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. Last Updated: 07/27/2016

U.S. Policy: Calculated Risk or Crapshoot?

By David Ignatius

The strategist Albert Wohlstetter liked to observe that when policymakers talk about a "calculated risk," it usually means they haven't done any calculation. What they're describing is a simple gamble.

Wohlstetter's remark is a useful rejoinder to recent characterizations of U.S. President Bill Clinton's policy toward Russia as a calculated risk - a reasoned bet that the benefits of economic reform would outweigh the dangers of corruption.

"Calm down, world," Deputy Secretary of State Strobe Talbott told Newsweek this week. "We have been aware from the beginning that crime and corruption are a huge problem in Russia and a huge obstacle to Russian reform." The administration has stayed engaged, Talbott said, because "the problem will only get worse if you isolate Russia."

It would be reassuring if they told the truth: Our policy toward Russia has been a crapshoot, and growing evidence - symbolized by recent news reports on an alleged $10 billion Russian money laundering operation through the Bank of New York - suggests it hasn't worked. And like most serious errors in judgment, this one has deep roots.

The early history of the Russia mistake was explored this year in "The National Interest," by Fritz Ermarth, for many years one of the CIA's top Soviet analysts. He writes that the corruption issue surfaced in 1992 after budding reformers in President Boris Yeltsin's government decided to hire a U.S. private detective firm, Kroll Associates, to search for at least $20 billion that had been looted by the KGB and stashed in offshore accounts.

Kroll's investigators wanted help. So Ermarth, then chairman of the National Intelligence Council, talked with colleagues at the CIA, NSA and other agencies. "Specialists in collection disciplines informed me that we could indeed help, although at some risk to our sources," Ermarth writes. But a policy decision was needed, so he went to the Bush National Security Council's top Soviet specialist, who assembled various other officials. "The answer was no," Ermarth recalls. "Some worried about risk to intelligence sources. But the main rationale was the following: Capital flight is capital flight. ... It doesn't matter who has the money or how it was acquired, even if by theft; so long as it is private, it will return to do good things if there was a market."

The CIA then reported extensively during the Clinton years on corruption surrounding the Yeltsin government, and the administration nonetheless chose to embrace Yeltsin and his crew.

Clinton's first CIA director, James Woolsey, took a special interest in Russian corruption. He was briefed in 1993 about a money laundering operation involving a concern, known as Nordex, based in a Washington suburb and headed by a man named Grigory Loutchansky. The agency briefed officials at the Justice Department, FBI and other agencies about Nordex and Loutchansky in mid-1993, and the CIA reportedly put him under surveillance.

Woolsey was thus astonished when his analysts showed him a Russian newspaper photo of Loutchansky shaking hands with Clinton at an October 1993 fund-raiser. Woolsey thought the photo might be a fake, so he took it to Anthony Lake, Clinton's national security adviser. He never heard anything back. Despite Woolsey's intervention, the Democratic National Committee later invited the Russian mobster to a 1995 Washington fund-raiser; Loutchansky couldn't attend because the State Department wouldn't give him a visa.

Woolsey also ordered a special 1994 national intelligence estimate on Russian organized crime, restricted to top government officials.

By 1995, Vice President Al Gore was taking a more active role in Russia policy, working closely with Yeltsin's new prime minister, Viktor Chernomyrdin. The CIA continued to provide intelligence about the looting of Russia, both by organized crime and by the new class of business oligarchs, which was siphoning assets into offshore accounts. One 1995 report discussed Chernomyrdin's activities in some detail. CIA gossip had it the report came back with "bull----!" scrawled across it in Gore's handwriting.

Clinton and Gore had lots of warnings about Russian corruption under Yeltsin's banner of reform. And the question continues to be: Why didn't the administration do more to stop it?

David Ignatius is associate editor of The Washington Post, to which he contributed this comment.