Collision and Collusion by Janine R. Wedel

Author:Janine R. Wedel
Language: eng
Format: epub
ISBN: 9781466892255
Publisher: St. Martin’s Press

A REPEAT PERFORMANCE IN UKRAINE?

As Ukraine began to enjoy more Western press and political attention in 1994 and 1995, following President Leonid Kuchma’s economic reforms, that nation became the target of much assistance, partially as a reward for its perceived advances. Aid to Ukraine also was seen as an alternative to aid to Russia, which was threatened to be cut back following that country’s assault on Chechnya and its suspected sales of nuclear technology to Iran. By 1996, Ukraine, which faced (and at this writing still faces) severe financial crisis, was the third-largest recipient of U.S. assistance (after Israel and Egypt).

U.S. policymakers were inclined to emulate the Russian aid model in Ukraine; that is, to look for “reformers.” As USAID’s assistant administrator Dine has expressed it:

The reformers are the performers. USAID supports the activities of key economic reform leaders.… For example, USAID staff work closely with Russia’s first deputy prime minister, Anatolii Chubais.… Chubais and his proteges are the Adam Smiths of Russian reform economics. USAID is also working with Ukrainian economy minister Roman Shpek, whom President Kuchma tapped to help lead an independent Ukraine out of three years of decline.213

U.S. support for the Harvard Institute in Ukraine was steadfast. Thus, while Jonathan Hay and Andrei Shleifer were lobbying for aid dollars in Russia, their globe-trotting colleague Jeffrey Sachs, head of the Harvard Institute since the summer of 1995, turned his attention to Ukraine. Sachs’s prescriptions had rendered him an anathema in Russia, but Ukraine was the new economic reform frontier.

Sachs and his associates built on methods the Harvard Institute had perfected to secure USAID funding for the Institute’s operations in Russia: the backing of their Harvard colleagues now in official Washington and the claim that the Institute’s work in the former Soviet Union was essential to U.S. national security. The Harvard coterie was helped by billionaire financier George Soros and his grantee Anders Åslund, the Swede.

Sachs co-authored Harvard’s proposal to provide macro- and micro-economic advice to Ukraine with Åslund. As in Russia, the Harvard Institute (this time composed of a different group of players) lobbied for, and was awarded, a contract to offer macroeconomic advice and to work with high officials, notably Minister of Economics Roman Shpek. The Harvard Institute’s proposal was unusual in a number of respects, beginning with its point of origin, which was not USAID. In answer to the question “Where did the HIID-Ukraine project originate?” Laurier Mailloux, director of USAID’s Office of Privatization and Economic Restructuring, reported that it “did not originate here.” And who made the decision to fund the HIID-Ukraine project? “That was a political decision that we [my office] weren’t involved in.… there were a number of other actors.”214

Indeed, the unsolicited Sachs-Åslund proposal did not prove to be an easy sell. The prospect of the Harvard Institute working in Ukraine met with resistance from USAID officials both in Washington and Kiev, as well as from the IMF and Ukrainian officials, including some in the National Bank of Ukraine, Ukraine’s central bank. All opposed Harvard’s project as redundant.

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