He was Chief Political Analyst at the U.S. Embassy in Moscow from 1990-1994.

American policy has always declared that what we wanted to see in Russia and in the other countries of the Soviet Union, was the growth of democracy, civil society, rule of law, and the growth of a market economy, free enterprise, capitalism. There's always been a problem in understanding that those two things don't necessarily go hand in hand. In some cases you may have to choose one or the other.

And I think what did happen is that by force of circumstance, the U.S. government was forced to choose. And we chose the economic over the political. We chose the freeing of prices, privatization of industry, and the creation of a really un-fettered, unregulated capitalism, and essentially hoped that rule of law, civil society, and representative democracy would develop somehow automatically as a result of that.

I mean, part of this was an ideological view, very prevalent in Washington, in both the Bush and Clinton administrations that capitalism brings democracy as an inevitable consequence, and this is really an ideological belief, not a tested demonstrable theory applicable to a place like post-Soviet Russia.

Will you talk what happened in the fall of 1993?

I think the first time when the United States really had to make a choice was in the political conflict between Yeltsin and his opponents that came to a crisis level in September and early October of 1993. That confrontation had been brewing for almost a year. In early 1993, there had been an effort by the then-Congress of People's Deputies to impeach Yeltsin and remove him. That failed.

Yeltsin then counter-attacked with a national referendum on a series of political questions, which he won and won fairly handily, and that was supposed to give him the political momentum to be able to really help transform the country, but using constitutional legal means.

Unfortunately, despite this new mandate that he received in the April referendum, in the summer months Yeltsin really sort of lost focus, and the momentum was lost. And the confrontation then resurfaced in the early fall, and ultimately Yeltsin basically lost patience with his--with his political opponents and you ended up with the violent confrontation of early October.

Now, the United States at that point really had its fingers crossed and was hoping for the best, but clearly its preference lay with Yeltsin. In part, that was because much of the opposition represented extremely ugly bigoted, nationalistic, anti-semitic, really hysterical forces that had been left over from the Soviet period, many of the people demonstrating in support of the people in the Russian White House and opposed to Yeltsin, had to be seen to be believed. I mean, these are the kinds of people, for example, that Slobodan Milosevic has relied on for his political support.

On the other hand, there were many genuine democrats who ultimately were in opposition against Yeltsin because they had a commitment to constitutionality and to legal processes of government. This included the then-head of the constitutional court. This included the man who had been the principal drafter for a new Russian constitution. Ultimately, they were on the opposite side of the barricades against Yeltsin.

The United States sided with Yeltsin. I think that was probably justifiable at the time. I felt it was necessary, but I think Washington did not fully recognize the price that was paid in the development of a civil society in Russia by that kind of violent confrontation in which over 150 people were killed, in which the Parliament Building was gutted through tank fire, and in which essentially the man occupying the Moscow Kremlin took most of his opponents and put them into prison where they remained until early the next year without--without trial.

I think there was a major price to be paid for that, and I think Washington really never faced up to the price.

So what was Washington's attitude? At least a couple of people congratulated Yeltsin on his victory after the day of the firing on the White House.

I think it is worth keeping in mind that Washington's attention at that time was very distracted by events in Somalia, and in fact the actual open battle that took place in Moscow on the 3rd and 4th of October was exactly simultaneous with the killing of the American Rangers in Mogadishu, and Washington's focus was on the Horn of Africa, not what was going on in Russia.

I think also there was a sense by that point that Yeltsin was our guy, and there was a pretty solid commitment to Yeltsin as a leader and to Yeltsin as the central figure of a team of what were seen as westernizing reformers, and many of those were indeed very good people, but I think what was lost sight of was that Russia's democrats and people in Russia who were committed to the development of a law-based state, of constitutionality, were divided by those events of the fall of 1993.

And some very good people ended up being essentially closed out of participation in the country's politics because they placed loyalty to the law above loyalty to Boris Yeltsin.

So once the battle was over and, as you said, some of the opponents were even in fact locked up, were we relieved that the opposition seemed to be handled, taken care of?

I think Washington was extremely relieved. Washington's main priority was that Yeltsin's victory be essentially ratified in an election. Yeltsin himself had the same priority. So they scheduled elections to take place in the middle of December, and Yeltsin's team and its supporters in Washington, I think, were completely confident, absolutely cocky, that that would be a ratification, and that they would obtain overwhelming support from the Russian people in that election.

