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. Last Updated: 07/27/2016

West Paying Now for Its Past Errors

The chickens are coming home to roost for Russian reform -- and for the Western leaders who failed fully to back the country's economic transformation when it was most needed, two and three years ago.

After the sudden end to the Cold War and the collapse of the Soviet Union, many farsighted thinkers saw the need for a 1990s version of the U.S. Marshall Plan that rebuilt Western Europe after World War II. Governments duly lined up to promise tens of billions of dollars in aid to Moscow, and sent legions of advisers to help create a market economy in the Western mold.

The advisers' legacy is well known: liberalized prices, mass privatization, all the fundamentals of a market economy that Russia enjoys today. But most of money pledged to sustain those changes never arrived. Now it is President Boris Yeltsin who is making promises in the billions of dollars to his electorate, as compensation for the "social costs" of reform.

By waiting so long, and until now, to release big sums of money for Moscow (still just a fraction of what the Marshall Plan extended), the IMF -- which heeds the call of its masters in Western capitals -- has done what it always said it sought to avoid: It has made aid to Russia an overtly political issue.

To be sure, talks with the International Monetary Fund on a three-year $9 billion loan -- suddenly floated at $12 billion Monday by the Russian side -- have been going on for many months, and there are protective strings attached. Those strings could be pulled if the wrong president with the wrong ideas makes it into the Kremlin this summer.

Nor is the IMF the organization at fault here. The truth is that it has been saddled with a task for which it was not designed. Marshall plans are fundamentally political affairs, and responsibility for such a political decision should have been taken by the governments of the G-7 countries long ago.

But all that is history. Over the past month Yeltsin has pledged a $6 billion presidential fund to pay workers' wages, $4.5 billion to rebuild Chechnya, and countless trillions of rubles to compensate savers, defrauded investors, pensioners and other constituencies -- without saying where the money will come from. Will the West help foot the bill?

The answer, with IMF Managing Director Michel Camdessus arriving to wrap up the loan Wednesday, would appear to be "yes." German Chancellor Helmut Kohl made his position clear Tuesday with his comment that to halt aid to Russia now would be "a stupid, idiotic idea," because then "developments will certainly take a turn for the worse."

Would that such determination had been evident three years ago.