The New York Times

Tuesday, September 21, 1999

Don't Give Up on Russia

By ROBERT E. RUBIN

Tuesday morning, the House Banking Committee is scheduled to open hearings on the Clinton Administration's Russia policy. This debate can be useful, indeed helpful, provided it takes into account three important factors.

First, we must realize that the United States has a critical interest in Russia's stability and economic success and in its transition over time to a market democracy. Second, we must recognize the obstacles Russia faces in switching to a market economy. And third, we must realistically assess the choices the West faces, given the conditions in Russia and our own interests.

American self-interest in a democratic, market-oriented Russia has been at the core of the Administration's approach to supporting economic reform in Russia over the last six years. Throughout this period, we were fully aware that Russia's transition would take a long time to complete, with many ups and downs along the way. We were also aware that all of our decisions involved probabilistic judgments -- weighing many possible outcomes and the consequences of each, based on the information available at the time. There were no guarantees.

While the Soviet Union's spectacular collapse in 1991 may have led some to expect too much, too soon, the Clinton Administration and the international community realized that Russia's path from bankrupt Communism to a vibrant market democracy would have to overcome enormous obstacles. Unlike many countries in Central Europe, Russia had no memory of a functioning market economy. Contract law and property rights would have to be created from scratch. Institutions to develop and enforce market regulations would have to be established. Judges to interpret the laws and regulations would have to be trained. And the rule of law would have to overcome the twin dangers of criminality and corruption, which were recognized from the start as critical impediments to a successful transition.

The rule of law is not established overnight. Nor is a market democracy. These are long-term objectives. In the short term, however, the United States had an enormous stake in providing the support necessary to create a stable environment in Russia, in promoting reform and in helping to ease the impact of this extremely difficult transition for the Russian people. Over time, reform itself is an important antidote to crime and corruption.

Given the challenges Russia faced, it would have been unrealistic to assume that Russia could shake 70 years of Communist baggage and become a full-fledged market democracy in less than a decade. Indeed, a successful transition is likely to take a long time to accomplish, and the United States, the other industrialized nations and the international financial institutions face no easy choices.

Obviously, great challenges lie ahead, but there have been important accomplishments. After a painful period of adjustment, basic elements of a market economy are in place. The United States and Russia have cooperated on foreign policy matters, including in the Balkans. And there have been significant achievements in other areas like arms control.

Clearly, Russia falls far short of the sort of market democracy we would like to see. But it might be useful to point out some of the other things Russia might have become, but did not. It's not a country whose policies are marked by virulent anti-Western nationalism. It's not a country that sank back into the sort of authoritarian state planning mode that characterized Communist regimes before 1991. And it's not a country that fell into total chaos or anarchy.

All of the things we've tried to accomplish could still come to pass. So could all the things we've tried to avoid. It is vitally in our interests that we do everything in our power to increase the probability of a constructive result.

In this context, engagement is a much preferred course of action to abandoning or isolating Russia. Engagement does not mean suspending critical judgment; quite the contrary. We need to be realistic about what can actually be accomplished, but we must also be prepared to deny Russia support, as we have in the past, if it fails to meet our conditions. Conditionality has to be an important part of any program.

In that regard, serious allegations have recently been raised about criminality, corruption and the possible misuse of International Monetary Fund money. Clearly, the appropriate authorities need to determine what the facts are and then respond appropriately. This is critical not only for Russia's economic future, but for our own efforts to combat international criminal activity.

This would be a complicated matter in any situation. But given our stake in Russia's success, we must approach it in a level-headed way. Only then will appropriate judgments be made about what course of action best serves the interests of the American people.

Robert E. Rubin was the 70th Secretary of the Treasury. Michael Froman, a fellow at the Council on Foreign Relations and a former Deputy Assistant Treasury Secretary, contributed to this article.