The embassy had warned Washington at the end of November that the election had the potential to be a disaster. I don't think Washington believed it. They certainly didn't want to believe it, but in point of fact the election that took place in mid-December was a fairly thorough public rejection, not so much of the politics that Yeltsin had brought to Russia, as of the economics because much of what the world saw through CNN was this battle that was fought out on the streets of Moscow.

It obscured the fact that the policies which Yeltsin's reform team had imposed had created a real crisis in middle-class and working-class living standards in Russia in the later part of 1993, and the people who had really struggled in 1990, '91, '92, taking on extra jobs, moonlighting, using up their savings, all kinds of mechanisms in order to get by and had just scraped by through the huge mega inflation of 1992 and thought in early 1993 that they were beginning to get ahead of the game again then got sandbagged by these policies from Yeltsin's team that created a real, real genuine fear among working class people.

And I think the result of that was not just the fact that Gaidar's part of Yeltsin's supporters received so few votes, but this brief immense surge in support for Zhirinovsky in which he received almost a quarter of the votes cast, and almost all of those votes came from younger male, blue-collar, industrial workers in the big cities who frankly were scared about their livelihoods.

So it wasn't these mean nasty crazies that had been on the streets in October. It was working-class people.

It was working-class people. I mean, I don't think there's much question that the votes that went to the Communist Party obviously represented people who still regretted the loss of the Soviet Union and people who had been on the other side of the barricades, but the real overwhelming defeat that Yeltsin's team got in that December 1993 election was about economics, and it was a rejection of this notion of shock therapy, of economic pain, and the monetarist prescription that led to something in 1993 that I had not seen in Russia since the final couple of months of 1991, which was real fear.

And it was a remarkable thing that during 1992 when you had 2,000-percent inflation a month and these enormous economic disruptions, that you did not actually see fear, that people really were very hard-pressed to adjust, but they did. But in the fall of 1993, the fear was back, and I think that fear was reflected in a willingness to listen to a man like Zhirinovsky.

...

And so obviously the question was how do we react, and unfortunately, when put to the question of the people have spoken in what was a very legitimate election and where the voice of the people was, I think, quite clear and unambiguous, after some consultations over the secure telephone obviously with the President and other senior officials, the American reaction was to tell the Russian government, "Let's basically ignore the election and get on with the program."

So, rather than listening to the voice of the people expressed in what was undoubted the most legitimate national demonstration of popular preference that had ever been held in Russia in a thousand years, our view was let's finesse the election, let's find ways to side-track this new legislature that has been created by the election, and let's get on with the program. And that created the basis for really the next 2 years in which American policy was to help create parallel governmental structures directly under the Kremlin to conduct policies that would not be accountable to the national legislature in any way in an effort to essentially evade the constitutional procedures that had just been created in Yeltsin's new constitution and to evade any kind of control by a parliament that was accountable to the electorate.

So, essentially, push reform by decree, government by decree...

....Unfortunately--since from Washington's point of view the wrong guys won--the reaction was rather than trying to find ways of working with this new legislature--which was a much more complicated body, I think, than people initially thought, had a lot of people in it who were potentially open-minded on many issues, but were certainly going to be less willing to go along with economic policy that impoverished much of the Russian people--rather than trying to meet these people halfway, the reaction was to find ways to ignore them and side-track them and to build up new separate parallel government structures to carry on with the policy.

And many of these parallel government structures that were set up, often directly with American participation, were remarkably similar to the role that the Soviet Communist Party had played for so many years in which you had parallel structures.

You had a government which was the facade of power and you had the party which was the reality of power, and by helping to create these parallel structures under Yeltsin's Kremlin, what essentially the United States participated in was perpetualization of this type of non-accountable authority in Russia.

And a structure that was familiar to the Russian people.

Not just familiar to the Russian people, but more particularly a structure that the so-called reformers felt very comfortable with. It was something that they had all participated in, in the Soviet era, and for them, it was as comfortable as putting on a pair of old gloves to engage in government by executive order and by decree, rather than the much more complex, much more challenging process of dealing with government that involves a representative parliament.

