Скандалът около Harvard Institute на Джефри Сакс (на английски)

David Johnson's Russia List ( разпространи през юни серия материали от американския печат и на учени от САЩ за скандала, в който бе замесен в Русия Harvard Institute - организация, която получава милиарди долари от американското правителство за планирене на икономическите реформи в страните от Източна Европа според критериите на Вашингтон. Негов директор е Джефри Сакс. Сакс е човекът, който през 1990 г. изготви т.нар. "План Балцерович" - по името на тогавашния министър на финансите на Полша, който доведе полската икономика до разруха. Изгонен поради това от Полша, влезе в екипа, сформиран от Джордж Сорос за подготовка на плана за икономически реформи в Русия, който по-късно бе приложен от Гайдар с катастрофални резултати. Оттам Сакс премина в Украйна, където неговите консултации останаха без никакъв резултат за украинската икономика, която продължава да е в окаяно състояние. Понастоящем Сакс работи върху икономическата реформа в България по молба на българския президент Петър Стоянов


US Asks Harvard to End Russia Aid
June 6, 1997
WASHINGTON (AP) - The U.S. Agency for International Development asked
University Friday to end its economic aid reform program in Russia, worth
some $14 million, by the end of the year.
  The request was made in a letter from USAID to the Harvard Institute for
International Development after two of its employees were accused of abusing
their positions as advisers to the Russian government and misusing U.S.
  The employees deny any wrongdoing.
  The USAID letter asked the institute to take ``immediate and reasonable
to close out all ongoing activities'' except for tax-reform programs, which
will continue until Jan. 1 while the agency tries to find another
organization to take over.
  The letter said the institute's environment program in Russia was not
  In an indication there may be wider implications, the World Bank announced
Friday it has ordered a special audit of a $4 million dollar loan to the
Russian Federal Securities Commission.
  The loan, intended to help Russia develop its capital markets, was managed
the Institute for a Law-Based Economy, which was co-founded by Harvard and
run in part by Jonathan Hay, Harvard's Moscow program director.
  Johannes Linn, World Bank vice president for Europe and Central Asia, said
there was no direct connection among the bank, Hay and Andrei Shleifer,
director of the economic reform program.
  Shleifer also is a professor in Harvard's economics department. His wife,
Nancy Zimmerman, is alleged to have made use of U.S.-government-paid staff
and office space in Moscow for her investment business.
  USAID wrote to Harvard May 27 that a preliminary investigation found that
and Shleifer ``abused the trust of the United States government by using
personal relationships, on occasion for private gain.''
  Michael Butler, their Washington lawyer, said Zimmerman paid for the work
done in connection with her investments and Shleifer and Hay followed all
government rules.
  Since 1992, Harvard scholars have helped Russian officials with changes in
government operations, the legal system and capital markets.

Date: Thu, 29 May 1997 10:30:23 -0400 (EDT)
From: Janine Wedel 
Subject: Harvard Scam (fwd)

Boston Globe
29 May 1997
[for personal use only]

Abuse of trust: US, Russia, and Harvard
By Janine R. Wedel
Janine R. Wedel, an associate research
professor at George Washington University,
is writing a book on Western assistance to
Eastern Europe.

In suspending a $14 million grant with
Harvard University, the US Agency for
International Development last week alleged
that Harvard's Institute for International
Development (HIID) abused the public trust
when directors of its Russian reform
program used their positions for private
profit. This story should come as no
surprise to the US government. The United
States delegated foreign policy to HIID in
significant areas that involved complicated
and controversial choices. And, despite
reports of abuse by HIID and the Russian
reformer group with which it works, US
officials consistently defended and
supported HIID projects in Russia and
Ukraine. In short, US policy invited the

Between 1992 and 1996, USAID awarded HIID
more than $40 million in noncompetitive
grants for work in Russia. HIID received
two cooperative agreements to administer US
economic assistance in Russia, encompassing
everything from privatization to
post-privatization and capital markets.
These agreements put the institute in the
unique position of recommending US aid
policies in support of market reform while
being a chief recipient of the aid, as well
as overseeing other aid contractors, some
of whom were its competitors. Last fall the
US General Accounting Office described
USAID's management and oversight over HIID
as ``lax.''

