Economic And Financial Aid To Russia example essay topic

Analysis of U.S. Foreign Policy with Russia Post Cold-War Soviet Union had left the country in a state of shambles. The economy was in ruins, the military was behind those of the western nations, and the government's ideologies were beginning to be questioned. When S.U. itself ceased to exist on December 25, 1991, the United States (Bush administration) initiated the redefining of relationship between the two countries. The U.S. had good intentions in mind, but things did not turn out the way they were expected. The result has been a tragicomedy of tepid cooperation, mild saber-rattling, and missed opportunities, (Cohen). Many critics, along with experts, had called for restructuring the current foreign policy with Russia.

If changes are not made soon, both countries would suffer serious implications in addition to the problems they are already experiencing now. The U.S. original intention was that they would aid Russia in integrating itself into the Western-based international system. As believed, this integration would reap two positive effects. The international system would offer not only financial, but political and security resources as incentives to Russia for reform and transition towards a market and democratic government. In addition, United States could profit from this integration by being a considerable influence in their societal and economic interests.

Russia's national and security interests could be shaped in such a way that would form common interests with western countries (Wallander). In twelve personal meetings since 1993, President Clinton and President Yeltsin laid the foundation for a bilateral relationship based on cooperation. The United States remains committed to maintaining a constructive relationship with Russia in which it would seek to expand areas of cooperation and frankly resolve differences without confrontation. However, these good intention failed to achieve any success of reviving the Russian economy or integrating it with the Western-based system (Wallander). One of the main and foremost concerns some critic raised was the security relations between the United States and Russia.

Recently, security relations have deteriorated since 1993; there had been problems with the Russian economy and military, which in turn, affected the foreign and security relations in a negative way; and friction has increased due to the U.S. intervention of former Soviet Union politics (Payne). Many of the U.S. actions have raised troubling concerns and left the Russians somewhat alienated. Currently, there are continual deteriorating relations between the two countries that threatens arm control agreements, NATO expansion into Eastern Europe, and the rivalry of U.S. -Russian in the Caspian Sea, Central Asia area. To improve relations with Russia, the U.S. must correct its problems or at least improve its policies toward Russia.

The United States and the NATO Allies have recently cooperated closely with Russia to strengthen European security and create an undivided Europe. NATO and Russia concluded a "Founding Act" that establishes the basis for a new relationship between NATO and Russia, along with a NATO-Russia Permanent Joint Council as a mechanism for consultation, cooperation and, as appropriate, joint action on issues of mutual concern. The Founding Act builds on the successful cooperation between Russia and NATO in Bosnia. The United States and Russia have also worked to enhance the Organization on Security and Cooperation in Europe (OSCE), which has assumed a leading role in resolving conflicts and strengthening democratic institutions in the region. The United States and Russia are also co-sponsors of the Middle East Peace Process and consult on this and other regional issues.

Cooperation seems to be expanding in efforts to combat global problems such as organized crime, narcotics trafficking and environmental degradation (US). After the Cold War, many had believed that the nuclear arm race would end. During the Bush administration, Bush tried to improve and increase U.S. security by promoting arm control agreements and nuclear materials in the former Soviet Union. There have been attempts in reducing both sides' nuclear arsenals and enhancing controls over weapons of mass destruction, including measures to avoid their proliferation. U.S. wants Russia to improve accountability standards for nuclear material and to dismantle hundreds of Russian nuclear weapons.

Such cooperation takes place under the umbrella of the Nunn-Lugar Cooperative Threat Reduction program and numerous Defense and Energy Department activities (Payne). The Cooperative Threat Reduction program tried to help Russia dismantle and collect nuclear weapons from the few Soviet republics that had nuclear weapons and return them back to the hands of the Russians. The program also helped new research and transporting and storing nuclear weapons in Russia. In early 1993, the Strategic Arms Reduction Treaty (START I) was also signed between the U.S. and Russia. Its purpose was to get rid of multiple warheads and cut back on both countries' arsenals. START II, would reduce overall deployments of strategic nuclear weapons on each side by more than two-thirds from current levels and would eliminate the most destabilizing strategic weapons-heavy intercontinental ballistic missiles (ICBMs) and all other deployed multiple-warhead ICBMs (US).

Despite these areas of agreement, the United States and Russia continue to differ on a number of issues. On several occasions at the highest levels the United States has encouraged Russia to curtail its nuclear cooperation with Iran. In addition, notwithstanding the conclusion of the NATO-Russia Founding Act, Russian officials oppose the further enlargement of NATO. Because of the U.S. expansion of NATO and the development of ballistic missile defense, the Russian Duma has not yet ratified START II. (Payne) When Clinton advocated the expansion of NATO in Europe, it created distrust in the Russian leadership because it made Russia believe that they are a threat and not a partner in the European area. Russia basically perceived these enlargements as a security threat.

