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                                                                                WORLD, Page 34

DIPLOMACY

Is the West Losing Russia?


More than food and financial aid is needed. The reformers must
feel that the world is at their side in the struggle for
democracy.

By BRUCE W. NELAN -- Reported by James Carney/Moscow and J.F.O.
McAllister/Washington, with other bureaus


    Walking across the White House lawn to his helicopter
last week, George Bush paused to tell reporters that his first
formal summit meeting with Russian President Boris Yeltsin will
take place in Washington on June 16 and 17. As Bush flew off to
make a campaign speech in Illinois, briefers quickly explained
that the Yeltsin talks would center on nuclear arms control,
not on economic aid for Russia, and that no new offers of help
were likely. "We've given him about everything we can," said a
White House official.

    No translation from the election-year code book was needed
to make that message clear. With recession-sore Americans
demanding economic relief and right-wing Republican challenger
Pat Buchanan riding an America First bandwagon, Bush is
determined not to give anyone the impression that he is being
overly generous to foreigners. If that discourages Yeltsin, so
be it.

    But is Bush missing the point? Sure, hundreds of millions,
tens of billions of dollars could be spent vainly trying to
prevent Russia from falling prey to its own darkest tendencies.
Yet as real as the risk of utter failure is the possibility
that history will condemn the West for not acting when it had
the chance, for not seizing one of those rare opportunities to
shape the world for the better. From the end of World War II,
the West, and especially the U.S., spent trillions to contain
the Soviet Union; that money was, in effect, diverted from the
domestic economies to reach this exact point in history.

    Now the cold war is over and the West has won, but the
victory will seem hollow if the peace is lost. The fulfillment
of the policy course set in the 1940s arrives not when Russia
is on the brink of collapse, but when it enters the community
of democratic free-market nations. The communist system has been
defeated, but that is no guarantee that Russia will become a lot
more liberal and a lot more democratic than it has ever been in
its thousand years of history. Which is where the West must
come in. The timing may not be ideal for Bush, who does not
want U.S. voters to see him adding to the $5.2 billion aid
package he has already offered Russia; or for most of Europe and
Japan, where recession is also biting. Nevertheless, the
argument is compelling that the West must see beyond the moment
and do more to assist Russia through its metamorphosis.

    WEIMAR RUSSIA. Close students of Russian affairs in
several countries are warning that the West's business-as-usual
approach to the collapse of the Soviet Union is shortsighted and
potentially disastrous. They see an epochal struggle ahead to
ground democracy and a free economy in the former Soviet
republics, and they want to pull out the stops to help it
succeed. Think how dangerous it would be, they advise, if
Russian fascists and militarists, battening on anger and hunger,
seized power from Yeltsin and his fellow reformers. Yeltsin
himself has warned that "certain countries" only "talk and talk"
about helping, while old Communists and new Nazis circle around
his government like wolves. Others speak of a "Weimar Russia"
waiting for a Slavic Hitler to appear.

    An anti-Western, nationalistic regime in Moscow would
probably not resemble the old U.S.S.R., but it could stake its
claim to superpower status by refurbishing the nuclear arsenal
of Russia's still immense armed forces and recharging its
military-industrial complex. Then, in the first frost of a new
cold war, accusatory voices would rise in the West, demanding
to know, "Who lost Russia?"

    "It would be utterly unforgivable for future generations
if, by failing to spend a few tens of billions of dollars in
aid over the next few years, suddenly defense spending in the
West would start climbing again to meet a renewed threat from
Russia," says a senior Western diplomat in Moscow. Of course,
Russia is not the West's to win or lose, any more than China was
40 years ago when the question "Who lost China?" was used as a
political bludgeon. Nevertheless, most experts argue that the
right kinds of aid can make a significant difference to the
outcome -- mostly by proving to the Russians that they are no
longer enemies and are not alone in their efforts to remake
themselves in a Western image.

    "It's rare when one country can profoundly affect the fate
of another through aid," says Paul Goble, a senior associate at
the Carnegie Endowment for International Peace in Washington.
"This is one of those times." Robert Strauss, the U.S.
ambassador in Moscow, predicts a traumatic year for Russia and
urges Western governments and corporations to step up their
investment and technical assistance. "Obviously we cannot be the
deciding factor," says a State Department official, "but Western
countries can improve the probabilities."

