A 24-hour convenience store is robbed. Crime reporters immediately converge on the First National Bank where they ask, “Is it true some of the money taken in the robbery at Joe’s are funds your bank lent him as part of his business line of credit?”
Does that scenario strike you as a little bizarre?
Well, it’s no different than how the media have approached recent news of graft and money laundering in Russia and various fragments of the former Yugoslavia. The focus has been on whether or not stolen funds came originally from the International Monetary Fund or the U.S. Agency for International Development. Reporters demand to know how the loss of “their” money will change the agency’s policies.
Sorry, but money is fungible. That is, once a bank or a national treasury accepts money from some source, it dissolves into the greater pool of funds held by that bank or treasury. Exactly where a particular dollop of money came from is immediately immaterial. The important question is whether or not the private bank or public treasury is using the funds honestly and effectively.
That is the real story of Western aid to the former USSR and Yugoslavia. Is the aid, whether in loans or grants, producing results that justify the expenditures made? Unfortunately, the answer isn’t clear and seems to vary with the political bent of the opinion maker.
It’s clear that a near-decade of bilateral and multilateral aid to the former Soviet Union has not brought about prosperity. Russia itself is in the depths of a deep depression, while other republics such as Ukraine and Belarus are in even worse shape. Ex-Soviet governments are massively wasteful, inefficient and corrupt. Most of their revenues, whether from taxes, aid or sale of state resources, are wasted or stolen.
But despite internal conflicts as in Chechnya and the farcical tragicomedy of Boris Yeltsin’s political maneuvers, Russia and other ex-Soviet states haven’t harmed the United States or other Western countries. The West spent four decades and trillions of dollars arming against the Soviet threat. The billions of dollars in aid given in the 1990s are peanuts by comparison. While such aid may produce little in the way of concrete benefits, it’s a small price to pay for an insurance policy. It’s better to pay a little, even if some of the funds are wasted, than to risk an economic crisis that would lead to political instability, anarchy and the rise to power of some megalomaniac who might pose a real threat to the West.
That, in a nutshell, is the rationale of politicians and policymakers who might be dubbed pragmatic internationalists. Since the current administration is a Democratic one, most Democrats fall into this camp. So do many moderate Republicans. Since aid continues, one can assume that this group holds the upper hand, at least for now.
But there are those who bluntly call for an abrupt end to any aid to the ex-Soviet Union. Some, like Senate Foreign Relations Chair Jesse Helms, might be termed “ideological isolationists.” They oppose any help to a former enemy, arguing that Russians and others will have to sort their own way out and, if they threaten the United States, a strong defense on our part is the best response.
Others, with more nuance, basically accept the insurance policy argument, but contend the situation in the former USSR has deteriorated to a point where Western aid is now irrelevant. Continue aid to countries such as Bulgaria and Romania that are struggling, however painfully, to build a new society. Don’t pour money down rat holes where its effects are undeterminable if not negative.
Western societies face hard questions in regard to aiding the former USSR.
The possible outcomes are not trivial. We’re dealing with countries that still have formidable stockpiles of nuclear weapons. Well-meaning and thoughtful people can come to opposite conclusions. It is an issue that can best be addressed by a well-informed public debate.
When the media focus on trivial side issues, such as whether or not particular funds from the IMF were stolen, they don’t contribute to the process.
© 1999 Edward Lotterman
Chanarambie Consulting, Inc.