Russia can not be blamed for their way of thinking since they were not invited to join the organization while its neighbors were invited in 1997. Under this treaty the U.S. seems to have an advantage because the U.S. only need to remove warheads from missiles while the Russians have to destroy their largest missiles. In the most recent years, President Clinton has tried to improve relations with Russia such as de-targeting missiles, but still both are dubious about the other's intentions in Eastern Europe (Payne). The American-Russian competition in the Caspian Sea had also soured their relationship.

It is believed that this area is oil rich and has natural gases under the seabed. The five bordering nations, including Russia, are trying to explore and find these oil and gas reserves. United State's foreign policy includes helping two of the five bordering nations-Kazakhstan and Azerbaijan to develop their industries. However, once their economy is stabilized, they would no longer remain under Russia's influence.

The investments from American oil companies have indicated that the U.S. are not acting on selfless intentions. This has led the Russians to resent, in some respect, foreign investments from America. "The Caspian Sea has for centuries been views by Russia as within its sphere of influence, and Russians resent the American presence in the region (Payne). The Russian believed that the Americans are trying to take over their position in the region and take claim to their economic resources. The U.S. current security actions can be changed to improve its relations with Russia. There will not really be a loss economically for the U.S., but instead a gain in relations with Russia.

The U.S. has created programs to prevent nuclear theft in Russia and to reduce the amounts of fissile matter owned by the two countries. Since nuclear theft and nuclear smuggling are serious threats to the U.S. national security, this should be a top priority for the new foreign policy. For these programs to be successful, they need both political and financial support. The U.S. has to strengthen accounting and control programs for the radioactive elements in the nuclear materials.

Radioactive elements like uranium should be bought, so that it is used and stored properly. The government should support more funding for the nuclear arms control; support new arm talks with Russia, and not expand NATO until U.S. -Russian security relations are improved. Currently, the U.S. will not make any further negotiations until the Russian Duma ratifies the START II treaty; however, they should change their perspective. The U.S. should immediately start formal negotiations on START because it is estimated that "Russia's operational warheads will decline to a thousand or less in the next decade due to lack of funds (Payne). Under the current U.S. policy, the number of strategic arsenals is yet to be decreased.

If the Russians ratify START II, this will help improve security and resume momentum in regarding the stockpile of nuclear weapons (Sestanovich). Since Russia sees the expansion as a threat mainly to them and their security, the U.S. should stop helping the Baltic states-Lithuania, Estonia, and Latvia, for NATO membership. The U.S. can avoid worsening their relations with Russia. Russia's economy is also in a dismal state and is getting worse. Although the statistics agencies reported a growth in industrial output in 1997, real profits in industry were down by five percent.

Almost fifty percent of the industrial enterprises reported losses, a dramatic jump from the twenty-seven percent two years ago. As part of its economic policy, Washington had supported free trade policies that eliminated barriers to U.S. imports. As a result, Russia opened greatly to the West, from 1990-1994, imports grew from 14-39% in retail, but with few markets and a decreasing of the domestic market, Russian industries have fell dramatically (Gaddy). Investment was down for at least seven years in a row (In 1997, the overall level of capital investment in the economy's production sectors was only seventeen percent of what it was in 1990.

In metalworking and engineering, it was an unbelievable five percent. The Russian standard of living has also fallen dramatically. The gap between the poor and the rich has widened. There no longer remained a system that would provide for the increasing number of the poor working class. While the western countries have increased their life expectancy rate, it is actually on the decline in Russia (Feffer).

It seems as though the U.S. focused on the wrong basis for international economic integration. The United States supports Russia's accession to global economic organizations such as the WTO, OECD, the Paris Club, and the Asian Development Bank. They are the largest foreign investors in Russia, with portfolio and direct investments of approximately $3 billion. They continue to encourage the Russians to make progress on legislation and administrative changes necessary to create a more favorable investment climate for foreign and domestic investors in Russia (US). The government also supports hundreds of joint programs, many of them conducted through the Gore-Chernomyrdin Commission (GCC). The eighth GCC meeting in February 1997 revealed the development of several new ideas: a new regional investment initiative to attract more foreign and domestic capital to the regions of Russia; joint work to protect the marine ecosystem near Sakhalin Island; an initiative to support cooperation among small businesses; and a program to raise public awareness in Russia of women's reproductive health issues.

