Economist Jeffrey Sachs Reveals How Neocons Subverted Russia's Financial Stabilization In Early 1990s
Jeffrey Sachs, an economist, has shed light on how neoconservatives undermined Russia's financial stabilization in the early 1990s. He served as an advisor to the first post-communist government of Poland in 1989 and helped devise a strategy of financial stabilization and economic transformation. His recommendations, which included large-scale Western financial support for Poland's economy, were heeded by the US Government, the G7, and the International Monetary Fund.
Financial Stabilization and Economic Transformation in Poland
Based on Sachs' advice, a $1 billion Zloty stabilization fund was established that served as the backing of Poland’s newly convertible currency. Poland was granted a standstill on debt servicing on the Soviet-era debt, and then a partial cancellation of that debt. Poland was also granted significant development assistance in the form of grants and loans by the official international community.
Despite Poland’s economy having experienced a decade of collapse in the 1980s, Poland began a period of rapid economic growth in the early 1990s. The currency remained stable and inflation low. By 2020, Poland's GDP per capita had reached a significant percentage of Germany’s GDP per capita, following decades of rapid economic growth.
Offering Similar Advice to the Soviet Union
In 1990, Sachs was contacted by Grigory Yavlinsky, economic advisor to President Mikhail Gorbachev, to offer similar advice to the Soviet Union. He was asked to help mobilize financial support for the economic stabilization and transformation of the Soviet Union. However, the proposal for large-scale Western support for the Soviet Union was rejected by the Cold Warriors in the White House.
In September 1991, Sachs was contacted by Yegor Gaidar, economic advisor to Boris Yeltsin, who requested that Sachs come to Moscow to discuss the economic crisis and ways to stabilize the Russian economy. Sachs recommended that Russia reiterate the call for large-scale Western financial assistance. However, this request was flatly denied by the G7 Deputies.
Failure of the West to Provide Large-Scale Financial Support
The failure of the West to provide large-scale and timely financial support to Russia and the other newly independent nations of the former Soviet Union definitely exacerbated the serious economic and financial crisis that faced those countries in the early 1990s. Inflation remained very high for several years. Trade and hence economic recovery were seriously impeded. Corruption flourished under the policies of parceling out valuable state assets to private hands.
During the tumultuous decade of the 1990s, Russia’s social services fell into decline. When this decline was coupled with the greatly increased stresses on society, the result was a sharp rise in Russia’s alcohol-related deaths.
Grave Economic Crisis and Lack of Western Support
Even with all of these economic debacles, and with Russia’s default in 1998, the grave economic crisis and lack of Western support were not the definitive breaking points of US-Russian relations. In 1999, when Vladimir Putin became Prime Minister and in 2000 when he became President, Putin sought friendly and mutually supportive international relations between Russia and the West.
However, it was in military affairs rather than in economics that the Russian – Western relations ended up falling apart in the 2000s. The US was far more interested in Russia’s subservience to NATO than it was in stable relations with Russia.
Neoconservatives Rise to Power in the United States
The end of the Soviet period and the beginning of the Yeltsin Presidency occasioned the rise of the neoconservatives to power in the United States. The neocons did not and do not want a mutually respectful relationship with Russia. They sought and until today seek a unipolar world led by a hegemonic US, in which Russia and other nations will be subservient.
Bottom Line
Looking back on the events around 1991-93, and to the events that followed, it is clear that the US was determined to say no to Russia’s aspirations for peaceful and mutually respectful integration of Russia and the West. As an advisor to Russia during two years, late-1991 to late-93, Sachs experienced first-hand the early days of neoconservatism applied to Russia. What are your thoughts on this matter? Share this article with your friends and let them know about this. You can also sign up for the Daily Briefing which is everyday at 6pm.
Economist Jeffrey Sachs Reveals How Neocons Subverted Russia's Financial Stabilization In Early 1990s
Jeffrey Sachs, an economist, has shed light on how neoconservatives undermined Russia's financial stabilization in the early 1990s. He served as an advisor to the first post-communist government of Poland in 1989 and helped devise a strategy of financial stabilization and economic transformation. His recommendations, which included large-scale Western financial support for Poland's economy, were heeded by the US Government, the G7, and the International Monetary Fund.
