Whose Russia to Lose? : ‘Personal Privatization’ and Honor Among Thieves

What an amazing orgy it’s been.

Ten years ago, almost everything in Russia more valuable than a toaster belonged to the Soviet government; now, most of that vast stock of wealth has been “privatized.” A better word: stolen.

Five years ago, over lunch at Moscow’s swank Metropol Hotel, a retired Soviet official fallen on hard times offered to sell me top-secret archives from the Stalin era. “How did you get them?” I asked, as my interpreter’s eyes widened in horror and shock.

“I had them ‘personally privatized,’ ” the ex-general explained. What he meant was that a friendly official in the ministry had agreed to let him supplement his meager pension by peddling these documents. “Personal privatization” is pretty much what has happened to Russia’s oil industry, its steel mills, its bakeries, its aluminum smelters and everything else that could be transferred. These have been handed--sometimes for free, sometimes for kopecks on the ruble--to people who knew how to sweeten the right government officials. To expect President Boris N. Yeltsin, or any other major Russian politician, to have kept his hands clean in the midst of all this is like believing that after all these years in the Playboy mansion, Hugh Hefner is still a virgin.

Now, it looks as if Swiss investigators have found a dimashisa pistolet, or smoking gun, in the records of a company that carried out a $1.5-billion contract for renovations in the Kremlin.

Among tens of millions of dollars in bribes that the company is accused of paying, investigators say that tens of thousands of dollars went to pay credit-card bills in the names of the lovely Yeltsin daughters. Additionally, the company is said to have deposited $1 million in a Hungarian bank account controlled by Yeltsin himself.

He could use it. As president of the Russian Federation, Yeltsin draws a salary of more than a million rubles a year, about $75,000 at current exchange rates. Compared with ordinary Russians, whose salaries (often not paid for months at a time) average about $700 a year, that is good money. Still, it’s obviously not enough to support the Yeltsin daughters in the style to which they have become accustomed. In fact, it’s amazing the Yeltsins are down for so little. If he’s only stolen a million dollars, that would make Yeltsin one of the most honest men in Russian government today, almost a eunuch at the orgy.

Meanwhile, the real scandal in Russia isn’t what was stolen: It is the failure of the Yeltsin government to carry out even the most minimal functions of a civilized state. This pathetic excuse for a government can’t collect taxes; can’t administer justice; can’t protect its people and businessmen from mafia thugs; can’t defend its provinces from fanatical rebels; can’t pay its teachers; can’t feed its outlying communities; can’t organize its armed forces; and can’t protect public health. The country is falling to pieces as guerrilla fighters in Chechnya and now Dagestan ruthlessly and pitilessly expose the Russian army’s incompetence, brutality and corruption. The life expectancy for Russian men has fallen from 64 years to 58 years since 1989. The population has fallen by 2.1 million since 1992. At current rates, Russians will be extinct by 2294.

“Democratic reform” and “building a market economy” is how fat-headed Western consultants and pundits describe this decade-long episode of incompetence and corruption. Western governments pretended to believe it; governments, private foundations, the International Monetary Fund and the World Bank pumped billions of dollars into Russia. Much of it now seems to be turning up again in the West, laundered through institutions like the Bank of New York or placed offshore by the Russian Central Bank, which then lied about it to the IMF.

In fact, the Yeltsin government is the biggest flop in history: It makes “Ishtar” look like “Titanic.” Now that the last shreds of dignity are dropping from the Yeltsin regime, the American blame game is beginning. We are shocked, shocked, say congressional Republicans, that the United States has been dealing with a corrupt foreign government. Investigations will be launched, speeches will be made. Already, New York Times columnist and Watergate veteran William Safire is talking about Kremlingate and wants to know what did the vice president of the United States know, and when did he know it.

Well, Safire has a point. While Yeltsin’s pathetic team dragged Russia deeper and deeper into a bottomless pit of corruption and misery, Clinton administration cheerleaders--Vice President Al Gore chief among them--were out there with pompoms and batons, turning handsprings and shaking their frilly skirts to rev up the crowd to cheer on Yeltsin’s “democrats” and send them more money.

It all looks silly now, and it will probably look worse as the media, which joined both the Bush and the Clinton administrations in turning as blind an eye as possible to the Russian catastrophe, starts to sniff out new details.

But before we call in the special prosecutors and grand juries, we need to ask a basic question about America’s Russia policy in the last 10 years: What else could we have done?

Yeltsin was and is the legitimate head of the closest thing Russia has to a government. On the big issues that matter to Washington--nuclear arms, the wars in Iraq and Kosovo, expansion of the North Atlantic Treaty Organization--Yeltsin’s Russia has gone along with U.S. policy, however grudgingly. Whatever freelancing scientists and generals may be up to, the Russian government hasn’t set up a Bombs R Us bazaar to sell nuclear materials and biological warfare technology to tin-pot dictators around the world. It hasn’t invaded the Baltic Republics. It hasn’t even used its veto against pet U.S. projects in the U.N. Security Council.

Even if Yeltsin had spent every dime that U.S. taxpayers sent Russia on crack parties with underage lingerie models, we got our money’s worth. Over the years, the United States, the IMF and the World Bank have shoveled a lot of money at a lot of ugly people: Zaire’s Mobutu Sese Seko, Indonesia’s Suharto, Haiti’s Francois “Papa Doc” Duvalier, Nicaragua’s Anastasio Somoza Debayle and, of course, the delightful Marcos family in the Philippines. We got more bang for the buck out of Yeltsin than we got out of the rest of them combined.

Where both the Clinton and Bush administrations blew it wasn’t in Russia; it was in the United States. Instead of telling the truth--that the Russian government is largely a collection of rotten skunks, but we have to be nice to them anyway and invite them to dinner even if they walk off with some of the silverware--both administrations tried to sell the cockamamie idea that U.S. aid and advice were turning Russia into a law-abiding, God-fearing, well-run liberal democracy. Worse, at times they seem to have believed it.

Now, when, surprise surprise, it turns out that Yeltsin is more Imelda Marcos than Corazon Aquino, the administration looks naive and incompetent and can’t make a convincing defense of its policy.

That’s too bad. Engaging Russia on matters of vital national interest (like loose nukes) while containing Russian crime and disorder--and preventing Russian mafia money from corrupting the Western financial system--won’t be easy. What we need, and fast, is a bipartisan, consensus approach for dealing with Weimar Russia, an approach that will have to be free of illusions about Russia’s political and economic system, and honestly and fully explained to the American people.*