The eight working committees of the Commission deal with business development, defense conversion, agricultural, space, energy, health, and environmental issues. In addition, the Commission provides a forum for high-level discussions of security, nonproliferation, economic, and other priority issues (US). However, it seems as though giving Russia a handout would only encourage Russia on its destructive course. The U.S. government has promised too much, and delivered little.

Whatever was delivered was worthless or insignificant because it went mostly into private sector development, which did not help many people, (Wallander). The United States has provided billions of dollars in aid for economic reforms, or privatization. The Board of Directors of the International Monetary Fund (IMF) considered granting Russia a $10.2 billion loan, and the U.S. - run Export-Import Bank may provide an additional $1 billion to boost Russia's flagging civilian aircraft industry. President Clinton strongly endorses the IMF loan, hoping it will bolster Yeltsin's faltering presidency. On the contrary, the beneficiaries of these reforms have been a small group of political and economic power brokers called the Chubias Clan.

"The Chubias Clan-not the Russian economy as a whole-has been the chief beneficiary of economic restructuring funding from the U.S. Agency for International Developments (Wedel). The U.S. intentions were to help the whole Russian economy, but things did not turn out the right way. The $11.2 billion IMF (International Monetary Fund) bailout in July 1998 had only exacerbated these abuses and failed to help the Russian financial crisis. The July 1998 IMP bailout which totaled $11.2 billion for 1998 was suppose to end the Russian financial crisis, but only few benefited leaving many workers who received no wages for months out of the deal. "All loans made to Russia go to speculative financial markets and have no effect whatsoever on the national economy", as stated by Veni amin Sokol or, head of the Chamber of Accounts of the Russian Federation (Wedel). The IMF package was supposed to help Russia climb up.

Although the U.S. is willing to help, the Russians must still act on their own (Sestanovich). Because the Chubias Clan worked with the Harvard University's Institute for International Development (HIID), they controlled a large sum of money in U.S. aid institutions that were suppose to help privatization and economic restructuring. These HIID principals were found to be corrupted, but nevertheless, western investors and U.S. officials believed that Chubias was the man who kept up the economic reform. As stated by Maxim Boyko, a Chubias Clan member, "aid helps reform not because it directly helps the economy-it is too small for that-but because it helps the reformers in their political battles". (Wedel) What the U.S. had to do is to put the political and economic power in different or more hands to help the Russian economic / financial crisis. In regards to the foreign economic policies with Russia, it is obvious that the U.S. should have emphasized Russian access to international trade.

The promise of trade and competition in the international system would create those domestic societal and economic interests that would have a stake in looking outside the old Soviet system, or a stake in something more than internal rent-seeking and corruption. Concentrating on only the issue of debt, primarily on IMF programs that were designed to help Russia cope with its debt problems and its short-term financial problems was proven to be ineffective. Rather, the U.S. should try to open Western markets, and in particular European markets, to Russian trade. Instead of offering a handout to the Russian government, the IMF and the World Bank ought to be providing policy advice to Russian leaders on decreasing tax rates to boost private enterprise and encouraging investment to make the Russian economy more attractive for domestic and foreign entrepreneurs. Only when investment, both foreign and domestic, is able to create prosperity for the Russian people will the tensions tearing the country apart be eased (Cohen). Clinton administration has also taken actions with out listening to Russia's input, and they have accepted Russian's inappropriate conduct.

There has been too much support from the Clinton administration even though the authoritarian Yeltsin government has done too many bad things. The U.S. has to stop its policy of support-at-all-costs for Yeltsin and Chubias Clan. Boris Yeltsin has tried to concentrate the power in the presidential position in a new constitution. In the 1996 presidential election, he has also tried to manipulate the media and used over $10 billion state funds to influence the electorate. The Clinton administration has forgiven too many mistakes made by Yeltsin when they should not have done that (Feffer). In truth, Washington had not involved Russia into important international organizations.

The government included a package of very specific economic reforms that were not supported by a broad base of social and political actors in Russia itself. The government's aid packages, negotiations, and advice about what kinds of economic reforms needed to be at the forefront of Russian efforts were focused on a narrow elite within the Russian government. This elite group did not enjoy broad societal support and used its access and support from the West and these narrow sets of policies to beat out political opponents whenever they could. This is one of the reasons U.S. policies are so implicated in the corruption that Russians have known about long before the Bank of New York scandal and in the inequities they see in the form of privatization and who has suffered from the implementation of IMF programs (Wallander). The government can solve these problems and formulate a policy based on integration. The incentives to the Russians are the promise of being integrated into the international trade system and systems for political cooperation among the major powers, rather than reverting to the kinds of exclusionary and dismissive policies that have been emphasized too much in the course of the 1990's (Cohen).

