Tilt: Heritage Panel, Casey Institute’s Robinson Warned Last Month of Unsustainability of I.M.F.’s Russia Rescue Effort

(Washington, D.C.): As predicted, things are not working out in Russia. Western investors
and
lenders are voting with their feet — withdrawing more funds from Moscow’s stock exchanges
and, in turn, driving into the stratosphere the interest rates of Russia’s short-term government
bonds. While Kremlin leaders are once again proclaiming their steadfast resolve to implement
promises of tax reform and fiscal discipline demanded as the price of last month’s $22.6 billion
International Monetary Fund bailout package, Russian rhetoric, pledges and assurances are no
longer sufficient to stanch the hemorrhage. The question is: Will such empty
commitments —
and the lurking fear of “an Indonesia with nuclear weapons” — prompt the U.S. and other
Western governments to pour more taxpayer dollars down the Russian
blackhole?

A Timely Symposium, An Unheeded Warning

These developments were anticipated by an informative symposium sponsored by the
Heritage
Foundation on 23 July. This event addressed “The Meaning of the Russian IMF Bailout” and
featured remarks by Stanley Fischer, First Managing Deputy Director of the
IMF and by Aleksei
Mozhin, IMF Executive Director for the IMF. The latter tried to put the best possible
face on his
agency’s then-just-approved Russian emergency lending program.

A more sober, and realistic, assessment emerged from the panel discussion that followed,
involving: Marshall Goldman, Professor of Russian Economics at Wellesley
College and
Associate Director, the Davis Russian Research Center; John Hardt, Senior
Specialist in Public
Policy, Congressional Research Service; Ariel Cohen, Senior Policy Analyst,
Russian and Eurasia
Studies, The Heritage Foundation; and William J. Casey Chair, Roger W. Robinson,
Jr., who
formally served as Senior Director of International Economic Affairs at the Reagan National
Security Council.

Mr. Robinson’s remarks on this occasion are especially timely in light of the
decisions that
the Clinton Administration, the Congress and other public and private sector players must
make in response to the latest developments in Russia. He argued that the United
States and
other Western nations can no longer sustain the fiction of a “firewall” between Moscow’s
economic situation and the Kremlin’s continued pursuit of costly — and threatening —
strategic
modernization programs and a variety of hostile foreign policy initiatives.

In the attached excerpts which should be carefully
considered by all those involved in
determining whether and how best to assist Russia, the Casey Chair made one especially
important recommendation: “U.S. and other Western financial policy-makers — as well
as
private investors and lenders — should include existing and emerging national security
issues in their future due diligence and creditworthiness evaluations.” In the absence of
such
a fundamental change in approach, giving additional taxpayer funds (either directly or via
multilateral organizations) to Moscow is no more likely to prove consistent with U.S. interests
than it is to stave off the full-scale financial disaster now looming in Russia.