COLLISION AND COLLUSION - Reviews
Chronicle of Higher Education
Nov. 27, 1998, p. A16
An Anthropologist Faults Academics for Offering 'Misguided' Assistance to Former Soviet-Bloc Nations: Janine Wedel says that 'econolobbyists' have produced 'misunderstandings and ill will on a massive scale'.
By D.W. MILLER
Almost a decade ago, the peoples of the former Soviet bloc looked westward for a template of a new society. Would-be benefactors were eager to tutor these nations in democracy and capitalism. Despite more than $80-billion in Western economic aid and technical assistance, however, Eastern Europe's transition to market economies has been fitful, at best, while Russians confront a future of corruption, hunger, and insolvency. Why has Western aid not been more effective?
While policy makers and academics prefer to debate the merits of economic "shock therapy" and to lament the political missteps of post-Communist reformers, a social anthropologist at George Washington University fingers the very process by which assistance has arrived. In her new book, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998 (St. Martin's Press), Janine R. Wedel argues that aid programs have suffered from a "gigantic disconnect" between East and West, "forged by the Cold War and exacerbated by the barriers of language, culture, distance, information, and semi-closed borders."
Some development economists have welcomed her critique of efforts to transform the formerly totalitarian states of Eastern Europe. Her broadside against U.S. "econolobbyists," however, including prominent members of the Harvard University faculty, has left even her supporters wondering whether her assessment will hit its mark. Ms. Wedel, a research fellow at George Washington's Institute for European, Russian, and Eurasian Studies, attributes the ineffectiveness of Western technical assistance in part to a failure to understand that Communism left a legacy not only of economic stagnation, but also of resilient political cultures that stress personal relationships and informal social networks. As a result, she writes, "the West's misguided aid efforts opened the door to misunderstandings and ill will on a massive scale."
Ms. Wedel observed the social effects of Communist rule up close, first as a Fulbright scholar and freelance journalist in Warsaw during the 1980s, and later while conducting fieldwork throughout the region. It was during her time in Poland that she became interested in looking "under the surface" of life under martial law, as "people learned to survive by wheeling and dealing," she says. A "tremendous amount of collusion" linked groups that appeared to most Westerners like sworn antagonists. In her 1986 book, Private Poland: An Anthropologist Looks at Everyday Life (Facts on File), "I mapped this whole level of informal relationships for getting by in an informal economy."
Those informal relationships became crucial in the post-Communist era, when the United States decided that much of its aid would take the form of advisers and consultants on economic and political liberalization. "I saw these interactions on the ground," Ms. Wedel says, "and there was such a disconnect between what the consultants thought they were doing and the agendas of the people being helped."
The goal of her new book is to show that "how aid actually happens -- through whom and to whom, under what circumstances, and with which goals -- determines not only the nature of what recipients actually get and how they respond to it, but its ultimate success or failure."
Ms. Wedel believes that economists, legal advisers, and aid officials misconceived their task in Eastern Europe. "Foreign-aid delivery often is thought of as a 'transmission belt' -- a conveyer transmitting advice from one side to another," she writes. In reality, aid is more like a series of chemical reactions, "transformed by the agendas, interests, and interactions" of the donors and the recipients -- often with unexpected results.
Since the early 1990s, Eastern Europe has been flooded with academics and other consultants -- many of them on contract with the U.S. Agency for International Development, or A.I.D., which assists economic reform in the region. In her book, Ms. Wedel faults them in two categories. She characterizes some as "fly-in-fly-out" types, who are merely ignorant of the importance of personal relationships and networks in the recipient society. But more harmful to the long-term cause of democratization, she argues, are the advisers who recognize the importance of the social and political networks and are co-opted by them.
The "fly-in-fly-out" types stay for a few days at a time and offer sweeping, generic economic advice, she says. They are indulged by their hosts mainly for their access to Western aid agencies and for the prestige they can lend to domestic political efforts to sell certain reforms.
Among such advisers, Ms. Wedel's chief exemplar is Jeffrey D. Sachs, a Harvard economist and director of the Harvard Institute for International Development, who made his name in the 1980s advising the Bolivian government on its stabilization program. Since 1990, he has offered his services to Poland, Russia, and other countries in Eastern Europe while participating prominently in the debate over economic reform.
In Ms. Wedel's view, advisers such as Mr. Sachs exaggerated their role in reform, had little patience for the long-term work of nation building, and tended to raise false expectations that the transition to free markets and democracy could be quick and painless. When these expectations soured, so did receptivity to Western help.
Harvard also figures in Ms. Wedel's case study of a Western aid effort that became enmeshed in factional local politics. Under the leadership of Andrei Shleifer, a highly regarded Harvard economist, and Jonathan Hay, a young, Harvard-trained legal expert, the Russia Project of the Harvard Institute for International Development came to epitomize for Ms. Wedel the pitfalls of Western aid strategies.
