Forget About Monica, It’s MoscowPand the Stakes are Global

Most Americans believe that President Clinton faces the most consequential moment of his career on Monday when he is scheduled to testify before Kenneth Starr’s grand jury. In fact, a much bigger day for Clinton and the rest of the world comes just two weeks later when the president meets with Boris Yeltsin in Moscow. By this time, Russia very well may be in the throes of a major market meltdown, which in turn might trigger political upheaval on a scale similar to Indonesia. Different from Indonesia, however, Russia still has 10,000 nuclear weapons. The gravity of Russia’s crisis makes this September summit one of the most important foreign policy missions of Clinton’s presidency and an event of much greater importance than his grand jury testimony.

The president’s first task is to ensure that the focus of the summit is on the big picture. The Cold War issues of arms control, European security, regional conflicts and human rights cannot be allowed to dominate either the tone or substance of the meeting. While Russian ratification of the START II treaty would be an important achievement and Russian concessions regarding trade with Iran would be welcome, Clinton must make the preservation of markets and democracy in Russia his main mission.

This will be difficult. Russia’s market economy and electoral democracy are once again under siege. With International Monetary Fund assistance, the Russian government narrowly averted a major devaluation of the ruble in July, but many believe it will not be so lucky this fall. If devaluation occurs, the scenarios being spun by Russian liberals, nationalists and communists alike are dire. A sudden rise in prices triggered by a devaluation would stimulate even greater mass social unrest than exists today. In the panic, trade union officials and Communist Party leaders fear that they might lose the support of their constituencies, which would turn to more radical political groups in times of crisis. Some in Russia already have urged Yeltsin to consider instituting emergency rule.

In this highly charged atmosphere, Clinton pronouncements about the importance of START II, the necessity for Russians to pay higher taxes or the evils of trading with Iran will look trivial. Instead, Clinton needs to deliver messages about the importance of capitalism and democracy in Russia and ideas and programs to assist the Russians in achieving these ends.

The Clinton administration demonstrated leadership in responding aggressively to Russia’s latest financial crisis. Clinton must now follow up this bailout package with a tough-love message that no future bailouts will be forthcoming unless fundamental reforms are finally undertaken.

Clinton must call on the Russian government to get serious about closing bankrupt enterprises, sell the stakes it still holds in hundreds of enterprises and make credible commitments to implement its anti-crisis program, including a more concerted effort to collect taxes from both corporations and individuals.

After delivering this blunt message to Yeltsin and his government, Clinton must provide creative solutions to help the Russian government avoid bankruptcy. More expensive IMF bailout packages offer only temporary solutions. Rather, Clinton should explore the possibility of a massive debt swap of short-term Russian treasury bills for long-term U.S. treasury bills. A sovereign debt swap would be better than direct transfers of money to the Russian government because the market will know that the money will not be squandered. Clinton needs to compel Yeltsin to think boldly. At this stage, Yeltsin has no good options, but must choose between bad and worse.

Clinton’s message regarding Russian democracy must be equally blunt. While imperfect, Russia has made progress in consolidating an electoral democracy and Clinton should recognize publicly these achievements. However, Clinton must deliver a private but firm message to Yeltsin and other Russian elites about the negative consequences of circumventing the democratic process--an idea that has become increasingly popular in elite Moscow circles as the prospect of major economic downfall becomes more likely. Authoritarian rule is wrong for Russia and any attempt to implement it would fail.

Many Americans have grown weary of Russia as achievements have been few and headaches many. But now is not the time to give up on Russia. Only seven years since the Soviet collapse, Russia’s revolution has by no means ended. Russia’s current leaders are still committed to developing a market economy and a democratic polity, and it is in the vital national interest of the United States to ensure that this trajectory continues.

No one has a greater interest in promoting the consolidation of democracy and capitalism in Russia than does Bill Clinton. If Russia eventually succeeds in becoming a member of the international community of democratic states, Clinton will secure his place in history as an important foreign policy president.