Many people were fooled for quite some time. Indeed, in the sheep-eat- sheep world of academia, everyone still obsesses over the IMF loans to Russia and the accompanying neo-liberal reforms, which one side (the right) asserts transformed Russia and the other side (the left) asserts destroyed it. How inconvenient for both sides is the fact that the reforms did not happen. They simply could not have happened, given the entrenched interest groups inherited from the Soviet period that were inimical to the implementation (as opposed to the declaration) of far- reaching neo-liberal reforms.
Next: "Larry's brain was like a tank powered by a Lotus engine: it purred as it rolled over anything in its way..."
Eventually American policy-makers, while extending more IMF loans, stopped trying to enforce "conditionality," but not because they understood the inherent constraints. After Russia's parliamentary elections in 1993, when the pseudofascist media clown Vladimir Zhirinovsky surprised everyone with a decent showing, a false Weimar analogy ("Weimar Russia") seeped out of the punditry- wonkery swamp, and Vice President Al Gore--who had his own Russia commission yet looms small in Talbott's memoir--leaned on the IMF (that is, on Summers) to go easy. Following suit, Talbott publicly urged "less shock and more therapy," making it seem as if he blamed Russian "reformers" for the apparent efflorescence of proto-fascism. Summers exploded. "Larry's brain was like a tank powered by a Lotus engine: it purred as it rolled over anything in its way," Talbott writes. "Over the next eight years, I was flattened more than once, but I usually found the experience educational."
They both needed an education. Talbott's explanation for what he had really meant to say regarding shock therapy--he wished to advocate the necessity of creating a social safety net--is unintentionally revealing, since many of the Soviet-era social welfare mechanisms, from near-free housing and utilities to padded employment, remained stubbornly in place in those years, and these institutions and customs were precisely what was blocking effective marketization. Meanwhile Talbott's blooper did help to expose the fact that the IMF loans were not about structural reform at all, but about propping up the Yeltsin regime.
The use of loans nominally for economic reform but really for political patronage reached its notorious apogee in 1996, when Yeltsin geared up for re- election, armed with the state budget as well as some IMF cash. Talbott writes that he "agreed" with the "reformers" on the need to re- elect Yeltsin, but he "disagreed" over their unsavory methods. A pity that he neglects to identify the alternative methods to attain a goal for which he insists there was no alternative. Was there really no alternative to Yeltsin short of anarchy and a new cold war? This was the strong-arm line straight out of Yeltsin's re- election campaign. And just how much influence did Yeltsin--who spent the bulk of the 1990s in the hospital-- really have over the larger structural processes at work? Consider that Russian regions in which nominal neo-Communists were elected, such as Krasnodar, turned out little differently from regions in which "democrats" were elected, such as St. Petersburg. Each sported a hyper- executive branch dominating the legislature and the courts, and epidemic looting by insiders, and the destitution of the populace. Call it the late Soviet Union, extended through the 1990s.
Moreover, did "support" for Yeltsin really have to mean pursuing very close American involvement in Russia's internal affairs? And how to explain the fact that Vladimir Putin has been implementing--without the "spinach treatment" or the IMF loans--most of what the Clinton administration had tried to impose upon the Yeltsinites? Domestic stakeholders in reforms finally arose, as the Yeltsin era's wild cannibalization of Soviet property and wealth--for that is what took place in lieu of reform--cleared the decks and created demand for the measures that Putin has been glorying in. Instead of reflecting on the Putin era's retrospective implications for American policy in the 1990s, Talbott conveys Clinton's regrets in 2002 at not having done "much more" to underwrite the Russian transition to the market! Here is an admission that what the United States did do was insignificant, despite the rhetoric and the contortions of the analysts right and left.
No wonder, then, that Talbott magnanimously gives the "credit" for Washington's role in micromanaging Russia's mirage of economic reforms completely to Summers. He settles scores the gentleman's way. No wonder, too, that Talbott attempts, on behalf of himself and his president, to snatch a strategic victory of sorts from their confusions and their setbacks, by recasting American policy toward Russia as the shrewd mugging of Yeltsin. Why did no one notice their policy brilliance at the time? ndercutting the supreme-cleverness skew is Talbott's treatment of the financial meltdown in the summer of 1998, when the Russian government partially defaulted on its debt, and unilaterally awarded a debt moratorium to private interests against their Western creditors, and watched the ruble dive. This piece of work, contrary to Talbott, had little to do with the Asian financial crisis of the previous year, which Russia weathered (some $2 billion in assets were withdrawn, without grave consequences), or with the Russian government's failure to collect taxes (revenues were up, if one counted regional governments, too). The cause, rather, was the flimflam financial system and especially the Russian Central Bank, which through a proxy speculated in dollars against its own currency, failed to remit the law-mandated fifty percent of any dollar revenues to the government account (compared, by the way, to the seventyfive percent mandated remittance for the U.S. Federal Reserve), squandered a hard-currency fortune on its own aggrandizement (grand offices and commercial projects, astronomical salaries and bonuses, interest-free loans to management), protected crony private "banks," and forced the government into default to try to save its own skin.
All this was explained to me in the summer of 1998 by the Russian private citizen Andrei Illarionov (who would become Putin's economic adviser); but the American architects of Russia policy, to save their skins, authorized a new IMF tranche to Moscow that very summer, just weeks before the meltdown. And this money was wired not to the Ministry of Finance, as previously had been the case, but to ... the Russian Central Bank! Commingled with other hard-currency reserves, the IMF loans became as traceable as the capital pirated out to Cyprus and other offshore locations (a technique pioneered not by the Yeltsinites but by the Soviet KGB, to funnel money surreptitiously to foreign Communist parties and to buy embargoed Western technology). The American policy-makers who still felt willing or even compelled to transfer billions to Russia in July, 1998 could not have been that shrewd.
