The United States has been asleep at the switch of its aid policies toward Russia.  There have been many signs of trouble, but these have been ignored by the Clinton administration and largely overlooked by Congress.  Our challenge now is to foster friendship with the Russian people after having facilitated bad policies and anti-American sentiment and to act before we are faced with an international crisis.

     The United States, over the past seven years, has embarked upon a fairly consistent course of economic relations with Russia.  Three interrelated policies characterize this course: 1) the provision of billions of dollars in U.S. and other Western aid, subsidized loans and rescheduled debt; 2) the urging of radical economic "reforms," including the privatization of state-owned assets; and 3) the backing of a hand-picked political-economic group, or "clan," to perform these so-called "reforms."  The United States has consistently supported President Boris Yeltsin and a cadre of self-styled Russian "reformers" to conduct Western aid-funded reforms and negotiate economic relations with the West.  U.S. support for Anatoly Chubais, Yegor Gaidar, and the so-called "Chubais Clan" (dominated by a decade-old clique from St. Petersburg), bolstered the Clan's standing as Russia's chief brokers with the West and the international financial institutions.  The Chubais Clan � not the Russian economy as a whole � was the chief beneficiary of economic aid from the U.S. Agency for International Development (USAID).

     Throughout the 1990s, Anatoly Chubais was a useful deputy for Russian president Boris Yeltsin.  In November 1991 he headed Russia's new privatization agency, the State Property Committee (GKI).  He then also became first deputy prime minister in January 1994, and later was a useful lightning rod for complaints about economic policies after the communists won the Russian parliament (Duma) election in December 1995.  Chubais made a comeback in 1996 as head of Yeltsin's successful reelection campaign and was named chief of staff for the president.  In March 1997, Western support and political maneuvering catapulted him to first deputy prime minister and minister of finance.  Although fired by Boris Yeltsin in March 1998, Chubais was reappointed in June 1998 to be Yeltsin's special envoy in charge of Russia's relations with international lending institutions.

     Working closely with Harvard University's Institute for International Development (called HIID), the Chubais Clan controlled, directly and indirectly, millions of dollars in U.S. aid through a variety of institutions and organizations set up to perform privatization, develop capital markets, form a Russian securities and exchange commission, and related activities.  Between 1992 and 1997, the Harvard group received $40.4 million from USAID in noncompetitive grants for work in Russia and was slated to receive another $17.4 million⁽¹⁾ until USAID suspended Harvard's funding in May 1997, citing evidence that Harvard principals were engaged in "activities for personal gain."⁽²⁾  The first highly unusual aspect of these awards is that Harvard secured most of the money without competitive bidding.⁽³⁾  Competition had to be waived at the highest levels of the Clinton administration.  Top officials of five U.S. government agencies, many connected to Harvard, including the Department of Treasury and the National Security Council (NSC) � two of the leading agencies formulating U.S. aid policy toward Russia (and Ukraine) � signed waivers.  From Treasury, the Harvard-linked Lawrence Summers and David Lipton backed Harvard projects.  The waivers stated that awards were being given to Harvard for "foreign policy" considerations � that is, the national security of the United States.

     Another highly unusual � and highly damaging � aspect of the U.S. arrangement with Harvard is that the United States, under cover of economic aid, delegated foreign policy in a crucial area, involving complicated and controversial choices, to Harvard University � a private entity.  In addition to receiving millions of dollars in direct funding, Harvard and the Chubais Clan helped steer and coordinate USAID's $300 million economic reform portfolio, which encompassed privatization, legal reform, capital markets, and the development of a Russian securities and exchange commission.⁽⁴⁾  In other words, the United States put Harvard in the unique position of recommending U.S. economic aid policies while being a chief recipient of the aid as well as overseeing other aid contractors, some of whom were Harvard's competitors.