So how do we ensure that decisions made by
a private contractor - in this case Harvard
-  are in the US foreign policy interest?
And, with competing ``clans'' that control
parts of the Russian government, what are
the mechanisms for approving the ground
rules by which Harvard chooses these clans
on behalf not only of itself, but of the
United States?

HIID formed an old-boy network and
collaborated with just one of Russia's
political-economic clans - the so-called
St. Petersburg clan - a group of
longstanding associates under the direction
of Anatoly Chubais, currently first deputy
prime minister as well as minister of
finance. Chubais was placed on HIID's
payroll in January 1996 after being
dismissed from the Russian government.
HIID's singling out of one group - and
USAID's support of this - raises questions.
US policymakers appear to have been charmed
by the St. Petersburg group's
sophistication, fluency in English, and
appearance of being ``Western.'' But it is
naive to expect that any group would ignore
its own agenda, especially when it is given
a blank check by Western donors.

Indeed, there are reports that several
aid-funded ``private'' organizations set up
by and connected with the HIID-St.
Petersburg clan partnership were used for
the Russians' political purposes. For
instance, the Russian Privatization Center
(funded $41 million by USAID), the World
Bank, and others created a network of 10
Local Privatization Centers. On-the-scene
managers of the USAID-paid consulting firms
that set them up reported that
decision-making was steeped in political
considerations. What assurance is there
that this taxpayer-funded organization was
not largely used as a political tool of the
St. Petersburg group?

This practice of giving one group a
comparative advantage and allowing much aid
to be used as the tool of this group feels
familiar to Russians raised in the
Communist practice of political control
over economic decisions - the quintessence
of the discredited Communist system.
However, the practice of funding
personalities over reform processes
collides head on with the aid program's
broader goal of building lasting,
nonaligned institutions. Should US
assistance try to help Russia move away
from communism by encouraging the
separation of the political and economic
spheres or, instead, reinforce their
interdependency - as under communism?

Finally, there are reports that, in
apparent pursuit of their own agenda, key
St. Petersburg players have been known to
actually obstruct reform when reform
initiatives have originated outside the
group. When a USAID-funded organization run
by St. Petersburg players did not receive
the additional funds they had expected from
USAID, these players are reported to have
interfered with legal reform initiatives in
title registration and mortgage that were
launched by agencies of the Russian

The most troubling question raised by the
Harvard story is the accountability of
Harvard and its contractors and connections
to our government processes. Of course, the
choices to be made are complicated.
Precisely because of this, we need to know
that there are controls and procedures in
place to assure the integrity of the
decision-making process. When there are
reasons to believe that a private entity,
such as Harvard, is working in opposition
to stated US policies, where in our
government do we look for assurance that
what is good for Harvard and its
contractors is not contrary to the
interests of US policy? One aspect of
exporting democracy and building
nonaligned, enduring institutions is the
accountability of private persons to public
institutions. Do we hold out the
USAID-Harvard-St. Petersburg clan
bureaucratic apparatus as a model here?

Russia Defends Harvard Advisors
May 31, 1997
      MOSCOW (AP) - The official in charge of Russia's economic reform
said he was severing ties with the Harvard institute that dismissed
two consultants accused of improperly profiting from their work in
      First Deputy Prime Minister Anatoly Chubais defended the
consultants at a news conference Friday.
      He questioned the motives of the U.S. Agency for International
Development, whose investigation of Jonathan Hay and Andrei
Shleifer led to their dismissal from Harvard's Institute for
International Development.
      USAID claims that Hay broke a conflict-of-interest rule by
buying Russian bonds, and that Shleifer's wife, Nancy Zimmerman,
made use of U.S. government-paid staff and office space for her
investment business.
      Hay, Shleifer and Zimmerman all deny wrongdoing.
      ``The investigation which was made against the Harvard
researchers has some kind of political roots and I guess that these
roots are produced by those in the United States who do not support
the ideas of the Russian radical reforms,'' Chubais, speaking
English, told reporters. ``That's why I decided it's not convenient
for me to have business with this kind of institution.''
      Chubais said he had asked USAID to end its use of the Harvard
institute in assistance programs in Russia. The aid agency
suspended its $14 million contract with the institute last week as
a result of its investigation.
      Richard Morningstar, a senior State Department official who
coordinates U.S. assistance to the former Soviet Union, denied
there was any political motive behind the dismissals.
      ``As I see it, this is not related to Russian politics or
American politics,'' he told The New York Times. ``This only
involves the actions of two individuals.''
      Shleifer, a professor of economics at Harvard, was director of
the Harvard institute's Russia project. Hay ran its offices in
Moscow. Since 1992, Harvard scholars have assisted Russia with its
transition to a market economy.
      Employees of the Harvard Institute and their relatives are
barred from making investments in the country where their work is
being done.
      The English-language Moscow Times reported Friday that, on the
day before the two consultants were dismissed, Chubais had asked
USAID to cut off financing for the Harvard program.
      In his letter to USAID director Brian Atwood, Chubais wrote:
``Because of changing conditions, continuation of these agreements
is not consistent with Russian interests.''

