But these are small points of light in an otherwise dismal picture.

NATO remains a key sticking point in US-Russian relations at the moment.  Particularly destabilizing from Moscow’s viewpoint is NATO’s interest in preparing the Baltic states for admission as well as efforts to absorb Ukraine into the alliance.  Russia has drawn its version of a line in the sand — a “red line” — which it warns NATO not to cross or risk “destruction of the existing world order.”[48]  Given Russia’s consistent opposition as well as the sheer number of actual and potential crises on Russia’s border, the U.S. must consider whether admission to NATO will make the petitioning states more or less secure.  Meanwhile, the U.S. must make a commitment to the Permanent Joint Council and actively engage Russia on the broadest range of security issues, including arms limitations.  NATO, for all its efforts to redefine its mission, has not spent much time on arms control (indeed, the 1999 Washington Summit focused on the Defense Capabilities Initiative, a modernization initiative[49]).  For conventional arms control to proceed, NATO must concentrate more on the contraction of its forces than the expansion of its influence.

To address Russian concerns about the asymmetry of nuclear arms control, the Clinton administration should consider the proposal of Jonathan Dean, of the Union of Concerned Scientists, to add a protocol to the current START II treaty that would  limit total deployed warheads to 1,000 and then proceed with the START III negotiations (concerning data exchange, warhead dismantling, tactical warheads and sea-launched cruise missiles).[50]  This disarmament process will cost money, of course, but every dollar spent neutralizing nuclear weapons on both sides is money well spent.

While the Clinton administration must challenge Russia’s residual hegemonic impulses, it must be careful to recognize Russia’s interests in Central Asia, Ukraine, and the Caucasus.  This is not an easy balancing act.  On the issue of Caspian Sea oil, for instance, the U.S. should work with Russia rather than against it in developing a sustainable approach to oil extraction and delivery to foreign markets.  Through its largely rhetorical support for Russians in the near abroad and maintenance of influence in the CIS, Russia has maintained a weak “imperial” identity.  As Anatol Lieven warns, if the U.S. tries to destroy this weak imperialism by completely isolating Russia, virulent nationalism of the fascist and anti-Semitic variety is likely to fill the vacuum.[51]

On economic issues, US must start with humanitarian aid and debt forgiveness.  The Clinton administration has offered 1.5 million tons of wheat, plus a $600 million credit to finance imports.  This is a good basis to build on.  Where possible, the aid program should buy within Russia (or the CIS or Eastern Europe) and distribute to the neediest regions in order not to undercut local agricultural production.[52]  The U.S. should also lead the way in calling for debt forgiveness, particularly of the $70 billion inherited from the Soviet Union.  In other words, the international community should apply the same standard to Russia that it did to Poland.  Grzegorz Kolodko, former Polish Minister of Economics, recommends that the West forgive 80 percent of the inherited debt and 50 percent of the post-Soviet debt – a sensible proposal coming from a border country very concerned with the future viability of the Russian economy.[53]

Once these emergency situations are addressed, the U.S. should support a mixed economy in Russia (and the rest of the CIS).  This option should permit the Russian government to pursue an “infant industries” approach to remaking the economy – picking likely economic winners and nurturing their growth.  No less a free-market source than Business Week has criticized the Clinton administration for undercutting Russia’s capacity to rebuild itself.[54]  Foreign direct investment can play a modest role, but the revival of Russian industry and agriculture must benefit Russians, not the owners and stockholders of multinational corporations.[55] Selective controls on capital flows, which economist Paul Krugman has recommended for economies in crisis and which Malaysia imposed in 1998, can also help to prevent capital flight and reduce the risks of speculation.

Meanwhile, the U.S. and Russia should take advantage of the environmental opportunity that the collapse of industrial production has inadvertently provided – Russian industry now gives off 35 percent less air pollution than in 1991 and 15-18 percent less water and other pollution.[56]  The Clinton administration should consider a large environmental package for Russia that would ensure that new production facilities and sewage treatment plants meet international standards.  The administration should also come through with sufficient funds to clean up Russia’s decommissioned nuclear submarines, an ecological disaster in the making.[57]  The U.S. and the West must not simply call for environmental protection in Russia; they must pay for it.  Otherwise, economic need will continue to push Russia to undertake disastrous policies, such as  the Atomic Energy Ministry’s recent attempts to import nuclear waste from around the world (including the United States).[58]

On the political front, the Clinton administration should stop interfering in Russia’s elite politics in a vain attempt to find the right mix of pliant reformers.  Instead, the US should concentrate instead on strengthening popular institutions – the judiciary, research institutes, grassroots organizations.  For economic reform to proceed fairly and openly, Russia will need stronger watchdog agencies and citizens’ monitoring groups.