     Further, economic reform was not necessarily the driving agenda of the Harvard-Chubais Clan partnership.  Members of the Chubais Clan � the very group which Deputy Treasury Secretary Summers called a "dream team"⁽⁵⁾ � were consistently under investigation in Russia, and many reports of personal enrichment from public and foreign monies have been convincingly substantiated.⁽⁶⁾  The Harvard group appears to have been similarly engaged: USAID cancelled most of the last $14 million earmarked for Harvard, citing evidence that the project's two managers had allegedly used their positions as advisers to profit from investments in the Russian securities markets and other private enterprises.  These men remain under review by USAID's Inspector General and the U.S. Department of Justice.  In 1996 the U.S. General Accounting Office (GAO) concluded that USAID's management and oversight of Harvard was "lax."  Clearly, the United States failed to adequately monitor the Harvard group.

     Much more important, the U.S. strategy of reform through aid to one group has totally failed.  Millions of dollars have been wasted, and the transparent, accountable institutions so critical to the development of democracy and a stable economy for this world power have yet to be established.

     There are three main problems with U.S. economic aid to Russia, which resulted in frustrating true market reform and democratic processes in Russia.

     The first problem is the way in which privatization was shaped and promoted by U.S. aid-paid consultants.  Shortly after Boris Yeltsin became the elected president of the Russian Federation in June 1991, the Federation's Supreme Soviet passed a law mandating privatization (after several privatization schemes were floated).  The program that the Supreme Soviet passed was intended to prevent corruption.  But the program Chubais eventually implemented contained few safeguards and instead encouraged the accumulation of property in a few hands.⁽⁷⁾  This program opened the door to widespread corruption and was so controversial that Chubais ultimately had to rely largely on presidential decrees, not parliamentary approval, for implementation.

     The privatization drive that was supposed to reap the fruits of the free market instead helped to create a system of tycoon capitalism run for the benefit of a corrupt political oligarchy that has appropriated hundreds of millions of dollars of Western aid and plundered Russia's wealth.  Part of the Russian public came to associate the terms "market economy," "economic reform," and "the West" with dubious activities that benefited only a few people while others experienced a devastating decline in their standard of living � a far cry from their secure, albeit staid, lives under socialism.  In a 1997 nationwide public opinion polls, 70 percent of those surveyed said that Chubais's privatization policies had a "bad" effect.⁽⁸⁾  It was a grave mistake for the United States to embark on severe measures that would cause untold suffering without political support.

     The second main problem with U.S. economic aid is that the United States promoted rule by decree: the preferred method of economic reform was top-down presidential decree orchestrated by Chubais.  Instead of encouraging market reform, this rule by decree frustrated many market reforms as well as the building of democratic, inclusive institutions.  Some reforms, such as lifting price controls, could be achieved by decree.  But many other reforms advocated by USAID, the World Bank, and the International Monetary Fund (IMF), including privatization and economic restructuring, depended on changes in law, public administration, or mindsets, and required working with the full spectrum of legislative and market participants � not just one group.

     A case in point was USAID's showcase efforts to reform Russia's tax system and to set up clearing and settlement organizations (CSOs) � an essential ingredient in a sophisticated financial system.  Those efforts failed largely because they were put solely into the hands of one group, which declined to work with other market participants.  In Moscow, for example, despite millions of USAID dollars, many of the Russian brokers were excluded from the process and declined to use the Moscow CSO.⁽⁹⁾  Thus, since 1994, when consultants working under USAID contracts totalling $13.9 million, set out to design and implement CSOs in five Russian cities, very little evidence of progress has emerged.  After an investigation into Harvard activities in Russia, the GAO issued a report calling the CSO effort "disappointing."⁽¹⁰⁾

     The third main problem with U.S. economic aid is that it set up still other means of bypassing democratic processes, including a network of aid-funded "private" organizations controlled by the Chubais Clan and the Harvard group.  These organizations enabled reformers to bypass legitimate bodies of government, such as ministries and branch ministries, and to circumvent the Duma.