    Outspoken American advocates of greater efforts look back
at the days when the U.S. had the stomach and pocketbook for
big initiatives like the Marshall Plan and contrast that with
the cheese-paring, tentative leadership Washington is providing
now. James Billington, the Librarian of Congress, says that by
overthrowing communism, "the Russians have done something big
and heroic. They perceive us as, in effect, not responding
except in petty ways. Our response has so far been hesitant in
tone, trivial in content and very nearly humiliating in its
effect." As one dramatic signal, Billington favors an exchange
program that would send 50,000 Russians to the U.S. for
training.

    FAILURE AT THE TOP. If Western aid efforts are moving
slowly -- and they are -- practical problems are hindering them
almost as much as political ones. On the Russian side, Yeltsin's
reforms have made some headway, but the economy is still in a
mess, with production declining and prices rising. "This is the
most difficult economic reconstruction job in the history of
the world," says Lawrence Summers, vice president and chief
economist at the World Bank. Until the accelerating reforms take
hold, experts argue, large injections of money would be useless.

    In the West, though more than $80 billion has been pledged
in various forms, only a small fraction of that amount has been
delivered. The rest is bogged down in national and
international bureaucracies or stalled by confusion in Russia.
The European Community has committed $4 billion in humanitarian
aid and technical assistance, but less than 10% of it has
reached its destination.

   Out of a total pledge of $5.2 billion, the U.S. has
provided $3.5 billion in credit guarantees for grain shipments
and $117 million in humanitarian aid, but has spent only $5
million of the $745 million it plans for technical assistance
in the next two years. Bush has all along resisted making fast
policy moves and quick course corrections. He has been slow to
treat Yeltsin as a responsible partner and now hangs back from
the conclusion that major new contributions may be necessary to
keep his reforms afloat. "Prudence" is how Bush usually
describes his decision making. "Timidity," counters Lee
Hamilton, chairman of the U.S. House Foreign Affairs
subcommittee on Europe. "It's less a matter of money than
leadership and implementation."

    A DETERMINATION TO TRANSFORM. Officials in Washington
reject the premise that Russia's reforms are doomed or that
Yeltsin's position is in peril. "Are we losing Russia?" asks a
senior Administration official. "No. On the contrary, I'm
relatively optimistic." Slight progress is showing: according
to one of six exchange rates, the ruble's value has improved
from 110 to the dollar to 80, and some prices -- even for
sausage -- have actually declined. Russian opinion polls
indicate Yeltsin's authority may have strengthened a bit.

    While those indicators provide encouragement, they do not
mean Yeltsin is safely over his major hurdles. Inflation will
surge as more prices are decontrolled this month and the cost
of oil, coal and gas is allowed to rise in April.

    "Reform is working," Deputy Prime Minister Yegor Gaidar,
Yeltsin's chief economic adviser, told Russians last week on
television. Then he added, "It is working slowly and badly. We
may know better than anyone else how unsteady are these very,
very weak signs of stabilization that have taken shape." In a
personal appeal published last week in London's Financial Times,
Gaidar declared, "Our basic task is this: we must conquer a
powerful inflation bequeathed by the old system, while at the
same time rapidly introducing market forces and private
ownership." Those policies are coming into place, he wrote, so
"if the West wants to help us, now is the time."

    What he and Yeltsin have in mind is a large and coherent
plan to stabilize the Russian economy while it transforms
itself and begins to earn foreign exchange with its exports,
especially oil and natural gas. Among the plan's elements:

    -- To build faith in the Russian ruble -- something it has
not enjoyed since the 1920s -- Moscow wants the seven
industrial powers to put up $5 billion. This fund would, in
theory, stabilize the currency by being available to support it
at a single, reasonable exchange rate; Gaidar hopes for about
50 to the dollar compared with the current free-market rate of
170. If the fund works properly, it should not have to be spent.

    -- Yeltsin and Gaidar are asking for $6 billion this year
in food and medicine. Russia's supplies are likely to be worse
next winter, and stocks of basic needs like aspirin and
syringes are critically short.

    -- They want another $6 billion to pay for imports of
spare parts and materials needed to keep factories working and
to revitalize key industries.

    -- Finally, Russia would like the West to postpone or
cancel much of Russia's $61.5 billion debt to foreign banks and
governments until the reforms are working.

    The Russians do not just loft these requests into the
blue. They have been negotiating deals with the International
Monetary Fund and the World Bank that will put some of them
within reach. Russia, now an associate member of the IMF, is
expected to be granted full membership at the end of April,
probably along with several other former Soviet republics. At
the same time, Yeltsin has pledged to enforce a stiff regime of
deficit reduction, tax collections and credit restrictions.

