[Congressional Record Volume 144, Number 119 (Thursday, September 10, 1998)]
[Senate]
[Pages S10190-S10192]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            CRISIS IN RUSSIA

  Mr. BIDEN. Madam President, I rise today to discuss the political and 
economic crisis in Russia, which poses, to state the obvious, a grave 
threat to the security of the United States and the entire 
international order. The situation in Moscow is rapidly changing, so by 
the time I finish these statements today, Lord only knows, something 
may have happened in the meantime. Things are that fluid.
  Although the situation is rapidly changing, in the wake of last 
week's summit, five basic trends seem to be clear. First, the Yeltsin 
era is about to end. Second, because of structural problems in Russia's 
political and economic system, there is no short-term fix to Russia's 
economic crisis. Third, an even greater danger than an economic 
meltdown is the total collapse of

[[Page S10191]]

the Russian political system, which would have catastrophic 
ramifications for the international security system. Fourth, in order 
to forestall such a collapse, the Yeltsin administration--or perhaps 
even a transition regime--will almost certainly take some immediate 
economic measures that will, at least temporarily, set back Russia's 
progress toward a free market economy. And, fifth, there is very little 
that the United States can do to affect this grim situation. It is 
fundamentally a Russian problem with deep cultural roots.
  Madam President, President Clinton, in my view, was correct in going 
through with last week's Moscow summit. If he had canceled or postponed 
the meeting, I think it would have sent signals to the world that the 
United States had written off the reform effort in Russia which, 
despite the very serious recent setbacks, has nonetheless achieved a 
great deal over the past 6\1/2\ years. I might note, parenthetically, 
that it may have achieved enough to prevent a total reversion to 
despotism in Russia. But that remains to be seen.

