U.S.-Russian Relations: Current Tensions Reflect Past Foreign Policy Failures

August 29, 2008

Mark Weisbrot
PostGlobal (Washington Post), August 29, 2008

Tensions between the United States and Russia have a long history, but one only need go back to the early nineties to see how our own government threw away its chance to have a better relationship with post-Communist Russia after the collapse of the Soviet Union.

In 1992, inflation in Russia was spiraling into the triple digits and the economy was collapsing. Economist Jeffrey Sachs, who was advising the government, offered a plan to get inflation under control which centered around stabilizing the exchange rate – a key element of a potentially successful anti-inflationary policy. To do this, though, it is necessary to have a good supply of foreign exchange reserves – i.e. dollars — and Sachs thought he might get a commitment from the United States to provide these reserves. He was wrong. He didn’t get the stabilization fund, nor the immediate suspension of interest payments, debt cancellation, or other aid he was seeking from the G-7.

Looking back on those events, Sachs later noted that “Richard Cheney, then the secretary of defense, and his deputy, Paul Wolfowitz, were drafting the controversial Defense Planning Guidance, which aimed to ensure long-term U.S. military dominance over all rivals, including Russia. . . “

“I had supposed in 1991 and 1992 that the United States would be rooting for Russia’s success as it had been rooting for Poland’s. With hindsight, I doubt that this was ever the case.”

It seems that Washington was more interested in destroying the post-Soviet Russian economy than saving it. Whatever their intention, destroy it they did. It was one of the worst economic collapses in the world history without a war or natural disaster. The economy shrank rapidly, tens of millions fell into poverty, and life expectancy for men dropped from 65.5 years to 57.

At the end of 1998 the economy began to recover, getting a boost from the collapse of its overvalued currency and then the rise in oil prices – Russia is the world’s second-largest oil exporter. This economic expansion was the basis of Vladimir Putin’s political success as President from 2000 through this year, and a resurgence of Russian nationalism. Since 1999, Russia’s economy has doubled in size. Despite everything that is still wrong with the Russian economy, the contrast with Washington’s “shock therapy” of the 1990s was sharp.

Unfortunately Washington’s political strategy for dealing with Russia has been no more intelligent or benign than its economic strategy. The expansion of NATO was a key element. The organization was created in 1949 for the stated purpose of defending against an attack on Europe from the Soviet Union, but it was not clear that it had a legitimate reason for continued existence when the Soviet Union disintegrated in 1991.

Washington soon found reason to expand it to Russia’s doorstep, incorporating Poland, the Czech Republic, and Hungary; the Baltic states of Latvia, Lithuania, and Estonia; and Bulgaria, Romania, Slovakia, and Slovenia. Military contractors in the U.S. played a major role in greasing the wheels for the expansion, with lobbying efforts worth tens of millions of dollars. The new NATO members were required to upgrade their weapons systems, providing what Senator Tom Harkin of Iowa – who opposed the expansion — called “a Marshall Plan for defense contractors who are chomping at the bit to sell weapons and make profits.” He wasn’t exaggerating. In 2003, after lobbying for six years, Lockheed Martin got Congress to approve a $3.8 billion loan for Poland to buy 48 of its F-16 fighter jets. It was one of the largest military loans in recent memory.

The Administration’s proposed placement of U.S. missile defense bases in Poland and the Czech Republic was seen by Russia as a further provocation. One can only imagine what the U.S. response would be if Russia made an arrangement to put such bases in Canada and Mexico. Recently the Bush Administration had been working to invite Georgia into NATO as well, although this was reportedly blocked by France and Germany.

The current friction over Georgia is a culmination of this failed strategy. It appears that the Administration’s building up of Georgia’s military and other commitments may have encouraged the Georgian government to try and settle its dispute over South Ossetia militarily, thus provoking the Russian military response. But this was an extension of a failed long-term strategy.

The Bush Administration now pretends it can bully the Russians by threatening to kick them out of the G-8 and deny them membership in the WTO. This not only won’t work, it is a dangerous delusion. Russia is, among other things, a nuclear power. Engagement and co-operation with Russia are a necessity for world security, progress on climate change, and other issues of great urgency.

It is one of the great intellectual ironies of our time that those who argue for “free trade” rely on empirically weak and often incoherent economic arguments and fail to make their strongest case: economic integration, when there is mutual benefit, can help to prevent wars and expensive arms races. The U.S.-China relationship is a good example. There is a faction of conservatives here, with allies in the military-industrial complex, that would like nothing more than a hostile relationship with China and a costly (but profitable for some) arms race. But for now, at least, they are sidelined because China is a major recipient of U.S. foreign direct investment, a huge trading partner, and in recent years has accumulated hundreds of billions of dollars of U.S. treasury obligations.

The United States has relatively very little in the way of commercial relations with Russia, and therefore there are not powerful business interests here to counteract those whose primary goal is the projection of imperial power, or making money from arms sales. The Republican presidential candidate, Senator John McCain, has been consistently bellicose towards Russia and had previously – long before the current military conflict — called for expelling Russia from the G-8.

Eventually, our foreign policy establishment will have to adjust to the realities of the 21st century, in which Washington cannot simply tell the rest of the world what to do. They will learn to accept a multi-polar world where diplomacy, international law, and negotiations play a much larger role and military force and threats are much less significant. The question, as always, is how much Americans and the world will lose in blood and treasure before that happens.

In the meantime, the media coverage of this latest conflict shows how far we have to go before common sense can prevail. Appearing on Meet the Press on the Sunday following the eruption of armed conflict, David Broder, a Washington Post columnist who is the embodiment of inside-the-beltway conventional wisdom, said that this was “particularly a moment where John McCain can claim to have been prescient, because . . . he draws a very sharp line when it comes to Russia. .”

“Obama’s basic message on foreign policy is it’s better to talk to our enemies than to get ready to fight them. And here’s a case where, clearly, talking did not dissuade Russia from this act of violence.”

It was Broder’s four-hundredth appearance on Meet the Press.

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. He received his Ph.D. in economics from the University of Michigan. He is co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press, 2000), and has written numerous research papers on economic policy. He is also president of Just Foreign Policy (www.justforeignpolicy.org).

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