Date: Sat, 07 Jun 1997 21:26:09 (MSK)

For: In These Times (Chicago)
From: (Fred Weir) (Dorothy Rosenberg)

     By Fred Weir and Dorothy Rosenberg
     MOSCOW -- The abrupt termination of a $57-million government
contract with Harvard's Institute for International Development
(HIID) and the firing of the two directors of its Russian reform
project for "abusing the trust of the U.S. government," hit the
international aid community last month like a bombshell. An
investigation into charges that the two officials engaged in
insider trading has begun to cast light into some of the darker
corners of Russian economic reform. The mounting evidence
suggests that the United States Agency for International
Development (USAID) gave HIID millions of taxpayer's dollars to
promote the careers and political goals of a tiny clique of
Russian marketizers. Over 5-years of promoting a simplistic free-
market model for Russia, HIID provided the ideological rationale
under which a handful of new capitalist oligarchs helped
themselves to the former Communist state's vast assets,
concentrated political power at the top and short-circuited the
rule of law.  Not only was Russia's fledgling democracy
undermined and progress toward an open market society thwarted,
but the tangled web of cronyism, corruption, and conflicts of
interest appears to have ultimately ensnared its American backers
as well.
      "In 40 years of HIID activities this case is basically
unparalleled," Jeffrey Sachs, the institute's director said after
firing the two men. Sachs, a Latin America specialist who himself
served as one of post-Soviet Russia's first economic advisers,
has plenty to worry about. Trading on Harvard's reputation and
Washington contacts, he has turned HIID into a major conduit for
USAID, World Bank and IMF funds for structural adjustment
programs in the Third World and beyond. The foundering of its
flagship Russia project raises disturbing questions about the
fundamental goals and track record of U.S. development
     Harvard has tried to depict the affair as a minor ethical
lapse in an otherwise successful program. However, the men fired
economics professor and Russia project director Andrei Shleifer
and Moscow field manager Jonathan Hay, were the architects and
chief executives of HIID's Russian reform strategy. USAID's
notice of suspension to Harvard charged that "Hay used resources
financed by USAID to support the private investment activities of
Shleifer's wife, Nancy Zimmerman". These activities included
"buying and selling Russian bonds, tracking deposits and
withdrawals from the investments' Russian bank accounts,
consulting about tax aspects of the investments and possible
additional investment opportunities."
     Hay, a Harvard Law School graduate whose brief was to advise
the Russian government on securities law, capital markets, tax
reform and privatization, was accused of using his insider
knowledge to play the profitable market in Russian state treasury
bills. He has acknowledged making the investments but claims to
have been unaware of any ethical or contractual prohibitions.
USAID is also investigating allegations that two investment funds
managed by Hay's girlfriend, Beth Hebert, were granted
preferential access to the Russian securities market.
     Official spin says that the problem begins and ends with
these allegations. "As I see it, this is not related to Russian
politics or American politics," Richard Morningstar, a top State
Department official who coordinates aid to the former Soviet
Union, told journalists. "This only involves the actions of two
     But informed critics have been warning for almost a year
that USAID and Harvard's Russia project were a scandal waiting to
happen. An article by George Washington University associate
research professor Janine R. Wedel, published in the journal
Democratizatsiya last Fall, warned that HIID had built a cozy
relationship with a small group of high-flying Russian liberals
that blurred the line between public and private activity,
tolerated political misuse of aid funds, froze out competing
Russian reform groups and reinforced some of the same Soviet-era
practices it was supposed to help eliminate.
     "More than mere assistance, aid became a political resource
for certain Russian reformers. This resource was allocated in the
communist tradition, through patronage networks," wrote Wedel.
"By siding with a particular group in a highly politicized
environment, U.S. assistance may have weakened its
     Arriving in Russia as the Soviet Union was collapsing in
late 1991, Hay and Shleifer met and shortly thereafter began
cultivating a group of bright, dynamic, pro-Western Russian
reformers from St. Petersburg. Its leading light was a young,
ginger-haired, English-speaking economist named Anatoly Chubais
whose subsequent meteoric rise to the heights of Kremlin power,
Wedel argues, owed much to the access and resources placed at his
disposal by HIID.
     "The result of U.S. aid activity here was that the personal
connections of Chubais and his friends became the public
financial interests in Russia," says Andrei Piontkowski, an
analyst with the Center for Strategic Studies, an independent,