     The Russian Privatization Center (RPC) was the donors' flagship organization.  The Center epitomized the operations of the aid-sustained Harvard-St. Petersburg coterie.  The Center was closely tied to Harvard in myriad ways, only one of which was characterized by a USAID supplied explanation: that Harvard provided management support to the Center.⁽¹¹⁾  The Center's documents state that Harvard is both a "founder" and "Full Member of the [Russian Privatization] Center," which is the "highest governing body of the RPC."⁽¹²⁾  Andrei Shleifer, the director of Harvard's Russia project, served on the board of directors.

     With Harvard's help, the Russian Privatization Center received some $45 million from USAID,⁽¹³⁾ millions of dollars more in grants from the EU, the governments of Japan⁽¹⁴⁾ and Germany, the British Know How Fund, and "many other governmental and non-governmental organizations," according to the Center's annual report.⁽¹⁵⁾  The Center also received loans both from the World Bank ($59 million) and the EBRD ($43 million) to be repaid by the Russian people.⁽¹⁶⁾  The largesse that flowed through the Russian Privatization Center appears to have been much greater than the sum total of all these figures would indicate.  The Center's CEO, Chubais Clan principal Maxim Boycko, has written that he managed some $4 billion from the West while head of the Center, according to Veniamin Sokolov, head of the Chamber of Accounts of the Russian Federation, Russia's rough equivalent of the U.S. General Accounting Office.  The Chamber has attempted to investigate how some of this money was spent.  According to Sokolov, a report issued by the Chamber in May 1998 shows that the "money was not spent as designated.  Donors paid hundreds of thousands of dollars for nothing ... for something you can't determine."⁽¹⁷⁾

     A 1996 confidential report commissioned by the State Department's Coordinator of U.S. Assistance to the NIS called the Russian Privatization Center "substantially over funded and largely 'an instrument in search of a mission.'"⁽¹⁸⁾  The report also said that the Center suffers from "'imperial overstretch.'"⁽¹⁹⁾  And there were many reports by aid-paid consultants that the Center (and its network of Local Privatization Centers) were used for political purposes.⁽²⁰⁾  Still, U.S. aid officials looked the other way.

     Despite evidence of corruption and lack of popular support, many Western investors and U.S. officials embraced the reformers' dictatorial modus operandi and viewed Chubais as the only man capable of keeping the nation heading along on the troublesome road to economic reform.  As Walter Coles, a senior adviser in USAID's Office of Privatization and Economic Restructuring program, said, "If we needed a decree, Chubais didn't have to go through the bureaucracy," adding, "There was no way that reformers could go to the Duma for large amounts of money to move along reform."⁽²¹⁾

     While this approach sounds efficient in principle, it is less convincing in practice because it is an inherently political decision disguised as a technical matter.  As Andrei Shleifer, Harvard's Russia director, and Maxim Boycko, a Chubais Clan principal, themselves acknowledged in a 1995 book funded by Harvard and published in the West: "Aid can change the political equilibrium by explicitly helping free-market reformers to defeat their opponents....  Aid helps reform not because it directly helps the economy � it is simply too small for that � but because it helps the reformers in their political battles."  U.S. privatization aid, the "reformers" added, "has shown how to ... effectively ... alter the balance of power between reformers and their opponents."⁽²²⁾

     In a 1997 interview, U.S. aid coordinator to the former Soviet Union, Ambassador Richard L. Morningstar, stood by this approach: "If we hadn't been there to provide funding to Chubais, could we have won the battle to carry out privatization?  Probably not.  When you're talking about a few hundred million dollars, you're not going to change the country, but you can provide targeted assistance to help Chubais."⁽²³⁾  U.S. assistance to Chubais continued even after he was dismissed by Yeltsin as First Deputy Prime Minister in January 1996.  Chubais was placed on the Harvard payroll, a show of loyalty that USAID Assistant Administrator Thomas A. Dine said he supported.⁽²⁴⁾

     Much of this feels familiar to Russians raised in the Communist practice of political control over economic decisions � the quintessence of the discredited Communist system.  While professing simply to support reform, U.S. policies afforded one group a comparative advantage and allowed much aid to be used as the tool of this group.  Ironically, far from helping to separate the political and economic spheres, U.S. economic aid has instead reinforced the interdependency of these spheres.  Indeed, the activities of Harvard in Russia provide some cautionary lessons on abuse of trust by supposedly disinterested foreign advisers, on U.S. arrogance in assuming it knows best and on the entire policy of support for a single Russian group of so-called reformers.