And I think that was particularly demonstrated by the extent to which many of the reformers who were elected to the State Duma just failed to participate in its activities, and many of the most prominent westernizers, even though they had been elected to this representative body, almost never showed up.

In the case of Andrei Kozyrev, it was almost 2 years before he even bothered to pick up his ID card, and he almost never participated in the work of the parliament.

So this is the second time that the U.S. is faced with choice of the rule of law or our team?

I think so. I think the election of December 1993 was a clear and legitimate expression of Russian popular will and a rejection of the economic policies that Washington and the Treasury Department and the IMF had pushed on Russia. And when faced with popular rejection, the choice was to ignore popular will and to press on with the policy, and I think there was a huge cost on the long-term development of rule of law and constitutional government in Russia for making that choice.

And a huge cost in our reputation, if you will, as a government that was preaching principle and rule of law in that?

I think we never fully understood the extent to which Russian democrats are complicated and a fractious bunch, and many of the people who were supporting Yeltsin were more interested in the development of a particular economic structure than they were of a democratic structure.

Many of the people who were more committed to legal reform, constitutional reform, protection of civil liberties, individual rights, were much less interested in the economic questions, perhaps much less optimistic of the ability of Russia to make very rapid economic changes, and sometimes you simply had to choose. And unfortunately, with each passing crisis in post-Soviet Russian politics, the number of the genuine democrats who became disillusioned with American policy grew and grew, and ultimately I think we lost most of them on the issue of the first war in Chechnya.

Tell me about the first war in Chechnya.

Keep in mind that the Yeltsin government had been wrestling with the problem of Chechnya since its really very first days, and the first occasion when Yeltsin tried to use military force in Chechnya was in late 1991, when a battalion of interior ministry troops were sent to Grozny on what was supposed to be an easy retaking of government authority there, and it turned into a fiasco.

In the three years that then passed, the Moscow government tried through a variety of surrogates, of trying to subsidize various political parties in Chechnya, trying to find different mechanisms of subversion, coercion, economic sanctions, anything they could think of to try to get a handle on the Chechnyan problem. All of these efforts failed, and in late 1994, after a series of hijackings, of buses and kidnappings and really a very, very serious problem of lawlessness in the Northern Caucuses, much of it sources to Chechnya, they resorted to large-scale military operations.

This was, I think, unquestionably the greatest single mistake of Boris Yeltsin's political career, and the one thing from which his reputation historically will never fully recover. I mean, this was Boris Yeltsin's Vietnam, and the brutality and ruthlessness of the first Chechnyan campaign was so great that he had alienated almost all genuine democrats in the country from their own government, and then came the question--what will be the reaction of the United States.

I think Washington very badly misunderstood what Chechnya was all about. I think it believed that the military campaign would probably be short, brutal, ruthless, but successful. I think it greatly underestimated the staying power, endurance, and the commitment of the Chechnyans. I think it greatly underestimated the brutality that the Russian forces would use within their own national borders.

And Washington's reactions was to commit ourselves to a policy of Russia's territorial integrity, all of these kind of buzz words that are used by diplomats that don't really have much meaning, and this really most unfortunate comparison that the Clinton administration made of what Boris Yeltsin was doing in Chechnya with Abraham Lincoln's conduct during the American Civil War.

In that, we lost our credibility, I think, with almost all of the democratic forces in Russia.

What is the attitude towards the United States today?

I would say disillusion, disillusion in part because much of the expectations that many people in Russia had of us in the late '80s and early '90s were illusionary. I think there was almost a fantasy notion that the kind of generosity, the kind of outpouring of assistance that the United States practiced during the Marshall Plan even towards our defeated enemies, Germany and Japan, would somehow in a very short order transform Russia into the kind of almost garden of Eden that came to exist in Germany, in Western Europe. I think there was a great deal of expectations that could never have been satisfied, never have been fulfilled.

I think there was a great deal of a sense that the Americans whom they had perceived to be idealistic, principled, and things in fact no government ever actually is were then increasingly seen to be unprincipled, conspiratorial, manipulative, and excessively identified with whatever were the actual power centers in Russia which, of course, was largely centered on Boris Yeltsin, but not exclusively.

