Open for Business: Russia's Return to the Global Economy
Ed Hewett, recently deceased, had a remarkable command of facts about the Soviet economy and a penetrating understanding of how it worked. These qualities, and his ability to explain complex matters briefly and clearly, are beautifully demonstrated in this excellent book examining the Gorbachev reforms and their breakdown. The book, which gives special attention to the external economic relations of the U.S.S.R. (and later, Russia), was revised and updated by Gaddy, of the Brookings Institution, after Hewett joined the staff of the National Security Council.
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Most people think that Russia's economic problems are due to the shock of fast and radical reforms. Actually, the Russian economy is not very liberalized at all, and its problems have been caused by reforms that were too slow and partial, not too sweeping. Russia suffers not from too free a market but from corruption, which thrives by preying on an unwieldy bureaucracy. Still, the outlook for the months ahead is promising. If Poland could do it, why can't Russia? The private sector got a salutary wake-up call from the 1998 collapse of the ruble, and the strength of the political center bodes well for economic recovery and social change.
The jailing of Russian oil tycoon Mikhail Khodorkovsky has revealed the fault lines running through the post-Soviet political economy. The reforms and privatization of the 1990s were so flawed and unfair as to make them unstable. A backlash was inevitable. Given Vladimir Putin's authoritarian tendencies, that backlash has proved equally flawed and unfair-and perhaps equally unstable.
US policy to isolate the USSR from the world economy (such as the 1974 Jackson-Vanik amendment, the grain embargo, and the attempt to impede the Soviet-European gas pipeline) ought now to be discontinued, so that (1) Western businesses can discover the new Soviet market (2) an economic wedge can be inserted to prevent backsliding in Soviet political and economic reform.