pro-reform Moscow think tank.
     "It's an American approach, they need a single figure to
personify reforms. Aid was concentrated in the hands of the St.
Petersburg group, and that helped the St. Petersburg group to
create a financial oligarchy in Russia," he says.
     After large-scale U.S. aid began in 1992, HIID set up the
Russian Privatization Center (RPC) and the Institute for a Law-
Based Economy (ILBE), both founded by government decree but
legally private. These institutional hybrids were staffed with
American advisors, run by Chubais cronies and designed as a
pathway around existing administrative bodies. The murky nature
of their status facilitated deniability of responsibility for all
participating parties: HIID, USAID, the Russian government and
the members of the St. Petersburg group.  Increasingly, the RPC,
ILBE and a small flock of offshoots usurped the functions of
government ministries in designing mass privatization of the
Russian economy, creation of securities markets, bankruptcy laws
and tax reform. Over the past 5 years these agencies have
attracted some $3-billion in loans and aid, including $1.2-
billion from USAID. In many cases, they negotiated and managed
loans that the Russian government is responsible to repay.
     "All of these circumstances present in U.S. aid to Russia --
one group's near-monopoly on aid in support of market reform,
support of old patronage networks and top-down reform, and the
creation of quasi-private organizations used as political
machines -- make it easy for representatives of the St.
Petersburg group and HIID to actively pursue their own individual
interests and to work on all sides of the table both in Russia
and with the donors," warned Wedel.
      As HIID's empire grew and ramified, American advisers often
connived with friendly Russian government officials to prepare
aid proposals which they themselves subsequently supervised.
"From an American standpoint, HIID appears to be in a conflict of
interest position," Wedel wrote last Fall.
     For five years, until Chubais turned on his erstwhile
benefactors last month, he worked closely with HIID on virtually
every major Russian reform project. The collaboration began with
oversight of $58-million in USAID funding to publicize the
voucher privatization program launched in November 1992. Under
the direction of Chubais' State Property Committee, every Russian
citizen was given a certificate to redeem for shares in state-
owned enterprises.
     Wedel cites instances of political abuse of aid money from
the very beginning. For example, the public relations firm hired
by USAID to popularize voucher privatization changed the
campaign's slogan "Your Voucher -- Your Choice" in radio and TV
spots to "Your Choice -- Russia's Choice" during the 1993
parliamentary elections. Russia's Choice was the name of Chubais'
political party. USAID subsequently fired the firm.
     According to the U.S. State Department's 1996 annual report
on aid to the former Soviet Union "Russia's mass privatization
program was successfully completed in July 1994 with state assets
having been transferred to over 40-million new shareholders."
     In reality only a tiny minority wound up owning a few
profitable enterprises, while the bulk of Russians were left
holding worthless paper as the national economy collapsed,
capital investment plummeted and most industry ground to a halt.
     That first wave of privatization was the only key reform
ever ratified by Russia's legislature. All later programs were
implemented by presidential decree, after Boris Yeltsin's tanks
destroyed the first post-Soviet parliament and a new constitution
concentrating power in the presidency was implemented in 1993.
     The HIID operation adjusted smoothly to the post-1993 top-
down model of economic control. The U.S.-backed reformers found
it easier to draft a decree and have Yeltsin sign it into force
than to go through the tedious process of wrangling and
compromising that would be necessary to pass it legally through
the new parliament, to which Russian voters stubbornly kept
returning anti-reform majorities.
     Such was the case with Chubais' second-stage privatization
scheme, known as loans-for-shares, which cemented his relations
with a group of bankers, the big winners from the first
privatization campaign. Loans-for-shares transferred controlling
interests in the crown jewels of Russian industry -- the
lucrative raw materials sector -- to a handful of financial
insiders in return for loans to the state. In the event, the
banks selected to conduct the auctions disqualified all
competitors and acquired the assets for themselves at the floor
bid price. To date, none of the loans have been redeemed and all
of the shares remain in possession of those banks.
     Public outrage over loans-for-shares was so intense that
Yeltsin dismissed Chubais from his post as deputy prime minister
in January 1996, citing his "grave mistakes" in the conduct of
     Chubais was immediately hired by HIID as a "consultant". Six
weeks later Yeltsin took him back to head his presidential re-
election campaign, in which job Chubais was instrumental in