  Moreover, for all its built-in problems, the summit did produce a few 
modest agreements. Most important among them, as mentioned by others, 
was the agreement whereby the United States and Russia will each 
convert approximately 50 tons of plutonium withdrawn in stages from 
nuclear military programs into forms unusable for nuclear weapons.
  The plutonium management and disposition effort will require several 
billion dollars, but I can think of no joint effort between our two 
countries that is more worthy of support.
  As you know, Madam President, because you are well schooled in 
international relations and have spent a career in the House and the 
Senate dealing with these issues, the reason that an economy only the 
size of Holland is having such a profound impact on the rest of the 
world is because of the military danger that its collapse would cause. 
If the Russian economy collapses and causes societal and political 
instability, there are 15,000 nuclear weapons there that could fall 
into the hands of unreliable and perhaps unstable leaders in a 
fractured country. So the effort to deal with, for example, taking 50 
tons of nuclear-grade material and rendering it incapable of being used 
in a military context seems to me to be well worth the buy, well worth 
the effort along the lines of the Nunn-Lugar bill in the destruction of 
nuclear capacity.
  Despite this and a few other achievements, though, the summit could 
not, I regret to say, conceal the terminal condition of the Yeltsin 
Presidency. Watching film of the summit press conference was a painful 
exercise, for the Russian President clearly showed his infirmity. This 
medical condition, together with the nearly total absence of popular 
support for President Yeltsin and his government, makes a change in the 
near future seem inevitable.
  Boris Berezovsky, the most prominent leader of Russia's new 
industrial tycoons--the power behind the throne--has already indicated 
in an interview that President Yeltsin's days in office may be 
numbered.
  The structural problems in Russia's economy are simply too serious to 
lend themselves to an easy solution. Many factors have contributed to 
the sorry state in which the economy now finds itself.
  The Asian financial crisis forced a general reappraisal of 
international lending in emerging economies. As investors retreated to 
safety, doubts about Russia's ability to protect the ruble became a 
self-fulfilling prophecy.
  The 50-percent drop in worldwide crude oil prices within the last 18 
months severely harmed Russia's hard currency earning capacity, 
weakening an important support for its currency and its ability to pay 
international debts.
  But more fundamentally, Russia has been hamstrung by an inability to 
create the necessary preconditions for being a player in the 
international economic system. President Clinton outlined them in his 
usual lucid way in a speech to students in Moscow.
  Russia must create a full-fledged rule of law with fair enforcement 
mechanisms. It must put into place modern taxation and banking systems. 
Investors, domestic and foreign, must have confidence that they will 
not have the rules changed in the middle of the game.
  In return, Russians, especially the large Russian corporations, must 
pay their taxes so that the Government can get its fiscal house in 
order and will not have to resort to the printing press to cover its 
deficits. The Russian ``kleptocracy'' must end.
  Madam President, I was speaking by telephone with one of the more 
prominent businessmen in my State about an hour before I came over to 
the floor. He is in the poultry business. He called to ask me what I 
thought about the current situation in Russia. He has several million 
dollars' worth of product in Kaliningrad. They have a rule there that 
if, in fact, it is not purchased within 90 days, it can be confiscated. 
So he has to decide whether to keep it there and run the risk of 
confiscation or get it out of there and try to market it someplace 
else. In his factory in Delaware he has an equal amount of product with 
Russian labels, which is poultry to be sent to Russia. He wanted to 
know what I thought was likely to happen, and so on and so forth.
  As I talked to him--he is a very bright guy who has been doing 
business in Russia in earnest now for the last 4 or 5 years--I asked, 
``What do they need most?''
  He replied, ``I never thought I would say this as a conservative 
businessman. What they need most is the IRS over there.''
  I said, ``Say that again?''
  He repeated, ``What they need is the IRS over there.''
  The truth of the matter is, one of the reasons their economy is in 
such horrible shape is that no one is paying their taxes. These are 
precisely the measures the International Monetary Fund has been urging 
on the Yeltsin government, but they remain largely unfulfilled.
  The only thing worse than the Yeltsin government paralyzed by an 
economic meltdown would be a coup d'etat that installed an 
authoritarian government. It takes little imagination to contemplate 
the horrible dangers of a resentful, extremist regime that still 
possesses thousands of missiles armed with nuclear warheads.
  Such a scenario, while still unlikely, is not beyond the realm of 
possibility, especially if Yeltsin's new candidate for Prime Minister, 
Yevgenii Primakov--who is almost certain to be confirmed by the Duma--
is unable to rapidly stabilize the situation.
  By tomorrow afternoon, I think Primakov will be confirmed by the 
Duma. In order to forestall a political catastrophe, I believe the 
Russian Government in the coming days will take economic steps that 
may, in the short run, avoid a revolutionary situation but in the long 
run will make it a heck of a lot harder for them to ever get their 
economic house in order.
  These steps will probably include putting an infusion of currency 
into the economy through a large-scale increase in Government spending 
to pay the back wages of state employees, including the military, a 
process which, in fact, seems already to have begun.
  Moreover, there will likely be some form of wage and price controls, 
foreign currency restrictions, and renationalization of some 
industries--all the wrong things to do. But in fairness to the 
Russians, I wonder if any of us were taking over that Government at 
this point, we would do anything short of that to avert a civil 
catastrophe. Such moves, we must realize, would likely doom Russia's 
chances of receiving the next payment of the $22 billion of the 
international support package negotiated just a month ago.
  I believe in the long run Russia's march toward a free-market economy 
is inevitable, notwithstanding what I said, but some emergency measures 
may be a necessary short-term detour to avoid the kind of complete 
calamity that a coup d'etat or popular uprising would bring. I am not 
predicting either a coup or an uprising, but I believe that the Russian 
leadership will conclude that is a risk they wish not to take.
  Unfortunately, there is very little the United States can do right 
now to influence events in Russia.
  Despite the deteriorating international economic enviroment and the 
inevitable mistakes that have occurred as part of well-intentioned 
assistance efforts, I do not believe that the United States or the West 
in general should feel that they are responsible for the Russian 
collapse.