    Once this austerity program is in place, Russia will have
the IMF seal of approval and will be able to approach other
governments and private lenders for new money in addition to
what it can draw from the IMF itself. In their first year of
membership, the former republics hope to call on several billion
dollars from the fund.

    THE POLITICS OF AID. U.S. policymaking is particularly
vulnerable to domestic politics this election year. U.S.
Treasury Secretary Nicholas Brady told a House Appropriations
Subcommittee that the Administration wants Congress to approve
an extra $12 billion contribution to the IMF, so that it can
increase its lending to Russia and other states. "Some have said
the Administration has not pushed hard enough," Brady testified.
"Nothing can be further from the truth."

    That was not good enough for subcommittee chairman David
Obey, a Democrat, who recalled that Republicans had in the past
attacked his party for its support of the IMF. Congress would
approve this contribution, Obey said, only if President Bush
were to "state to the country in a very public way why these
actions are necessary." But Brady also repeated the consistent
U.S. rejection of Gaidar's call for the $5 billion fund to
support the ruble, arguing that the Russian economy is still too
shaken by inflation and unsecured credit to fix a firm value on
the currency.

    Still, Washington is pondering future moves, and some
calculations appear to go beyond Election Day in November. "To
those who want us to write the check today," says a senior
official, "I say I understand that supporting Yeltsin is
important. But if you hand the money to the Russian government
before its program is complete, you will lose it all fast, and
you won't get a second chance."

    The IMF could soon be doubly useful: it would provide an
international cover for a politically risky increase in help
from the U.S. and an impersonal institution that can insist on
austerity in ways less damaging to Russian pride than peremptory
instructions from teams of Western experts. In fact, many
analysts urge that whatever form aid takes, it should neither
humiliate Russians nor imply that they are no longer responsible
for their own successes and failures. Michel Tatu, Le Monde's
veteran Soviet expert, says, "The role of the West should not
be overstated. In the end, it is the Russians who are going to
have to do all the work."

    Thoughtful Russian leaders share that view. "The West can,
no doubt, contribute greatly to our transition toward a market
and democracy," says Oleg Bogomolov, director of Moscow's
Institute for Political and Economic Research. "But the West
should not in general substitute its help for our own strength.
This balance is a very narrow thing."

    THE VISION THING. With all the proper qualifications, the
experts still agree that the West is faltering at the highest
level: the perception of vision by which history will judge its
conduct. On that level, the West must succeed in showing more
concern and visible support for Russia.

    The tenor of assistance has to change from the immediate
to the long-term. Food and medicine will still be needed, but
"the hunger and thirst for technical assistance is much
greater," says Richard Armitage, who has been put in charge of
American assistance to the former Soviet Union. Russia needs
help in creating and solidifying the institutions essential to
a stable democracy, from functioning financial operations to an
independent judiciary, a coherent parliamentary system and
wholesale and retail markets. Virtually none of these pillars
of the Western life-style exist in Russia; reformers are
starting from scratch.

    The U.S. can begin, of course, by spending some of the
$745 million in technical aid that Washington has planned for
the next two years. The real payoff, says Blair Ruble, director
of the Kennan Institute for Advanced Russian Studies in
Washington, may eventually come "from small-scale private
initiatives. But I also think we need to commit ourselves in a
visible way, so the world understands we are engaged in the
process of democratization in the former Soviet Union."

    That high-profile engagement is what is most clearly
lacking. The U.S. has not devoted "nearly the effort" it put
into the gulf war to the transition in Russia, says Jack
Matlock, a former ambassador to Moscow. "This is infinitely more
important for the future. It will determine the whole political
and economic geography of the 21st century." The country seems
to be "cowering," he says. "As far as I can see, the White House
is just afraid of being accused of giving money to foreigners."

    Leadership on a foreign policy question as vast, vital and
expensive as this one can only come from the U.S. President.
Bush, a Chief Executive who prides himself on his skill in
international affairs, ought to be perfectly suited to provide
it. But so far, he has been unwilling to use his position of
authority to explain the historic moment to Americans and
persuade them to act accordingly. Under the pressure of election
politics, Bush has led from the rear.

    If Russia's struggle for democracy fails, it will mark a
failure of Western democracy as well. It is one of the century's
great turning points, and if the U.S. is to prove itself a
superpower in more than military terms, it must meet the
challenge with the full commitment it deserves.