I think our very close association with the government of Viktor Chernomyrdin did us very great harm in terms of the legitimacy we had in much Russian public opinion. Whatever he may have been--his administrative skills--nobody in Russia, I think, was under any great illusions about Viktor Chernomyrdin's background with the natural gas monopoly or his commitment to any kind of genuine democratic government.

I mean, this was demonstrated that every time Chernomyrdin or his political party had to go to the polls, they were annihilated. Nobody voted for them, for very good reasons, but the fact that the American government and the American Vice President in particular were so close to Viktor Chernomyrdin and his government, I think created the impression that what the Americans were basically interested was in dealing with people in power in order to serve American interests rather than a commitment to the long-term democratic development of Russia.

The elections of December of '93. You have said and written that there was from your point of view-- inside the embassy in Moscow--an unmistakable shift in the kind of reporting that was expected.

I think as Washington became increasingly committed to a particular programmatic relationship with Russia, built around what is sometimes called shock therapy, monetarist policies, particular economic prescriptions that ignored legal reform, ignored development of representative institutions, ignored sort of the development of constitutional government and focussed almost exclusively on monetarist and price mechanisms, that the U.S. government, not just the embassy, but the government as a whole really divided into those who were participants and committed to and often the believers in these programs on the policies, and those people who generally had had a longer personal and professional association with Russia who were frequently very skeptical about the applicability of these policies to Russia, very skeptical about the motivations of many people in Moscow were participating in these reforms. And I think what you got was a battle in some ways--I know this oversimplifies--between the Russia hands and the economists.

That does overstate things because there were many people who were involved in economic affairs who were themselves very skeptical about the policies and very dubious about what we were doing, but I think in general, you could say that not just in the embassy, but in the State Department, in CIA, in other parts of the government that dealt with Russia, there was a division between those people whose focus was on a particular economic ideology and those people whose focus was on a social, political, economic entity called "Russia." And I think the two really were incapable of coming to a meeting of minds because their general approach was so different.

And one of your former colleagues in the embassy has said that basically open warfare broke out between the political divisions and the economic division.

I think that's not an overstatement. There were personality aspects associated with that. I was part of that, which I certainly recognize, but beyond the personality, I think, was this broader analytical issue. Are these policies right for Russia? Is Russia the right country for these policies? And many of the people who were committed to the programs and the policies were also institutionally responsible for evaluating their success, and not too surprisingly, as in any government, when people are responsible for evaluating the success or failures of their own programs, the evaluations always pronounced the programs as successful. Whereas, other people who had analytical reporting responsibilities that were not attached to the programs frequently were much more negative, much more skeptical about what we were doing, and not just about the success or failure of the economic programs and policies, but what would be the long-term impact on broader American national interests from carrying out policies which Russia simply could not adapt to its own circumstances.

You were involved in writing one particular report, but this report was not allowed to be sent from the embassy. Tell me about that.

There had actually been a great deal of reporting and analysis out of the embassy that was, shall we say, internally contradictory in which different parts of the embassy were reporting the different, different things.

One thing that the Moscow embassy has is a long-term practice of allowing individual officers to send in statements of individual viewpoint that are not fully cleared, that don't represent the views of the ambassador of the mission, but are the views of the individual. And that was a fairly hallowed tradition at the Moscow embassy, and it exists in very few American embassies that I'm aware of.

And that had been practiced under both Ambassadors Straus and Pickering, and a number of people made use of that. I was one of them. I was allowed to send in a number of messages expressing my own views, my own skepticism about much of what U.S. policy was trying to achieve in Russia, and those were clearly labeled as my individual views.

In early 1994, I wrote another such message. There was a great deal of debate within the embassy about it. It was not well received in the economic section.

The ambassador, however, was prepared to send the message in as an expression of individual views, but met very strong objections to that, particularly from the Treasury representative and the economic section. And ultimately, the message went in by--under a separate channel in the State Department that is known as dissent channel which is a formal mechanism that exists to allow people to express dissenting views, but also guarantees that those views will not be very widely disseminated in the government because most embassy reporting goes not just to the State Department, but it goes to the White House, CIA, Defense Department, Treasury Department, Commerce Department, all over the place. Dissent channel messages are very, very carefully kept within the State Department and very, very limited in their distribution in the State Department.