     The July 1998 IMF bailout of Russia represents an intensification of the very policies that have produced such abuses.  The $11.2 billion aid package for 1998 (with another $7.8 billion funds over three years pledged in Russia "stays on track") was supposed to put an end to Russia's financial crisis.  Yet only a very few certain political-economic players � not the population at large, including those workers who have gone without wages for months � stand to reap any benefits.

     Among those who spoke out against the bailout was Veniamin Sokolov, head of the Chamber of Accounts of the Russian Federation, Russia's rough equivalent of the U.S. General Accounting Office.  Sokolov, who has investigated the destination of some previous monies from international lending institutions and aid organizations, argued (in a visit to Washington in May-June 1998⁽²⁵⁾, that "All loans made to Russia go to speculative financial markets and have no effect whatsoever on the national economy."⁽²⁶⁾  And it is the Russian people who are responsible for repaying those loans.  Chubais, the West's chief Russian "reformer," and chief negotiator of the bailout, recently admitted that he had "conned" Western countries out of the money, according to the Los Angeles Times.⁽²⁷⁾ 

     The very call for an IMF bailout is a commentary on the failure of previous economic aid to Russia: If aid had been effective, why were billions in IMF loans needed to prevent the country from falling into crisis?  Further, the swiftness of the bailout's failure surprised even its critics.  The IMF loan and accompanying hype were intended to revive confidence in Russia's plummeting markets and give the government time to get its financial markets under control.  However, just a few weeks after the IMF deal was approved, investor confidence hit a new low and the Russian government was forced to devalue the ruble.

     For its part, USAID, which provided Russia with $95.7 million in economic aid in 1997 and another $129.1 million estimated for 1998, is requesting from Congress $225.4 million in economic aid for Russia in 1999.

     Given the continuing socioeconomic deterioration of Russia, what should the United States do?  If the U.S. government wants to adhere to its own declared objectives and help promote in Russia sound economic development and equitable growth as well as viable and transparent democratic institutions, it has no option than to reverse its current policies and practices.

     The U.S. role in creating a system of tycoon capitalism and the current economic meltdown, coupled with military policies such as NATO expansion, have fueled anti-American sentiment in Russia.  The first thing we should do, as Joseph Stiglitz, a leading World Bank economist, correctly suggests, is to adopt "a greater degree of humility ... (and) acknowledgement of the fact that we do not have all of the answers."  Washington must also accept that the future shape of Russian society will and must be determined by the Russian people.  U.S. policy should at least try to adhere to some of the principles that it preaches, such as participatory democracy and the rule of law or even "no taxation without representation."  In line with this, the U.S. must stop its policy of support-at-all-costs for Yeltsin and the Chubais Clan, not only in USAID targets but also in U.S. influence in IMF and World Bank lending.

     Second, the U.S. government should recognize that a healthy banking and financial system cannot arise without a revival of production and distribution in the "real" economy.  Measures that emphasize increases in tax collection and reductions in government expenditures under the current extremely depressed conditions simply guarantee accelerated decline of the real economy and social-political chaos.  The United States should use its great influence on the IMF and World Bank to reduce their pressure on Russia to pursue such suicidal policies.

