THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, September 27, 1994 TAG: 9409270011
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 52 lines
Russian President Boris Yeltsin arrives in Washington today for a summit meeting with President Clinton. At the same time, stories in the Western press are reporting that the capitalist experiment in Russia is failing and that free enterprise has caused hardship for its people.
This analysis misses the mark by a wide margin, however. The one part of Russian reform that has worked has been the drive to give property to small business owners, many of whom are thriving. The parts of the Russian economy that are experiencing hardship are the remnants of the Soviet system that bankrupted the country and that reactionaries have protected from reform.
Unfortunately, western institutions have a sad record in helping Russia reform itself. Harvard economics Professor Jeffrey Sachs, who resigned in January from a post advising the Russian government, blames stalled reforms on the International Monetary Fund, which he said did not provide enough aid to reformers because they did not act according to IMF's dictates.
Western aid, however, often hurts far more than it helps. A major part of the problem is that in Russia reformers have not given priority to creating the framework for free enterprise that Westerners take for granted. These include a stable currency, private-property protection, security of contract and an independent judiciary.
At the same time, free enterprise is succeeding, to a large extent, in such former communist countries as the Czech Republic, Hungary and Poland. Of course, these areas had memories of prewar free enterprise, along with a generally Western orientation and outlook. Russia has not had that advantage.
Russia has seen tremendous strides forward in civil liberties, including the right to association, assembly, free speech and worship. But high taxes and a general lack of economic freedom mean business is at the mercy of organized crime supported by corruption in high places. Inflation is out of control and that has helped fuel support for extreme nationalists.
So what has taken hold in Russia is not free enterprise or capitalism as it is generally known, but a kind of economic anarchy that is indeed brutalizing the Russian people and society. President Yeltsin desperately needs to get a handle on what is really wrong - the lack of a framework in which free enterprise can grow. Otherwise, more Western aid will only throw good money after bad. ILLUSTRATION: Drawing
BORIS YELTSIN
by CNB