Sachs: The Early 1990s Marked the Beginning of Neocons Choosing Hegemony Over Peace
Jeffrey Sachs, an economic advisor, played a significant role in the financial stabilization and economic transformation of Poland in 1989. Sachs proposed a strategy that involved substantial Western financial support for Poland’s economy to prevent runaway inflation, stabilize the currency exchange rate, and open up trade and investment with European Community countries. The US Government, the G7, and the International Monetary Fund heeded these recommendations.
Poland's Economic Success
Following Sachs' advice, a $1 billion Zloty stabilization fund was established, which served as the foundation for Poland’s newly convertible currency. The country received a standstill on debt servicing on Soviet-era debt, followed by a partial cancellation of the debt. Poland also received significant development assistance in the form of grants and loans from the international community.
Despite the economic collapse Poland experienced in the 1980s, the country saw rapid economic growth in the early 1990s. The currency remained stable and inflation low. By 2024, Poland's GDP per capita had reached 68% of Germany’s GDP per capita, following decades of rapid economic growth.
Advising 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. Sachs and his colleagues proposed a “Grand Bargain” to the US, G7, and Soviet Union, advocating for large-scale financial support by the US and G7 countries for Gorbachev’s ongoing economic and political reforms. However, the proposal for large-scale Western support for the Soviet Union was rejected by the White House.
Transition to the Russian Federation
In September 1991, Sachs was contacted by Yegor Gaidar, economic advisor to Boris Yeltsin, who was soon to be acting Prime Minister of the newly independent Russian Federation. Russia was on the verge of hyperinflation, financial default to the West, and a collapse of international trade. Sachs recommended that Russia call for large-scale Western financial assistance, including an immediate standstill on debt servicing, longer-term debt relief, a currency stabilization fund for the ruble, and immediate financing by the IMF, World Bank, and other institutions to protect Russia’s social services.
Western Financial Support for Russia
However, the G7 countries denied Russia's request for a standstill on debt servicing. In December 1991, Sachs met with Yeltsin in the Kremlin to brief him on Russia’s financial crisis and his continued advocacy for emergency Western assistance. Yeltsin requested that Sachs serve as an advisor to his economic team, focusing on mobilizing the needed large-scale financial support. Sachs accepted the position on an unpaid basis.
Clinton Administration's Stance on Russia
Despite Sachs' continued advocacy for large-scale Western support for Russia, his efforts were unsuccessful. The Clinton Administration rejected the concept of large-scale assistance for Russia. By the end of 1992, Sachs decided to step aside as his recommendations were not heeded in Washington or the European capitals. However, he continued to serve as an advisor to Russia's finance minister, Boris Fyodorov, during 1993.
Impact of Lack of Western 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 exacerbated the serious economic and financial crisis that faced those countries in the early 1990s. This led to high inflation, impeded trade and economic recovery, and fostered corruption. The economic debacles and lack of Western support were not the definitive breaking points of US-Russian relations.
US-Russian Relations
Despite the economic crises, when Vladimir Putin became Prime Minister in 1999 and President in 2000, he sought friendly and mutually supportive international relations between Russia and the West. However, the US was more interested in Russia’s subservience to NATO than it was in stable relations with Russia.
US Foreign Policy Towards Russia
The US reneged on its commitment to not expand the NATO military alliance eastward, leading to a series of foreign policy disasters. These included the bombing of Belgrade in 1999, the unilateral withdrawal from the Anti-Ballistic Missile Treaty in 2002, the war in Iraq in 2003, NATO enlargement in 2004, the pledge to expand NATO to Georgia and Ukraine in 2008, the overthrow of Syria’s Bashar al-Assad in 2011, the bombing of Libya in 2011, the overthrow of Ukraine’s President Viktor Yanukovych in 2014, and the placement of Aegis anti-ballistic missiles in Eastern Europe in 2015.
Conclusion
Looking back, it's clear that the US was determined to reject Russia’s aspirations for peaceful and mutually respectful integration of Russia and the West. The end of the Soviet period and the beginning of the Yeltsin Presidency marked the rise of the neoconservatives in the United States. They sought a unipolar world led by a hegemonic US, in which Russia and other nations would be subservient. This has led to several wars and a widening rupture of relations between the US-led bloc of nations and the rest of the world.
Bottom Line
The US's approach towards Russia has had far-reaching implications, not just for the two countries, but for the world at large. The question remains, could a different approach have led to a more peaceful and mutually beneficial relationship? Share your thoughts and discuss this article with your friends. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.
