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. Last Updated: 07/27/2016

Harvard Suit Latest Hit to '90s Dreams

The West’s 1990s romanticism of adopting Russia as a younger brother and steering it down a road of reforms took another blow this week.

The U.S. government sued Harvard University on Tuesday, saying it had failed to properly supervise two advisers tasked with assisting Russia in its transition to a market economy.

Prosecutors say the two men, Andrei Shleifer and Jonathan Hay, misused their positions at a Harvard program by seeking personal financial gain.

The government wants back the more than $40 million that it sunk into the Harvard Institute for International Development program, and if it wins will be awarded triple damages, or $120 million.

Shleifer and Hay, who with their wives invested hundreds of thousands of dollars into the very market they were helping form, maintain that there was no conflict of interest in their activities.

Whether the advisers acted to the letter of the law — as they claim — remains to be seen. But they certainly did not act within the spirit of the law.

The advisers and Harvard were given the solemn duty of advising the Russian government on how to establish Western-style capital markets. In that capacity, they should have taken every precaution possible to ensure that their actions — both personal and professional — would be perceived as aboveboard.

The unfortunate impression that could be left in the minds of Russians is that the United States, purporting to selflessly offer its support, had actually just turned out to be a greedy older brother.

The U.S. lawsuit could be a bid to show Russia that only two men at Harvard were at fault and that the government had had only the best of intentions.

But Russia no doubt has abandoned any illusions that the West is simply a caring relative. The West’s support has left Russia with billions of dollars in debt to lenders like the International Monetary Fund, the World Bank and the European Bank for Reconstruction and Development.

Like Harvard, all three institutions already have their own tales of woe in Russia. The Swiss are investigating whether part of a $4.5 billion IMF loan was funneled abroad. The World Bank has seen hundreds of millions earmarked for special projects disappear without fulfilling the goals. And the EBRD has filed lawsuits against several Russian companies to recoup millions of dollars in debt.

Harvard is just the latest backlash from the West’s lofty plans that ran afoul — and it will probably not be the last in this brotherly relationship.