persuading Russia's leading bankers -- the very people he had
enriched through privatization -- to throw their support behind
the old Kremlin boss.
     According to his tax declaration Chubais' 1996 earnings were
$278,000. Chubais was out of government service for five months
in 1996, during which time he worked for HIID for six weeks and
then as head of Yeltsin's re-election team. After sharp questions
were raised in parliament, Chubais denied having been paid
anything at all by the Yeltsin campaign and said his 1996 income
derived entirely from "conferences and consultation fees," though
he declined to elaborate.
     "Formally, this money was earned honestly, but there's
something wrong with it," says Piontkowski. "It would be OK if he
were a smart entrepreneur or an expert with great ideas, but in
fact the Americans didn't pay for his ideas. He was an ideologist
and a conduit for putting things into effect. During those two
months he became the head of Yeltsin's election campaign, he was
Yeltsin's main consultant, and he exercised great influence.
That's what they paid for".
     Chubais went on to become the newly re-elected President
Yeltsin's powerful chief of staff and, this Spring, was re-
appointed to government with the dual portfolio of Finance
Minister and First Deputy Premier in charge of economic policy.
He is now the driving force behind a new wave of privatization,
harsh budget-cutting and tax reforms that are widely lauded in
the West.
     But something has gone mysteriously awry in his long-time
association with HIID. After the scandal with Hay and Shleifer
broke in late May, Chubais called a press conference in which he
passionately defended his two old associates but slammed Harvard
and claimed he had asked USAID to cancel HIID's Russia contract.
     "The investigation which was made against the Harvard
researchers has some kind of political roots and I guess that
these roots are produced by those in the United States who do not
support the ideas of the Russian radical reforms," Chubais said,
speaking in English. "That's why I decided it's not convenient
for me to have  business with this kind of institution."
     What went wrong, experts say, is that Chubais' allegiances
have shifted. An old St. Petersburg crony of Chubais, Dmitry
Vasiliev,  head of Moscow's Federal Securities Commission, has
been working closely with HIID to lay the foundation for capital
markets in Russia. Together they have designed a model based on
the U.S. system, in which stock markets are kept strictly
separate from the banking sector and impersonal investors
exercise direct disciple over enterprise managers by delivering
rapid market feedback.
     But Chubais' power base is now the giant financial
conglomerates for whom he acted as political midwife. He
reportedly favours a German-style stock market, in which large
banks foster long-term relationships with companies and crowd
small investors out of the picture. Who will regulate the banks
is an open question.
     "Russia is no longer the open arena for outside ideas that
it was five years ago," says a Western diplomat who asked not to
be named. "It has developed its own indigenous capitalists, who
have their own distinct imperatives. Chubais has climbed to the
top largely by cooperating with these people, and he is certainly
acting for them in this struggle. He doesn't need Harvard
     We may never get the full story on how HIID came to be
booted out of Russia, who convinced USAID to publicly jettison
its most prestigious contractor or the role played by the alleged
financial indiscretions of Shleifer and Hay.
     However, "judging by the results attained in comparison with
the enormous opportunities and resources spent, these assistance
efforts may one day be considered one of the greatest and most
costly failures in contemporary history," Constantine Menges,
director of George Washington University's transitions to
democracy program told a Congressional hearing last year.
     "In trusting economists with the success or failure of the
historic opportunity for the economic transformation of Russia .
. . has meant that the leadership of the U.S. compounded this
mistake by also entrusting the future of democratization to these
     "As the dismal results make evident, neither the economists
nor their respective organizations were in the least prepared for
the responsibilities that were suddenly given to them." 
     Their lasting legacy might well be to have fuelled an angry
future backlash among Russia's neglected, defrauded and
impoverished majority and imbue it with an explicitly anti-
Western and anti-market agenda.
     As Wedel argued, the central fallacy of HIID's Russia
program lay "in thinking that lasting institutions can be built
by supporting particular people, instead of helping to facilitate
processes and the rule of law. . .
     "When support is concentrated in one group of reformers with
and ties and whose American colleagues are both recipients and
overseers of the aid, the West simply encourages anti-Western,
anti-reform elements who can point with glee to the absence of
real, measurable benefits to the host country as a sign that
Russia is being exploited by the West."