So, in a sense, dissent channel allows you to say anything you want to say, but make sure that not very many people hear it.

And what was the gist of the message that you first tried to send in the normal channel--through the normal channels?

The argument was essentially that the economic policies we were trying to foist on Russia would fail because Russia could not adapt them, and that we had--and that we had our priorities backwards, that it was really irrelevant to the interest of the United States how Russia organized its own domestic household, what mixture of market or statist economic mechanisms it used. It was really irrelevant to us.

What was important is that Russia be a responsible partner with the United States on the world stage, and that we be able to deal with it in a cooperative way on a wide range of international questions that are of interest to both countries, and my argument was that by putting all of our priority on trying to transform Russia into our idea, our model of an appropriate economic system, we would so alienate the Russian electorate, the Russian political elite, that it would be impossible for us then to cooperate with them on the world stage, and that this was a reversal of real American priorities.

And what was the argument that the Treasury representative used to squash this message?

Well, these discussions took place some years ago, and it's hard for me to remember all the details of it. What I do remember most vividly is the statement that this message would give Larry Summers a heart attack, and I think just a general feeling that my views on the economic policies, on the appropriateness of these types of monetarist reforms in Russia was heresy, and that heresy should not be allowed.

What all of this is telling us is that even back as early as 1994, 1993, Washington was certainly getting the reporting that said this isn't working.

It was getting that reporting from many sources, not just from internal classified government sources. There was a good deal of press that was revealing some of the problems.

I mean, there was a good deal of analytical attention to this within various parts of the intelligence community, particularly at CIA. This was by no means a question of one individual crying out that the emperor had no clothes on. There were a lot of people who knew a lot about Russia, many of them in academia, many of them in business, many of them in journalism, many of them in different parts of the government who were very, very skeptical about what the U.S. government was trying to do.

I don't think there's any question that if people in Washington wanted to listen to doubting viewpoints that there were plenty of doubting viewpoints to listen to.

You've been quoted as saying the question of 'who lost Russia' is not the right question, but the question of 'who robbed Russia' is the legitimate question to ask. Talk to me a bit about that.

Well, the 'who lost Russia' is really a very conceited reflection of a notion that somehow Russia is ours to lose.

What we had to lose in our relations with Russia were our own national interests, and obviously the way we conducted ourselves with Russia would determine whether or not Russia would be willing to cooperate with us on the world stage, but the broader question of the nature of economic reform in that country was one in which the United States played an important role and we created a virtual open shop for thievery at a national level and for capital flight in terms of hundreds of billions of dollars, and the raping of natural resources and industries on a scale which I doubt has ever taken place in human history.

And I think it must be kept in mind that the robbing of Russia was not conducted solely and exclusively by Russians, but there was a lot of foreign participation. I mean, we've recently seen some of the scandals involving some of the money-laundering that took place in New York, but colossal sums of money left Russia into places like Singapore and Switzerland and Cyprus and the Bahamas and the South of France and all sorts of places.

And, for example, overnight, some of the Baltic republics became major exporters of commodities that they did not even produce, and it was large, large amounts of things like nickel and chromium and diamonds and timber and other commodities--started appearing in world markets through all kinds of nefarious mechanisms in which enormous numbers of people made enormous amounts of money.

And a lot of that money is not in Russian hands. It's in foreign hands. A lot of people around the world profited enormously from the raping of the Russian economy.

I think many people in Russia sense that that is true, and so much of the resentment in the Russian electorate against these economic policies is divided between the anger that they feel towards some of their own oligarchs, their own political leaders, and the anger they feel towards the outside world.

And you've said that we push policies that essentially said greed is good.

I think our attitude was that what Russia really needed in its culture was the idea of greed, that the Soviet Communist egalitarian leveling approach had been so deadening to enterprise, so deadening to individual initiative that I think there was a view that a little greed would be a very healthy thing in Russia.

I think what many of these people did not understand was that greed had been part and parcel of the Soviet Communist system. It had simply operated under the counter. Nobody got along according to the rules in the Soviet Union, and that in fact the basis for a very large-scale organized crime existed well back in the Soviet period and began to flourish enormously during perestroika, and once all the controls were off within the end of the Soviet Union, these criminal gangs and many of their new associates in business suits had the ability to rob what is still an enormously rich country and make fantastic sums of money.

