TIME: Almanac 1995

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<text id=92TT2742> <title> Dec. 07, 1992: A $2 Trillion Wish List </title> <history> TIME--The Weekly Newsmagazine--1992 Dec. 07, 1992 Can Russia Escape Its Past? </history> <article> <source>Time Magazine</source> <hdr> COVER STORIES, Page 42 THE NEW RUSSIA: POLICY A $2 Trillion Wish List </hdr> <body> Russia requires money and expertise beyond what even the richest donor nations can provide. But the West should still do more. By J.F.O. McAllister/Washington--With reporting by James O. Jackson/Bonn and Ann M. Simmons/Moscow Americans want to concentrate on American problems. But as Bill Clinton acknowledged during the campaign, they can afford to do so only to the extent that the rest of the world remains stable. The more successful Russia is at remaking itself into a free-market democracy, the more time and treasure Clinton can devote to domestic needs. That will require, as Clinton has noted, a substantial U.S. investment in Russia's future up front. Other Western governments agree that Boris Yeltsin needs a visible helping hand to survive. But the experts keep debating how best to extend it. A few call for pumping in more money faster, even if Russia fails to reach basic economic reform targets right away. Some even favor subsidizing selected state firms until they learn to make things the market wants. The trouble is that easing up on reform only prolongs the pain of converting people and resources to productive uses, and fuels the inflation that is so corrosive to democratic government. "Successful economic reform can't be turned on and off for political reasons," says a U.S. official. Nor is there widespread agreement on how much to give. West Germans were shocked at the $100 billion annual tab for integrating their 16 million formerly communist kinsmen; even though eastern Germany can plug into a ready-made legal and commercial system, economic parity could take 20 years. A comparable effort for the former Soviet republics would cost $1.8 trillion a year. Nevertheless, ensuring a stable and prosperous Russia is of vital interest to the whole world. The republics have more than 2 million soldiers, a score of Chernobyl clones, the potential to flood Poland and Germany with hundreds of thousands of refugees--and to become a big market and political partner if things work out right. But with recession gripping the West, generosity comes hard, especially when donors fear that Russia's economic chaos will simply swallow up limitless funds. Most Russians still feel they are not getting enough. "We're pretending to reform, and you're pretending to help us," goes the Moscow saying. But both the reform and the aid are real, if short of ideal. Together, Europe, Japan, Canada and the U.S. have given or loaned $81 billion to the 10 members of the Commonwealth of Independent States since 1990. More than two-thirds comes from Bonn, eager to finance the departure of Soviet soldiers. The U.S. share of $9.2 billion includes $5.5 billion in loans for Russian purchases from American farms. This year's pledge from the major industrialized countries was $24 billion, half in direct grants and credits and half from the International Monetary Fund, World Bank and official debt rescheduling. Moscow should collect nearly $18 billion directly from donor countries by the end of the year, but the multilateral agencies have stalled. They require Russia to meet rigorous reform targets--like 9% monthly inflation, vs. the real 30% rate--that the country is nowhere near attaining. The mismatch between the needs of the republics and the foreign resources available is no excuse for a stingy hand on the purse strings. Western humanitarian aid during the past year provided food and medicine to hungry Russians who might otherwise have turned into an angry mob. Now donors must look to long-term assistance that will help the new countries build the basic institutions of market economies and learn how to run them. One hundred Peace Corps volunteers arrived in Moscow last week; half have M.B.A.s, and several are company presidents. They will spend two years staffing small business advisory centers all over Russia. Officials from the republics are taking Capitalism and Democracy 101 at a Vienna institute. Donors are shifting resources to "hoe and shovel people" who will immerse themselves in teaching Russians how to solve their own problems. But nothing that has been done so far relieves Western governments of the responsibility of--and self-interest in--doing more. Clinton's advisers recognize the importance of helping Yeltsin with hard cash as well as rhetoric, but have not reached any decision on whether to back an expanded aid program or how tightly to tie payouts to reforms. The new Administration will try to thread this needle by pushing for the fastest possible delivery of aid already in the pipeline, emphasizing technical help in regions where reform is percolating fastest and raising public awareness of how much America has at stake in Russia. Even if the West becomes much more charitable, the enormous scale of the problem means that Lenin's heirs will have to right their economy largely by themselves. But it is important to convince Russians that they do not bear their burdens alone. </body> </article> </text>