     Dorothy Rosenberg is a research fellow at the Institute for
Policy Studies in Washington and is currently living in Russia as
co-coordinator of a joint U.S.-Russian project on strategies for
a sustainable transformation. 

     Fred Weir is a contributing editor to In These Times.

Date: Mon, 09 Jun 1997 
From: Ellen Mickiewicz  
Duke University
Author, Changing Channels, Television and the Struggle for Power in 
Russia (Oxford)

Dear David,
The Weir/Rosenberg piece (June 7, 1997) quoting Janine Wedel refers 
to USAID involvement in
supporting Yegor Gaidar's party in the 1993 parliamentary election 
campaign.  I'd be interested
to see the sources for Wedel's conclusions, since my investigation of 
this highly controversial
affair produces a more complicated picture, although the exact truth 
of the matter is not likely to
be determined.  I permit myself to excerpt a small portion of my new 
book, Changing Channels,
that explains the situation as I see it.  I've taken out the 
footnotes, but they're in the original.

- ---------

     "The U.S. consulting firm, Sawyer Miller Group (later, Robinson, 
Lerer, Sawyer,
Miller), had an $11.8 million contract from the U.S.State Department 
Agency for International
Development to assist the Russian Federation privatization ministry 
(State Committee on
Property--in its Russian acronym, GKI) create support for the reform 
process....  In mid-November, about a month before the elections, the 
Sawyer Miller spots, which had carried the
tag line  Your Voucher, Your Choice,' were somehow changed to say  
Your Choice, Russia's
Choice.'  U.S. Government funds now appeared to be supporting the 
campaign of a political
party in the Russian elections.  The ads ran for about a week before 
a national uproar forced the
Russian Government to pull them....  
     At the time Mark Malloch Brown was a Sawyer Miller partner in 
charge of the company's
international practice.  He maintained that the Russian government 
ordered his Moscow office to
change the tag line, and when the American company refused to do so 
the Russians removed
Sawyer Miller from the task and took over the materials.  The Russian 
privatization ministry
(GKI) replaced Sawyer Miller with another U.S. public relations 
company, Burson Marsteller.    GKI, on the other hand, charged that 
it had been unhappy with the quality of Sawyer
Miller's work for some time and denied it had applied pressure to 
alter the ad.  GKI's deputy
chairman, Dmitry Vasiliev, later argued that Sawyer Miller's work was 
a failure and simply did
not relate to Russian culture and Russian circumstances;  what works 
in Texas is completely
inappropriate for Russians...'
     Malloch Brown disagreed, stating that the Russians reedited the 
spot and changed the
graphic.   We didn't make the changes; they did,' he stated.  
     It is true that conflicts were brewing between Sawyer Miller's 
methods and Russian
Government expectations, which Malloch Brown laid to problems of the  
tremendous growth' of
demands and an office that was staffing up hurriedly, as well as an  
in your face' management
team.  From the beginning, the Russians and the American firm seem to 
have had different
conceptions of the assistance project, but when, in November 1993, a 
long-delayed tranche of
AID funding came through, GKI gave first priority to Sawyer Miller.  
     Mark Malloch Brown recalled that it was Arkady Yevstavyev, press 
officer for Anatoly
Chubais, head of the privatization ministry, who instructed Sawyer 
Miller to change the tag line,
which Sawyer Miller refused to do.  (In 1995, Yevstavyev took over as 
head of news at Channel
One and, when his patron Chubais was removed, Yevstavyev lost his 
position, too.[Later in this
book, I discuss Yevstavyev as one of two apprehended while removing 
large amounts of cash
during the 1996 presidential elections])  At the same time, Malloch 
Brown said, he was
 absolutely certain Chubais was unaware of and did not initiate it.'
     The new U.S. partner, Burson Marsteller, came in to manage the 
privatization campaign,
but according to Executive Vice President Kirby Jones, arrived after 
the tag line had been
changed;  they were involved in neither the creation nor the 
placement of the altered ad.
     Denying the charges, Russia's Choice leader Yegor Gaidar told a 
U.S. newspaper that
 "Russia's Choice does not need to use such funding sources,"...'
     Although it was a small flap in the United States... it was a 
much more significant issue in
Russia, because it related to the role of foreign political 
consultants, extending the fallout from
the April referendum campaign. [I treat earlier in the book this much 
more clamorous and telling
involvement of private US consultants in that 1993 Russian 
campaign]...Citing reports from the
American press, rival party leaders charged that Russia's Choice had 
violated electoral
regulations by  using funds from foreign sponsors,' in this case, 
AID." [from Chapter 8]