     Not only did the IMF bailout fail to restore confidence, but the international aid has been fundamentally ill-conceived.  As Veniamin Sokolov warned: "Giving more loans to the Yeltsin government is comparable to giving a drug addict a fresh supply of narcotics.  Any new loans will only go to the realm of financial speculation and to prop up support for Boris Yeltsin.  Russia does not need any further such lending."⁽²⁸⁾  In sum, further aid will go to the same corrupt niches and is likely to make the situation worse, not better.

     Third, the United States should launch a high-level drive to try to recover monies from aid organizations and international financial institutions that have ended up in private unregulated bank accounts outside of Russia.  This would show concern for the Russian people, who otherwise would be held responsible for paying back loans from which they did not benefit.  It also would demonstrate U.S. commitment to the rule of law.

     Fourth, the United States should embark on a broad-based policy to encourage governance and the rule of law.  It is essential that the United States discontinue support of non-inclusive organizations and the bypassing of democratic process through decree.  Some U.S. aid funds have gone for "democracy building," including strengthening and revamping the judiciary.  However, these efforts have been a low priority and have been undermined by the practice of U.S. encouragement of the Chubais Clan to enact swift "reforms" without approval of the Duma, Russia's popularly elected legislature.

     The United States needs to adopt a pro-democracy stance that encourages institution-building and as broad a range of democratic positions as possible.  We must cease to select specific groups or individuals as the recipients of uncritical support, which both corrupts our "favorites" and delegitimizes them in the eyes of their fellow citizens.

     Fifth, U.S. officials and advisers need to establish contact and ties with a wide cross-section of the Russian leadership � politicians, economists, and social and political activists � and not only Yeltsin and his allies.  How Russian elites perceive the efficacy of U.S. aid programs and politics should be a source of concern, especially because many Russians have questioned American intentions.

     Although a reversal of policy will require a long and resolute process of diplomacy, Clinton administration officials can take steps, by, for example, meeting with members of the Duma and a diversity of Russian elites.  Some aid-funded people-to-people exchanges and programs to develop the economy from the bottom up have been useful and have created goodwill among the Russian people.  Given the unfortunate record of U.S.-Russia relations, exchanges that involve a broad section of the Russian population, especially at local and regional levels, are now crucial.

Kryshtanovskaya, Olga.  "The Real Masters of Russia."  Argumenty i Fakty, no. 21, May 1997, Reprinted in Johnson's Russia List ([email protected] May 1997).

Nelson, Lynn D.  and Irina Y.  Kuzes.  Property to the People: The Struggle for Radical Economic Reform in Russia. Armonk, NY: M.E. Sharpe, 1994.

Nelson, Lynn D.  and Irina Y.  Kuzes.  Radical Reform in Yeltsin's Russia: Political Economic and Social Dimensions. Armonk, NY: M.E. Sharpe, 1995.

Shelley, Louise I.  "Privatization and Crime: The Post-Soviet Experience."  Journal of Contemporary Criminal Justice vol. 11, no. 4, 1995, pp. 244-56.

U.S. General Accounting Office.  Foreign Assistance: Harvard Institute for International Development's Work in Russia and Ukraine.  Washington, DC: General Accounting Office, November 1996.

Wedel, Janine R.  "The Harvard Boys Do Russia."  The Nation, June 1, 1998, pp. 11-16.

Wedel, Janine R.  "Clique-Run Organizations and U.S. Economic Aid: An Institutional Analysis."  Demokratizatsiya: The Journal of Post-Soviet Democratization, vol. 4, no. 4, Fall 1996, pp. 571-602.

Wedel, Janine R.  "Cliques and Clans and Aid to Russia."  Transitions, Changes in Post-Communist Societies, vol.4, no.2, July 1997, pp.66-71.

Williamson, Anne.  How America Built the New Russian Oligarchy.  Unpublished manuscript.

Williamson, Anne.  "Russia's Fiscal Whistleblower: Chief Auditor Venyamin Sokolov says Western Loans Are Hijacked by the Corrupt Yeltsin Government."  MoJo Wire, 16-22 June, 1998.