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  As I said on the floor last spring in the course of the Senate debate 
on NATO enlargement, we have wisely not repeated the mistakes made 
after World War I with respect to Germany. There is no parallel with 
Weimar.
  Rather than imposing staggering reparations on a defeated enemy, the 
capitalist world has pumped $100 billion in aid, loans, and investments 
into Russia.
  Rather than isolating Russia internationally as the victorious allies 
did with Germany well into the 1920s, we encouraged Moscow and welcomed 
her into a variety of international organizations.
  We must confront the inescapable fact that the root causes of 
Russia's stunning descent into chaos lie in her own history and 
culture.
  Centuries of serfdom and submission to foreign conquerors and 
autocratic tsars hampered the development of political democracy and a 
civic culture in Russia.
  Then at the beginning of the 20th century, just when both--that is, a 
civic culture and a political democracy--were nonetheless beginning to 
emerge Russia was hit first by World War I and then by the Bolshevik 
Revolution and civil war.
  I believe the 7 decades of communism that followed offer the best 
explanation of the current disarray in Russia.
  The tangible devastating legacies of communism are well known: 
millions killed by Stalin's mad collectivization and purges, 
environmental degradation, and a massive deterioration in public health 
and life expectancy.
  There is also a philosophical legacy that bears directly upon today's 
impasse. Marxism's basic tenet, the class struggle. Some scholars may 
disagree with me, and I am sure I will hear from them when I say this.
  The entire political class now vying for power in Russia was taught 
to believe that economic class determines one's interest, that life is, 
in essence, a zero-sum game. If you, my opponent, win, that must mean 
that I lose.
  Such a mindset stifles mutual trust and makes compromise in the 
political arena extremely difficult. The result is that democratic 
Russia has developed relatively few individuals who in the West would 
be called or could be called a ``loyal opposition.''
  Last year on a visit to Moscow, I held lengthy discussions with 
several of the leaders who have been in the forefront of the opposition 
to Chernomyrdin.
  The Communist Party leader Gennadii Zyuganov and the nationalist 
leader, former general Aleksandr Lebed, both struck me as intelligent, 
thoughtful men, but distrustful and conniving ones who put self before 
country.
  Only Grigorii Yavlinsky, the leader of the Yabloko Party, seemed to 
be one who might fit into our category of the ``loyal opposition.'' I 
am told that he may be named First Deputy Prime Minister if Primakov is 
confirmed as Prime Minister by the Duma. That would be an encouraging 
sign. We will know by tomorrow or the next day whether that is true.
  One can argue endlessly about what the United States might or might 
not have done to avert the current catastrophe.
  But before we indulge in ``who lost Russia?'' finger-pointing, it is 
well to look at Poland, where western-style economic shock-therapy was 
applied, the population suffered but endured, and the country emerged 
immeasurably strengthened.
  Lest one thinks this is a communist-era comparison of a giant and a 
midget, I would point out that Poland's nearly 40 million population is 
now in the same general league as Russia's, which is down to 147 
million from the Soviet Union's 270 million.
  More importantly, Poland's gross domestic product is approximately 
one-third of Russia's, so a fair contrast, I believe, can be drawn.
  Poland's political culture and sense of nationhood were solid enough 
to support the wrenching, but necessary, economic reforms. Neither was 
present in Russia.
  Perhaps the shorter period of communist rule in Poland than in Russia 
and the sense that communism had been an alien creed imposed upon the 
country were factors that mitigated the corrosive ideological effects 
of Marxism.
  Whatever the ultimate explanation, the sad fact is that Russia's 
political culture, unlike Poland's, proved unable to provide the 
underpinning for successful economic reform thus far.
  The fundamental problem, is not that Russia carried out too many 
democratic and capitalistic reforms too soon, but rather that it did 
not carry them out fully.
  The Russians now bear the principal responsibility for sorting out 
their colossal problems. The United States should continue to offer 
encouragement and support.
  Most importantly, we must keep our eye on the first priority of 
preventing the collapse of Russian democracy along with their economy.
  (Mr. COATS assumed the Chair.)
  Mr. President, you come from an agricultural State, larger but not 
unlike mine. I suspect in the coming days and weeks, there are going to 
be people who will agree with me, and maybe others already do, that one 
of the ways in which we can deal with Russia's problems in a positive 
way in the near term is by providing significant food aid, because 
shortly we may see significant shortages of food in Russia on the 
shelves.
  The EU is already considering a significant food aid program. Maybe 
that is one of the things we can do in the short term to help stem the 
erosion of civic support for democracy in Russia. The point that has to 
be kept in mind is that we have a clear interest in Russian democracy, 
along with the emerging prospect of a Russian market economy. But it 
ultimately rests with the Russians, and they have some very, very tough 
decisions to make.
  Mr. President, I yield the floor.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. If the Senator from Massachusetts would 
withhold just a moment.

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