Date: Sun, 15 Jun 1997 11:59:02 -0400 (EDT)
From: Janine Wedel 
Subject: Response to Ellen Mickiewicz

Dear David,

Permit me to respond to Ellen Mickiewicz's comments of June 9.  She
is objecting to a point in the Weir/Rosenberg piece (June 6), which
quotes and refers to my recent article in Demokratizatsiya (run here
on March 19) on several points.  The point of objection pertains to USAID
involvement in supporting Yegor Gaidar's party in the 1993 parliamentary
election campaign.

There appears to have been a misreading of my article on this point.  The
account of the particular incident relayed by Ellen Mickiewicz does
not contradict mine.  Yes, according to Sawyer Miller, Arkady
Yevstavyev, press officer for
Chubais, figured prominently in the effort to change the slogan from
"Your voucher,
your choice," to "Your choice, Russia's Choice."  In my work on the
USAID-supported St.
Petersburg Clan-Harvard HIID partnership, Yevstavyev's
name came up more than once.

I found no evidence that
either USAID or Sawyer Miller approved (or approved of) this change in
slogan. In fact, Sawyer Miller
objected, only to be fired from the project and replaced by
Burson Marsteller (again, reportedly under pressure from particular
Russians).  However, clearly, USAID funding was involved, whether USAID
knew or approved of what happened.  My account
of this incident is based on interviews with representatives of
Sawyer-Miller, Burson Marsteller, USAID, and others, and accounts in
Izvestiya (see endnotes in article for details). 

My account (p. 580-581 of the article) reads in part as follows:

Under U.S. aid-funded
programs, Western public relations firms have engaged in "public
education" to promote privatization.  USAID spent $18.9 million on public
education for mass privatization alone.  In Russia, the first PR/public
education project undertaken was the promotion of the voucher auction.
This began with information television spots that explained what a
voucher is (and what to do with it) and what shares and auctions are.

	However, in April 1993, the nature of the "public education"
efforts changed from being informational to convincing Russians of the
benefits of privatization.  According to the public relations firm that
handled the project, this entailed monitoring the reformers' political
competitors and "making sure the right reformists were getting in office."
The firm arranged radio and television sports to promote privatization,
including some featuring prominent politicians.  A "man of the week"
series highlighted reformers like Chubais.  The effort came to a head
during the election campaign of 1993.  Although the project was formally
being run by a Western PR firm, the reformers had enough contacts and
control to insert their own political slogan into
the process, changing it from "Your voucher, your choice," to "Your
choice, Russia's Choice."  "Russia's Choice" is the name of a political


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