I don't think that in post-Soviet Russia the real problem was a lack of greed. The problem was a lack of genuine law because, in the Soviet period, what passed for law, what passed for legality, what passed for law enforcement were so discredited in the minds of the Russian people, and quite legitimately discredited, that what was really needed in the post-Soviet Russia was a new culture of law, a new culture of civic society, not a culture of greed.

What if anything did our policies have to do with creating the oligarchs?

I think our policies had a great deal to do with creating the oligarchs. I know there has been more recent tendency by the spokesmen from the IMF, from the US Treasury to claim that this was really all things Russia did to itself. But in the early post-Soviet era Washington, both through the IMF and US Treasury, played an enormous role in determining what kinds of economic policies would be created, what kind of winners and losers there would be.

Some of the people who later came to be called the oligarchs were among the most favored private businessmen in terms of doing all kinds of contractual relationships and in having the kind of political access that made it possible for them to create these enormous financial institutions and engage in all kinds of nefarious economic and political activities. The idea that we in the West, we Americans or the international financial institutions or some of the big European financial institutions have clean hands in this matter, I think, is is simply wrong.

How were the policies that we were pushing create incentives to these people?

In part our policies were opening up opportunities for almost unbridled robber baron capitalism with no counterweight in terms of legal controls, oversight by regulatory agencies or any practical oversight by the central bank. Indeed the Russian central bank has become fairly widely known now became part of the problem because it engaged in all kinds of off shore financial dealings in order artificially to inflate its own books to try to meet the arbitrary financial goals that had been laid down by the IMF and other Western lenders.

I think also there's no question that the West had an opportunity as these huge commodity sales abroad were taking place to either exercise law enforcement on our own territories or around the world, not in Russia but in the rest of the world, or not to exercise law enforcement. We could either look the other way while deals of colossal scale that simply could NOT be legal were taking place, or we could energetically try to investigate what was really going on. It's only really in the last few years that we've begun looking into some of these particularly money-laundering deals when they've touched, when they've touched our own territory. But transactions of that type have been taking place really since the late 1980s, I mean even in the late Gorbachov era this was starting. There were certain warnings within the U.S. government, particularly from the CIA in as early as the late 1980s that this kind of activity was going on.

So it's disingenuous to argue that we didn't know or couldn't have known what was going on.

Certainly people who wanted to know could have known. Even if they'd had access of only to the public press. And in the early 1990s the Russian press---which was really feeling its oats---often did a superb job in drawing attention to potential corruption scandals, malfeasance, all kinds of questionable activities. I don't think there was any lack of information, there was a lack of attention, and I think a lack of recognition that letting this problem grow was going to have some fairly important negative consequences, not just for economic reform in Russia but for the whole course of Russian democracy.

How do you make it make sense to yourself, that U.S. policies were going pretty far wrong and yet there was no mid-course correction?

I think you have to recognize that U.S. policy toward Russia was really part and parcel of a broader policy towards the entire developing world which was dominated by ... the so-called "Washington Consensus" view on economic reforms. And this is built around things that have been called "shock therapy," privatization, price control, various monitors. These were applied in places as widely spread as Indonesia and Thailand, Latin America, Russia and Ukraine. Without very much sense as to what the different local characteristics were and what the .......ability and adaptability of these societies were.

I don't think the United States government had an economic policy for Russia. We had an economic policy for the non-developed world and we pushed it with an almost religious zeal. And an unwillingness to respond to the argument that different countries do have different histories, different capabilities, different national cultures. And a real unwillingness to recognize how much of our own prosperity and the prosperity of other developed countries is built not on greed, but on the basis of established law and contractual obligation. And that those basic foundations of modern market capitalism don't exist in many other countries. And until they're at least laid and begun to develop you cannot expect the capitalism in the sense we understand it can actually develop either.

Has there come a point where we just had to say that our policy was working even if we knew it wasn't because we had staked so much on t his policy?