In the early 1990s, the U.S. aid agency farmed out its Russian efforts to the Harvard institute, which had a prestigious ped-igree and contacts in Russia. The institute initially received $2-million from A.I.D. to foster the makings of a democratic, capitalist system in Russia, such as capital markets and financial regulations.
According to Ms. Wedel, institute administrators made a strategic decision to pursue reform by aiding the political fortunes of just one faction among many. The faction is associated with Anatoly Chubais, who was then an up-and-coming pro-Western politician from St. Petersburg and who became a key economic adviser to Russian President Boris Yeltsin. With the acquiescence of U.S. policy makers, the institute identified Mr. Chubais's "clique," in Ms. Wedel's terms, as the best vehicle for the privatization of state assets and other urgently needed measures. So the institute channeled its A.I.D. funds into reform projects designed to advance the Chubais faction, which in turn parlayed its pull with Mr. Yeltsin into new laws and quasi-governmental agencies that were established by decree instead of through the legislature. The institute used its influence in Russia and in Washington to win a total of $57-million in mostly no-bid contracts, and to gain management of hundreds of millions more given to other contractors.
Eventually, writes Ms. Wedel, the institute's means obscured its ends. Its ostensibly non-governmental organizations teemed with conflicts of interest and allowed their Russian and American sponsors to claim or deny responsibility for policies as convenient. When the privatization of state assets, backed by Mr. Chubais, ended up enriching a small group of Russians, the institute was implicated in the program's ensuing unpopularity. Finally, in 1997, the institute lost all of its A.I.D. contracts in Russia and fired Mr. Shleifer and Mr. Hay over allegations, still under investigation by the agency, that they had enriched themselves through inside information. The two men have denied the allegations.
Ms. Wedel believes that the best opportunities for the West to guide Russia along the path to capitalist democracy may have passed. By "putting their eggs in one basket," she writes, aid planners and politicians "opened themselves to suspicion and cynicism about aid programs, capitalism, and the West." The fact that Western aid contracts seemed to benefit only certain factions -- and the Western consultants who helped them -- revived the image of the West as an "imperialist and colonialist demon."
The application of social anthropology to economics is not new. Indeed, development economists have for years faulted international aid agencies for creating economic programs in developing nations without regard to their distinctive cultures and their political and social frameworks. But the sudden opportunity to re-create nations emerging from under the Soviet thumb elicited a more urgent -- and more ideological -- response from the West. As Ms. Wedel sees it, aid donors eager to underscore the triumph of capitalism tended to assume that only they knew what recipients needed.
Some economists who have read Ms. Wedel's new book acknowledge the potential contribution of her fieldwork to their discipline. "There is a long tradition of economists' looking at the world as a set of mechanistic relationships. But it simply isn't," says Lloyd Jeff Dumas, an economist at the University of Texas at Dallas. "Economists are supposed to be sensitive to the impact of incentives on people's behavior. To do that, you have to know how they look at the world."
Clifford G. Gaddy, an economist with the Brookings Institution, says Ms. Wedel "understands from her previous work that societies are very complex and you have to understand them from the inside and from the bottom up. ... This is difficult for an economist to accept."
It is not yet clear how Ms. Wedel's conclusions will sit with other economists and with foreign-aid specialists. While endorsing the idea of an anthropological study in principle, Mr. Sachs calls her characterizations of him "repulsive" and "inaccurate" and says, "This is the first time I've read I wasn't an adviser to the Polish government."
Even Ms. Wedel's supporters say her exhaustive focus on the allegedly collusive tactics of many Western consultants in Russia may detract from her more fundamental message. Western advisers in Russia have faced a truly vexing dilemma, says Mr. Gaddy: "Is it possible to establish a transparent, pluralistic, democratic society with non-democratic means?" Under the circumstances, it was not unreasonable to conclude that a small group of key players needed to push reforms quickly before hostile interest groups mobilized to defeat them, he says. "It would have been more balanced to hear those arguments." Says Mr. Dumas, "I hope this book is not simply looked at as an expose. It has some of that flavor."
But Ms. Wedel contends that recent experience in Eastern Europe demonstrates clearly that "we need to focus on building non-aligned institutions in these countries," not on favoring one political faction over another. Indeed, she argues, aid has worked best when "the relationship between donor and recipient made sense," especially when aid programs respond to indigenous requests for expertise in specific areas, such as taxation and budgeting.
The theme of collusion, she adds, offers a cautionary tale for economic globalization: The Russian experience illustrates the danger of allowing the agents of aid to become more loyal to the bond they form with one another than to the nations they represent.