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The "Who lost Russia?" debate is heating up as the presidential campaign gets going.

Charges of massive money-laundering by Russian criminals via a major New York bank have called into question the administration's whole record on aiding Russia. Congressional hearings are scheduled. Republicans charge that Vice President Gore, who helped coordinate relations with Moscow, is soft on Russian corruption.

But once this debate gets caught up in election politics, we aren't likely to get much insight. And even if the intent in Congress were serious, it's much harder to frame the arguments than the critics seem to believe.

It's clear that our Russia policy bears rethinking. After a decade of movement toward a market economy with U.S. help, Russia is stagnating. Economic output has plummeted, while poverty and corruption have soared.

Yet the very phrase "Who lost Russia?" -- which is shaping up to become a Republican campaign mantra -- betrays a mindset that is part of the problem. We didn't defeat Russia, as we did Japan and Germany, and couldn't dictate Russia's future. We were tinkerers on the sidelines -- with important input and money -- who were never in position to remake a backward country reeling from centuries of despotic rule.

The administration can be faulted for failing to recognize its own hubris regarding Russia. U.S. officials thought that Russia's economy could be reshaped quickly in our image. They channeled western aid to Russian "reformers" who pledged to build a market economy from communism's ruins.

Joseph Stiglitz, chief economist for the World Bank, argues there was "an excessive reliance on textbook models of (neoclassical) economics" without adequate regard for the society around them. U.S. advisers cheered when Russian state firms became "privatized" and issued "shares," even though most of these shares were snapped up by former communist managers or criminals. Western advisers showed insufficient understanding of Russia's history, culture and political forces.

There was also excessive reliance, say critics, on a particular small group of Russian "reformers" close to President Boris Yeltsin. This clique's leader, Anatoly Chubais, devised the notorious plan that traded shares in Russia's most valuable mineral and energy enterprises to a group of shady oligarchs for loans to Yeltsin's 1996 presidential campaign. Yeltsin was in danger of being beaten by the Communist Party's Gennady Zyuganov.

"The fallacy lay in thinking that lasting institutions can be built by supporting particular people, instead of helping to facilitate processes and the rule of law," writes anthropologist Janine Wedel, in her grimly mesmerizing study of Western aid gone wrong, "Collision and Collusion." The loans-for-shares deal made capitalism synonymous with theft in the mind of many Russians and solidified corruption in the bosom of the Kremlin.

The Clinton team kept endorsing international loans to the Kremlin even as evidence of high-level official Russian corruption mounted.

But suppose the administration pleaded guilty to all the above. Can Republican (or other) critics say what they would have done otherwise? The Bush White House, which presided over the critical years of communism's demise, never came up with a better plan to help Russian economic reforms.

By the time Clinton came to office, the Soviet Union had collapsed, and the communist party was in tatters. This threw the centralized economy into a tailspin. Russia got pseudo-democracy but lost any chance of economic reforms carried out by a strong central government, as in China.

Would Republicans have known how to check Russian corruption or establish a legal system? Chubais gambled that loans-for-shares would create a class of robber barons who would galvanize Russia's economy the way John D. Rockefeller and Andrew Carnegie did ours. He was wrong: The Russian oligarchs just took and took and funnelled money out of the country.

But if the old communist managers had kept control of major industries, they would have done the same thing. Would Republicans have preferred a communist victory in 1996?

The point is not to exonerate White House myopia on Russia, but to leaven the hubris with which America approached the past decade. Before asking "Who lost Russia?", let alone China, we all need to re-examine whether America has the capacity to reshape the world.

Philadelphia Inquirer

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