     Janine R. Wedel is an associate research professor of anthropology and a research fellow in the Institute of European, Russian, and Eurasian Studies at The George Washington University.  She also serves as an adjunct professor in the Graduate Public Policy Institute at Georgetown University.  A three-time Fulbright fellow and recipient of awards from the MacArthur Foundation, the National Science Foundation, the Woodrow Wilson International Center for Scholars, and the United States Institute of Peace, Dr. Wedel has studied Eastern Europe's evolving economic and social order for nearly 20 years.  A social anthropologist (Ph.D.  from the University of California, Berkeley), she has published two books on Central and Eastern Europe: The Private Poland (1986) and The Unplanned Society: Poland during and after Communism (Columbia University Press 1992).

     Dr. Wedel has been following aid efforts in Central and Eastern Europe since 1989 and in Russia and Ukraine since 1992.  Her analyses of aid issues have been published by the Joint Economic Committee of the U.S. Congress, the Atlantic Council, the OECD, The New York Times, The Wall Street Journal Europe, The Nation, and others.  She also writes for the Christian Science Monitor, the Boston Globe, and scholarly and policy journals.  Dr. Wedel has been an invited participant at National Research Council and National Academy of Sciences conferences and workshops.  She served as a commentator for four Polish ex-prime ministers and an associate producer for PBS documentaries on Eastern Europe.

     Dr. Wedel details her analyses of aid to Central and Eastern Europe and the former Soviet Union in Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998, forthcoming from St. Martin's Press in November 1998.

  1.  According to USAID's Deirdre Clifford (interview of June 11, 1996), since 1992 HIID received $40,373,994 in noncompetitive grants under the First Cooperative Agreement.  Another $17,423,090 was designated for HIID under the Second Cooperative Agreement (a three-year agreement that began on September 30, 1995), of which $4.5 million was obligated.  Source: USAID documents and interview of June 11, 1996.

  2.  Letter from U.S. AID to HIID director Jeffrey Sachs, May 20, 1997.  and U.S. AID press release, "USAID Suspends Two Harvard Agreements in Russia," Washington, D.C.: USAID Press Office, May 20, 1997.  For details of abuses by HIID principals, see Carla Anne Robbins and Steve Liesman, "How an Aid Program Vital to New Economy of Russia Collapsed," Wall Street Journal, August 13, 1997, and Janine R. Wedel, "The Harvard Boys do Russia: How the Best and Brightest Helped Destroy the Russian Economy," The Nation, June 1, 1998.

  3.  U.S. government procurement officers and GAO officials, including Louis H.  Aanardi, who spearheaded GAO's investigation of Harvard activities in Russia and Ukraine, have said that this is highly unusual.

  4.  U.S. General Accounting Office, Foreign Assistance: Harvard Institute for International Development's Work in Russia and Ukraine, Washington, D.C.: U.S. General Accounting Office, November 1996, pp. 4 and 18.

  5.  Lawrence Summer's speech printed in Russia Business Watch, vol. 5, no.2, Spring 1997, p. 19.

  6.  See, for example, Peter Reddaway, "Questions about Russia's 'Dream Team'," Post-Soviet Prospects, vol. 5, no. 5, Washington, D.C.: Center for Strategic and International Studies, September 1997; and Janine R. Wedel, "The Harvard Boys Do Russia: How the Best and Brightest Helped Destroy the Russian Economy," The Nation, June 1, 1998.

  7.  For details, see Lynn D.  Nelson and Irina Y.  Kuzes, Property to the People: The Struggle for Radical Reform in Russia, Armonk: NY: M.E.  Sharpe, Inc. 1994, and Radical Reform in Yeltsin's Russia: Political, Economic, and Social Dimensions, Armonk: NY: M.E. Sharpe, Inc. 1995.

  8.  Data from the Centre for International Sociological Research, Moscow (based on 1,000 respondents across Russia) reported in The Economist, March 15, 1997.