In a more detailed setup, there are certain things in which U.S. must include if they were to have a new policy. To regain trust from Russia, the U.S. should cease threatening to build an anti ballistic missile system, which would be a part of the ABM treaty in response to their willingness, in some respect, in disarming their own missiles. The U.S. should not be hypocritical in allowing the Energy Department design new nuclear weapons while trying to disengages those of the Russians at the same time. The Clinton administration should regard Russia as an influential Eurasian power. Since Russia still has considerable influence as one of the old world powers.

They would not feel like they have been alienated against (Cohen). By "internationalizing" Russia on the basis of consistent principles of human rights and non-aggression, the U.S. would avoid a division into spheres of influence and preserve the capacity to challenge Russia on human rights violations (in Chechnya, for example). U.S. should encourage governance and rule of law (Cohen). In the economic realm, the U.S. should stop pouring money into the black hole of Russian privatization. It should target the revitalization of Russian industry and allow Russia to nurture these industries, where necessary, with sensible trade policies. The Defense Demilitarization Enterprise Fund is a critical tool for helping convert Russia's military industries into productive enterprises.

Like OPIC, however, these funds should concentrate less on profits for U.S. businesses and consultants and more on rebuilding Russia's industrial capacity. Particular attention should be paid to defense conversion at the local and regional levels. But the U.S. must seriously undertake a program of conversion at home, or Russian demilitarization will appear unfairly unilateral. Additionally, the Clinton administration must not base its support for Russian reform on a single political actor-the Yeltsin camp.

The U.S. should adhere to principles, not parties, in its dealings with other countries. Washington has supported several excellent projects that strengthen Russia's civil society, such as funding Inter-news independent television and training an independent judiciary. By putting more money into these projects, the U.S. can better promote a pluralist politics that will long outlive Boris Yeltsin (Feffer). To reiterate what has already been over- emphasized, the Clinton administration must not lobby the IMF on behalf of Russia. More money is not what Russia needs. At best the money will be wasted; at worst, it could be abused by a future anti-Western leadership.

Instead, President Clinton should take the lead in ensuring that all aid to Russia is conditioned on the adoption of free-market and democratic reforms (Cohen). Instead of increasing tax collections and reducing government, the Russians have to try to rebuild production and distribution (Wedel). The U.S. economic advisors should not encourage the Chubias Clan to put things through economic reform without the approval of the Russian Duma, Russia's popularly elected legislature. When providing economic and financial aid to Russia, the United States president, U.S. officials, and economic advisors should address information with a wide range of Russian politicians and activists so that more views that represent the people can be heard. If the U.S. follows these recommendations mentioned, warm relations will soon to come with Russia (Wallander). The policy for Russia should address four main points.

The government must reduce the threat of mass destruction weapons toward the U.S., to support human rights and democracy, to support Russia's transition into a market-based economy, and to help Russia become integrated into the Euro-Atlantic and global communities. To help the Russian economic growth and development, the U.S. has to turn around its current policies in Russia. The new policies must also realize that the Russian future depends on the people and their principles like democracy and rule of law. The U.S. government should also realize that Russia has to try to pull itself out its financial crisis; however, the U.S. should try to help with these problems (Wedel). The U.S. should use its influence in the IMF and World Bank to reduce pressures on Russia.

The United States can not guarantee that democracy will work well in Russia, but the United should be doing enough to help them in this transition. Better relations with Russia will only benefit the U.S. itself (Wallander). In spite of many difficulties, there remains hope that the initial premises of integration of Russia into the Western-based economic, political, and security system and institutions remains possible and remains the aspiration of at least this Russian leadership. But in order to realize that ambition and its premises, which are still open on the Russian side, the U.S. have to caution against any action that may be perceived within the Russian security elite as a direct threat to Russia's most important core national security interest.

Bibliography

Cohen, Ariel. Why We Should Be Worried About Russia web Feffer, John. "Restructuring East-Central European Economies". web Feffer, John. "U.S. -Russian Relations: Avoiding a Cold Peace" web Gaddy, John. U.S. -Russian Relations web "How Dangerous to Bear, How Important the Future A Paper on U.S. Foreign Policy to Russia". web Payne, Laura. "U.S. -Russia Security Relations". web Sestanovich, Stephen. "U.S. Policy Toward Russia". web Sestanovich, Stephen. "U.S. Policy toward Russia". web US Relations with Russia web Wedel, Janine R. "Aid to Russia". web Wallander, Celeste The Dynamics of US-Russian Relations: A Critical Perspective web pon ass / POLICY%20 MEMOS / Wallander 111. html.