Russia, economically weak and militarily weakening, hasn’t put up much of a fight against the U.S. policy of Containment Lite.  It recalled its ambassador from Washington after the December 1998 bombings of Iraq; it has tried to outmaneuver the U.S. and its allies for the prize of Caspian oil; it has courted Iran and largely repaired its relationship with North Korea.   In an attempt to form an “Asian triangle,” Russia has even sought common cause with India and China (the former angry about NATO expansion and the latter incensed over the U.S. theater missile defense program).[59]  Both China and India joined Russia in condemning NATO’s actions in Yugoslavia.  These are perhaps improbable bedfellows given their historic tensions, yet aggressive U.S. policies are practically forcing them into a menage a trois.

These are cautious maneuvers.  For the time being, Russia is treading very tentatively, careful not to antagonize its chief economic patron, the United States.  But Russia will not always be so dependent on U.S. aid and money from multilateral institutions largely controlled by the United States.  Russia is rich in history, in resources, in resourcefulness.  It is rich, too, in strains of intolerance and anti-Western sentiment that are only strengthened by adversity and isolation.  The Clinton administration (as well as its more anti-Russian critics on the Right) should think twice about capitalizing on Russia’s current dependency, for short-term gain may lead to negative consequences in the long-term.   It is time, finally, for the U.S. to restore partnership to the “strategic partnership” and consign containment, Lite or otherwise, to the Cold War past.

[1] Marshall Goldman, “The Cashless Society,” Current History, October 1998, p. 319.

 

[2] James Meek, “Russia feels sea change in US policy ,” The Guardian, January 26, 1999.

[3] Dale Herspring, “Russia’s Crumbling Military,” Current History, October 1998, p. 325.

[4] Cited in the U.S. State Department’s report delivered to the U.S. Congress on February 19, 1999.  Jamestown Monitor, February 26, 1999.

[5] Meek, op. cit.

[6] This section relies on information from “Preparing for the Next 50 Years: A Risk Reduction Strategy for NATO,” British-American Security Information Council, February 1, 1999.

[7] Madeleine Albright, speech to annual foreign ministers meeting at NATO HQ, December 10, 1998 [this is DR’s reference – you might want to make it more precise]

[8] BASIC, op. cit.

[9] “Russian Parliament Delays Work on START II Treaty,” Washington Post, December 23 ,1998.

[10] Laura Payne, “US-Russia Security Relations,” Foreign Policy in Focus, September 1998.

 

[11] “Russia Says START II is Imperiled,” Washington Post, January 22, 1999.

 

[12]According to Helms, “We do not need to re-negotiate the ABM Treaty to build and deploy national missile defense.  We can do it today.  The ABM Treaty is dead.  It died when our treaty partner, the Soviet Union, ceased to exist.” Jesse Helms, “Amend the ABM Treaty?  No, Scrap It,” Wall Street Journal,  January 22, 1999.

 

[13] Walter Pinkus, Washington Post, January 22, 1999 [I don’t have the title of this article]

[14] Steve Goldstein, “New Aid Sought to Battle Threat of Russian Nuclear Material,” Philadelphia Inquirer, January 20, 1999.

 

[15] EIU Country Report, 4th quarter, 1998, p. 3.

[16]  EIU Country Report, p. 3.

 

[17] EIU Country Report, p. 3.

[18] Agence France Presse, February 2, 1999.

[19] Agence France Presse, January 29, 1999.

[20] David Treisman, “Russia’s Taxing Problem,” Foreign Policy, Fall 1998.

 

[21] Fritz Kaegi, “Dumping U.S. jobs: US steelmakers’ success in charging Russia with dumping also hurts the US,” The Russian Business Review, February 1999.

[22] “Clinton Urges Russia to Extend Reforms,” Washington Post, September 2, 1998.

 

[23] Address by Secretary of State Madeleine K. Albright to the US-Russia Business Council, October 2, 1998.

[24] For a more detailed account see Janine Wedel, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998 (New York: St. Martin’s Press, 1998).

[25] Boris Kagarlitsky, Testimony Before the Committee on Banking and Financial Services, United States House of Representatives, Hearing to Examine the Russian Economic Crisis and the International Monetary Fund, September 10, 1998.

 

[26] Phil Reeves, “Russian Leaders Accused of Scam,” The Independent, February 12, 1999.

[27] Quoted in Anatol Lieven, Chechnya: Tombstone of a Russian Power (New Haven: Yale University Press, 1998), p. 176.

[28] Interior Ministry estimate from Interfax, March 11, 1999.  Deputy Prime Minister Yuri Maslyukov has estimated $200 billion in capital flight since the beginning of the market reforms Itar-TASS, March 16, 1999.