  9.  For details, see Janine R. Wedel, "Clique-Run Organizations and U.S. Economic Aid: An Institutional Analysis," Demokratizatsiya: The Journal of Post-Soviet Democratization, vol. 4, no. 4, Fall 1996, Pp. 592-593.

  10.  U.S. General Accounting Office.  Foreign Assistance: Harvard Institute for International Development's Work in Russia and Ukraine. Washington, DC, U.S. General Accounting Office, November 1996, p. 8.

  11.  Interview with USAID's Cecilia Ciepiela, 5 August 1996.

  12.  U.S. General Accounting Office, Foreign Assistance: Harvard Institute for International Development's Work in Russia and Ukraine, Washington, DC: U.S. General Accounting Office, November 1996, p. 60.

  13.  U.S. General Accounting Office, Foreign Assistance: Harvard Institute for International Development's Work in Russia and Ukraine, Washington, DC: U.S. General Accounting Office, November 1996, p. 57.

  14.  Japan is currently the largest contributor among the G-7, according to Ralf-Dieter Montag-Girmes, director of post-privatization support with the Russian Privatization Center in an interview of 12 June 1996.

  15.  Russian Privatization Center 1994 Annual Report, Pp. 5, 24.

  16.  The World Bank figure was provided by Ira Lieberman (interview of July 23, 1996), while the EBRD figure was supplied by Renae Ng (conversation of September 24, 1996).

  17.  Documents and information form Veniamin Sokolov, head of the Chamber of Accounts of the Russian Federation (interview of May 31, 1998 and talk at American University of June 2, 1998).  In 1994 both the Duma and the head of the GKI requested a detailed accounting from the RPC.  They got nothing.  (Sergei Zavorotnyi, "The Traces of 'Privatization' Go Overseas," Komsomolskaya Pravda, April 8, 1997.)

  18.  Source: Confidential Report to The Special Adviser to the President and Coordinator of U.S. Assistance to the NIS (S/NIS/C), U.S. Department of State, and The Assistant Administrator for Europe and the NIS, U.S. Agency for International Development, on USAID Programs Supporting Commercial Law and other Legal Reform in the Russian Federation.  Prepared by Mark C. Medish, September, 1996, Washington, D.C., p. 6.

  19.  Source: Confidential Report to The Special Adviser to the President and Coordinator of U.S. Assistance to the NIS (S/NIS/C), U.S. Department of State, and The Assistant Administrator for Europe and the NIS, U.S. Agency for International Development, on USAID Programs Supporting Commercial Law and other Legal Reform in the Russian Federation.  Prepared by Mark C. Medish, September, 1996, Washington, D.C., p. 17.

  20.  See Janine R. Wedel, "Clique-Run Organizations and U.S. Economic Aid: An Institutional Analysis."  Demokratizatsiya: The Journal of Post-Soviet Democratization, vol. 4, no.4, Fall 1996, pp.571-602.

  21.  Interview with Walter Coles by Janine R. Wedel, June 6, 1996.

  22.  Maxim Boycko, Andrei Shleifer, and Robert Vishny, Privatizing Russia, Cambridge, Massachusetts: The MIT Press, 1995, p. 142.

  23.  Interview with Ambassador Richard L. Morningstar, U.S. Aid Coordinator to the former Soviet Union, by Janine R. Wedel, February 11, 1997.

  24.  Interview with Thomas A. Dine by Janine R. Wedel, August 16, 1996.

  25.  Information from Veniamin Sokolov (interview of May 31, 1998 by Janine R. Wedel) and talk at American University, June 2, 1998.

  26.  Anne Williamson, "Russia's Fiscal Whistleblower: Chief Auditor Venyamin Sokolov says Western Loans are Hijacked by the Corrupt Yeltsin Government," interview by Anne Williamson, MoJo Wire, June 16-22, 1998.

  27.  Kommersant Daily, September 8, 1998, and Los Angeles Times, September 9, 1998.