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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: akidron who wrote (23516)	8/28/1998 10:47:00 AM
From: derek cao	Read Replies (2) \| Respond to of 70976

Off topic: E D I T O R I A L S The Cost Of Cronyism Date: 8/28/98 Country after country is now discovering what happens when the rule of man supersedes the rule of law. But when the U.S. could have exerted its leadership to counter rampant cronyism around the world, it punted. Russia is just the latest example of the cost of corruption and cronyism -and in Russia's case, lingering communism. The old Soviet apparatchiks have become the new Russian kleptocrats. They've blocked reforms to sell state-owned land and some industries. Mining, health care, education, agriculture and textiles are still state-run. And as for industries that were privatized, the kleptocrats snapped them up, and promptly refused to pay any taxes. Gazprom, once the state-run energy monopoly, was ''privatized'' into the control of Viktor Chernomyrdin. Gazprom owes nearly 4 billion rubles in back taxes, or more than 80% of the country's entire debt to its defense industry. To further twist the knife in Russia's economy, Russia has refused to trim its massive subsidy spending. Free health care and education, generous pensions and almost-free housing have also helped bleed the state coffers near dry. To bump along, the kleptocrats and Communists sold short-term bonds right into a pyramid scheme. Repayments were financed with the sale of more bonds. And now the Russian people must bear the brunt of a devalued ruble as markets assert their inexorable discipline. What has the U.S. position been? Support Russian President Boris Yeltsin at all costs, despite his lack of progress in pushing through any real economic reforms. And the Clinton administration has used the International Monetary Fund as its shill in propping up Yeltsin's government with bailouts. To be sure, Yeltsin has been the best small ''d'' democrat in Russia since the Soviet Union collapsed. His tank-stopping heroism gave him the stature to make the needed changes. But he hasn't (due in part to the resistance of the Communists), and the IMF, with our blessing, hasn't held him accountable. While Russia is the latest victim of cronyism, Indonesia, Malaysia, South Korea, even Japan, are all facing the consequences of their disregard for markets and the rule of law. And in these instances, the U.S. has acquiesced to the IMF and its typically bad advice - lower budget deficits by ''broadening the tax base,'' and reduce trade deficits by devaluing the currency. And it's only been recently that the IMF has targeted corruption and cronyism as a source of countries' economic woes. Perhaps the Clinton administration has not been more vigilant on the international economic front because it's comfortable making deals like those made in Russia and Asia. It's comfortable having as its only goal staying in power. And judging from all the scandals besetting it, the Clinton administration is comfortable ignoring the rule of law when it's convenient to do so. But deal-making is not leadership. And staying in power should not be the goal of any government. Countries around the world are learning these painful lessons, while we in the U.S. are feeling the aftershocks. Could the Clinton administration have prevented the economic quakes now shaking the world? Probably not all of them. But it could have helped make them shorter and less disruptive. Next week, Clinton and Yeltsin are to meet in Moscow, but don't expect any earth-quieting announcements. Both of their jobs are in jeopardy, and they each hope to use the summit to look presidential and shore up support back home. But smiling for the photographers is not leadership either. -------------------------------------------------------------------------------- (C) Copyright 1998 Investors Business Daily, Inc.