[29] Michael McFaul, “Russia’s Summer of Discontent,” Current History, October 1998, p. 309.

 

[30] “US: Caspian Oil Pipeline Deal Near, Associated Press, January 21, 1999.

 

[31] Human Rights Watch, World Report 1999 (New York: HRW, December 1998), p. 242.

[32]Ron Laurenzo, “U.S. Base In Azerbaijan Not In Cards,” Defense Week, February 8, 1999.  Some, however, take the invitation very seriously: John Ellis, “US Should Build a Military Base in Azerbaijan,” Boston Globe, February 6, 1999.

[33] Rajan Menon, “American Interests in Central Asia,” U.S. Relations with the Former Soviet States, Aspen Institute, 23rd conference, Aug. 17-21, 1998.

[34] Human Rights Watch, p. 275.

[35] Ibid., p. 309.

[36] Ibid., p. 301.

[37] Alexander Motyl, “Ukraine: Politics, Economy, and Relations with the West,” U.S. Relations with the Former Soviet States, Aspen Institute, 23rd conference, Aug. 17-21, 1998, p. 16.

[38] Paul Goble, “The East: Analysis from Washington – Looking Beyond the CIS,” RFE/RL, February 12, 1999.

[39] Dimitri Simes, “Russia’s Crisis, America’s Complicity,” The National Interest, Winter 1998/1999, p. 19.

[40] Simes, p. 19.

[41] See, for instance, Michael McFaul, “The Demon Within,” Moscow Times, March 2, 1999.

[42] “Russian Opinion Poll Puts Communists Ahead,” Bloomberg, February 3, 1999 based on an opinion poll carried out by the independent Russian Social-Economic Agency on Jan. 19-26, 1999

[43] While the New York Times downplayed the turnout, calling the protests “tepid”, a million marchers is still a sizeable number. “Communists and Workers March to Denounce Yeltsin,” New York Times, October 8, 1998.

 

[44] Peter Rutland, “A Flawed Democracy,” Current History, October 1998, p. 318.

 

[45] Human Rights Watch, p. 281.

[46] William Jackson, “Fascism, Vigilantism, and the State,” Problems of Post-Communism, January/February 1999, p. 40.

[47] Human Rights Watch, p. 287.

[48]Yevgeny Gusarov, the deputy foreign minister of Russia, quoted in Robert Burns, “Russian Opposes More NATO Expansion”, AP, February 7, 1999.

 

[49] BASIC, op. cit.

[50]Jonathan Dean, “Relaunching START II,” Moscow Times, February 9, 1999.

 

[51] Lieven, p. 383.

[52] On whether Russia indeed has food supplies to draw upon see Andrew Jack, “Critics find food package to Russia hard to stomach,” Financial Times, February 5, 1999.

[53] See Grzegorz Kolodko, “Plan for Russia,” talk delivered at the Institute for International Economic and Political Studies, Moscow, November 25, 1998.

[54] “Washington Is Making It Hard for Russia to Help Itself,” Business Week, February 8, 1999.  Joseph Stiglitz, the World Bank’s chief economist, has made similar points.  See, for example, “Towards a New Paradigm for Development: Strategies, Policies, and Processes,” 1998 Prebisch Lecture at UNCTAD, October 19, 1998.

 

[55] For a more detailed proposal, see Alice Amsden et al., “Strategies for a Viable Transition: Lessons From the Political Economy of Renewal,” a report for the Institute for Policy Studies, June 13, 1995.

[56] “Russian Crisis Has Helped Environment,” Reuters, January 18, 1999.

 

[57] The Clinton administration has announced its intention to help dispose of the subs, but will only specify the amount of funding in October 1999.  Total cost for clean up is estimated at $2.6 billion.  The U.S. has shown a preference, for strategic reasons, to focus on later-generation subs – the older models, however, pose an equal risk.  See Simon Saradzhyan, “Russia Cheers US Aid for Sub Disposal,” Moscow Times, February 26, 1999; also James Meek, “Cook Visits Icy Nuclear Nightmare,” The Guardian, March 4, 1999.

[58] Lyuba Pronina, “Nuclear Waste Row Erupts,” Moscow Tribune, February 19, 1999.

[59] Pavel Felgenhauer, “Asian Triangle Shapes Up,” Moscow Times, February 25, 1999.  Also “Yeltsin, Zhu discuss strategic partnership,” Daily Yomiuri, February 27, 1999.  And Stephen Blank, “Which Way for Sino-Soviet Relations?” Orbis, Summer 1998.

FPIF, August 1999

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