Clinton is an intellectual lummox.
The Moscow Wake
Most observers have concluded that today's meeting in
Moscow of two crippled leaders, Boris Yeltsin and Bill Clinton, will
produce little of substance. All we can do is hope that this is true, at least in
terms of any attempt by Mr. Clinton to solve Mr. Yeltsin's financial
problems. Russia already has squandered vast amounts of Western money.
The new message should be: You're on your own.
There may also be some arms control talk, but
Russia's lower house, the Duma, is in an even more
sour mood now than when it rejected earlier pleas
to approve the START II agreement to reduce
nuclear missile deployments. Just yesterday, it
overwhelmingly rejected Mr. Yeltsin's decision to
bring back Viktor Chernomyrdin as Prime Minister.
Though not the final word, it was an emphatic
message that even the non-Communists in the Duma
are after Mr. Yeltsin's scalp.
This is all the more incentive for the Russian
President to seek more Western support for his
country's crashing economy. He may complain that Mr. Clinton and the
International Monetary Fund have become picky just when Russia has hit a
rocky patch, with debts coming due and revenues from oil exports sinking.
He might reinforce his point by saying that Russian politicians are becoming
more nationalistic. He might even drop a reminder that Russia, for all its
troubles, remains a nuclear power.
But giving aid to Russia, we should know by now, is no different from
supporting the habit of a junkie. Nobody outside the Russian oligarchy
believes that falling oil prices and "irrational" investors are the real problem
there. The failure of Russia to reform its feudal economic system and create
a proper rule of law produced today's financial chaos and has even put
Russia's democratic achievements in jeopardy. Yet despite that, Russia's
"bankrupt" government continues to funnel billions of dollars into new
weapons systems, pleading that selling weapons to Iran and the like is vital
to its need for foreign exchange. Mr. Clinton might ask the Russian leader
how he can plead destitution while keeping his weapons-makers fattened.
The best advice Mr. Clinton could offer Boris Yeltsin is to suggest he spend
some time with another visitor. Former Argentine Economy Minister
Domingo Cavallo is reportedly on his way to Moscow, on the invitation of
acting Prime Minister Chernomyrdin. Russia's economic stew is baffling to
even the most veteran emerging market watchers, but Mr. Cavallo at least
has some relevant experience. He pioneered peso convertibility in
hyper-inflationary Argentina, paving the way for a one-to-one rate with the
dollar, maintained by a currency board.
Russia could use some of the same medicine, starting with making the U.S.
dollar, already widely used, legal tender in Russia. We hasten to add that
officially dollarizing Russia, and even introducing a currency board, would
be but a first step toward cleaning up the colossal mess that is Russia's
economy. Corruption and bribery, asset stripping and capital flight are just
some of the problems that will continue to keep Russia starved for liquidity.
Stabilizing the ruble, whatever the means, cannot take the place of reforming
the tax system and land code, and enforcing bankruptcies and shareholder
rights.
But such reforms are resisted by the oligarchs who have played such a
powerful role in backing Mr. Yeltsin and Mr. Chernomyrdin. They have
profited from the tilted playing field Russia has created. The ideas emanating
from the Chernomyrdin camp are hardly encouraging. There's been a push
for the Central Bank to print money to pay wage arrears, recapitalize the
banks of the oligarchs and pretend to make good on defaulted debts.
Seizing privatized assets is another bright idea that's been floated. The only
reformer who appears to have remained in favor--tax czar Boris
Fyodorov--likely will be vastly outnumbered in a Chernomyrdin government
populated by those opposed to real reform.
The sad fact is that Mr. Clinton is meeting a Russian President at the end of
his political (and perhaps physical) tether. The American President himself is
little better off politically. The best the U.S. can do is pledge support for a
Russia that first learns to help itself.
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