Russia's crash mercifully pulled the plug on the wretched era of IMF loans and "conditionality," a debacle that could not be openly admitted in the run-up to Al Gore's presidential campaign. But the ruble devaluation also achieved more for Russia's GDP in a few months than had been achieved in the seven previous years. The collapsed ruble provided a stunningly logical boost to the economy by becoming a de facto policy of strongly encouraging Russian manufacturers (not by the chimera of industrial policy, as the critics had urged, but by the rigor of fiscal policy). Talbott does not bring out all the ironies.
Still, to give him his due, Talbott copiously reports one of the main overall consequences of the Clintonites' Russian policy: the successful inculcation of deep anti-American sentiment. "You know," Andrei Kozyrev, Yeltsin's first foreign minister, told Talbott, "it's bad enough having you people tell us what you're going to do whether we like it or not. Don't add insult to injury by also telling us that it's in our interests to obey your orders." Similarly, Yuli Vorontsov, Moscow's ambassador to Washington ended a forty-seven-year career in the foreign service by remarking: "You know, Strobe, having worked on U.S.-Russian relations most of my career, including during the Soviet period and cold war, I must tell you that it is much easier to be your enemy than to be your friend."
Such comments could be mustered endlessly. Talbott attributes them to the bitterness of the Russians about their precipitous collapse, and he is right. But that is not the whole story. He and other well-intentioned American policymakers contributed to the deep mistrust. The United States, after all, was not in military occupation of the former Soviet Union, and did not have the leverage (or the depth of commitment) to do in Russia what it had done in postwar West Germany and Japan; and yet the United States acted as if it did, raising expectations and fanning resentments. The United States arrogated to itself--in the guise of the phony multilateralism of the IMF and in the name of democracy--the right to determine the personnel and the policies of a foreign government, because we know what is best. This did little to affect those personnel and policies, but it did help to discredit liberal internationalism.
And what, pray tell, was the "take"? Talbott provides a list of the Clinton administration's accomplishments, all linked to Russia's external behavior: (1) the removal of Soviet-era nuclear missiles from Ukraine--but the crucial agreement involved the cooperation of Ukraine; (2) the withdrawal of Russian troops from the Baltics--but would this not have taken place anyway? The impecunious Russian government has continued to close bases and withdraw troops from multiple places, including where the leases came free; (3) the halting of Russian rocket-parts sales to India-- but how consequential (or long-term) was this decision since others, notably Israel, are rushing to fill the profitable gap? (4) Russia's abandonment of Slobodan Milosevic--which must be credited at least in part to his own noxious and erratic behavior--as well as Russia's sanction for the use of force in the Balkans, forthcoming after the American government had suddenly stopped disregarding Russia's possible vital contribution to Balkan pacification and relied on a skilled Finnish emissary; and (5) Russia's acquiescence in the widening of NATO.
It is not a long list. (Talbott might have made more of the hugely successful bipartisan programs for storing and protecting the components of Russia's doomsday complex.) Talbott points out that Clinton met Yeltsin eighteen times-- as many encounters as all the presidents from Truman to Bush had with their Kremlin counterparts. And what did the Russia hand have to show for this presidential-heavy diplomacy? Russia's belated help with tin-pot Serbia, and its "acceptance" of something that it could not have blocked: the superfluous addition of non-strategic countries to a defense alliance that has outlived its purpose.
he expansion of NATO threatens, above all, to put readers into a coma; but the topic occupies the heart of Talbott's memoir. It was his special bailiwick in the 1990s, and it appears to be a major source of pride. To demonstrate the obstacles that he overcame, Talbott reminds us that "virtually everyone I knew from the world of academe, journalism, and the foreign-policy think tanks was against enlargement." More important, "the Pentagon was overwhelmingly opposed to enlargement." According to Talbott, Defense Secretary William Perry wanted to postpone enlargement "for a decade, or perhaps forever." (It would have been nice to have been told why.)
When Talbott turns to the positive case for expansion, he leaves out the fact that it was Germany that began the push for eastward expansion of NATO, because it was tired of being on the front line. This omission makes the policy seem an American initiative. From the American vantage point, Talbott writes, there were two reasons for the expansion of NATO. The first reason was that we owed it to the Czechs and the Poles for what they endured under communism after Yalta. This may be morally sound; but if the enlargement of the alliance with America was about payback, then we should have started by admitting African countries from which we extracted massive slave populations and where the European imperialists committed unfathomable mass atrocities.
The second reason, Talbott argues, was that NATO expansion helped to nudge the expansion of the European Union-- an indirect admission, perhaps, that the really important goal was the aggrandizement of the EU. Note the lack of a claim about increased security, either for the United States or the new NATO members. So much time and energy was sucked away in cajoling Russia to resign itself to its exclusion from the Western alliance--and after September 11 NATO turned out to be unessential, while Russia proved to be more crucial to American security interests than even Talbott had understood.
Conspicuously, Talbott does not dwell upon the argument that NATO expansion carried domestic political significance in the United States. Perhaps this is just as well, since such significance has never been demonstrated. Instead of electoral constituencies, the key domestic factors were an inertial anti- communism combined with professional and ethnic cheerleading inside the government. We can only wonder what American foreign policy would have looked like had the establishment been populated not by Soviet specialists on and emigres from Eastern Europe or their descendants, but by, say, Japanese, Taiwanese, Korean, or Vietnamese immigrants and their descendants, or Saudi, Iraqi, Iranian, Indian, and Pakistani immigrants and their descendants, or by specialists on all those countries. Would our diplomacy in the first decade after the Cold War have been so fixated on Russia and on expanding NATO?
Next: The best part of the book... <snip>