In government there is always an inclination to think the policies are successful or working regardless of the reality. This I think became not just a bureaucratic impulse, this became a very high level political impulse partly because the United States had committed so much political prestige at the very highest level not just to the relationship with Russia, that's perfectly understandable and I think quite justifiable, but to particular programmatic solutions, particular policy orientations, and to particular constituent groups in Russia, not Boris Yeltsin necessarily, but Viktor Chernomyrdin, Anatoli Chubais, other people, other institutions, constituents who were our favored interlocutors.

And I think you cannot but recognize that, once many people on the American side, particularly in the Treasury Department, parts of the State Department and the White House, became professionally and personally committed to the success of particular constituents groups in Moscow, that we had greatly overstepped the extent to which our involvement was serving our broad national interests.

Ultimately, between governments, there should be a degree of neutrality when you're dealing with issues that involve money. And I think that the kinds of normal discretion that anyone would practice, say, between Washington and Tokyo, between Washington and London, simply were not put into practice between Moscow and Washington and we paid, we paid a very high price for that.

And the Russians are paying, too, arguably?

The Russians are paying objectively a greater price, but we pay the secondary price of the extent to which we are blamed for much of the pain that the Russian people are now suffering.

And what about the connection with Yeltsin? Even as Yeltsin's reformist credentials began to disappear and his popularity plummeted, he was still the person that we supported unquestioningly.

Well, Boris Yeltsin has many positive qualities. Understanding of modern economics is not one of them. I don't think anyone could reasonably be under the illusion that Yeltsin had much grasp of what many people in his team were doing. I don't think he had more than a fleeting comprehension of the mechanisms that were being discussed between his reform team and the west.

He had, I think, a very great faith both in many of the younger people who had supported him during his battle with Gorbachev. I think he had a very deep perception that the Soviet economic system was not reformable and had to be junked and had to be replaced. I think he had very little comprehension of the extent to which some of the mechanisms being imported from the west were going to work in Russia.

In this regard, he was a man of his generation. I don't think any Russian from his political background in the Soviet Communist Party could be expected to comprehend the nature of the economic reforms that were being tried. But as the elected president, he ultimately, of course, was responsible.

I think the United States came to have a commitment to Boris Yeltsin, which was almost as much symbolic as substantive, because the people we were dealing with on economic reform were other people, many of whom, I think, did not tell Yeltsin very much about what was going on. They certainly never successfully explained to Yeltsin any of the realities of monetary policy, let along of some of the realities of the privatization programs and the other so-called reforms that led to such scandals.

But I think the United States became so committed to the person and the symbol of Boris Yeltsin that, even when we were confronted with the carnage of the war in Chechnya, it was very difficult for Washington to try to back away from it.

What has Russia become?

Russia has become, I think, in many ways something of a replica of what it was before the Soviet era. There's a great deal about Russia in the Year 2000 that is very similar of the Russia of the year 1900, I mean, some of the same basic questions.

What are the appropriate relationships between executive power and legislative and legal power? What is the relative balance between central power and regional and local power? How do you deal with the problem of the land, of agriculture and the peasantry? What is the relative role of domestic capital versus foreign capital? How much does Russia want to be like the West? How much does it want to maintain an adherence to its own cultural roots and traditions? How is Russia different from the west? How is Russia to be integrated with the West?

Those questions existed in Russia long before the Bolshevik Revolution and I think, in my own view, most of the 20th century for Russia has been almost lost time; they went down this terribly wrong road during the Soviet period, where many achievements obviously were made. Huge human costs were paid and ultimately, at the end of the century, they're dealing with most of the same questions that they faced at the beginning of the century.

So, I think the 21st century for Russia is going to be trying to really deal with some of the problems that never got settled in the 20th.

And why should we care?

We should care not only because Russia possesses the world's second largest arsenal of weapons of mass destruction, though that is a perfectly legitimate reason. We should care because any country that occupies as much of the political space of the world as Russia does is going to be an important player in the world.

The fact that the Russian economy is currently weak, that Russian public health is a disaster, these are not going to change the fact that, in the 21st century, Russia and its periphery, the other countries that used to be in the Russian-Soviet Empire, are going to be where much of the instability, the conflict, the competitions over natural resources, the competitions between east and west, north and south are going to take place.

In fact, the very worst thing that could happen for American national interests throughout the whole Eurasian land mass is, if Russia were a complete failed state, to have a vacuum of any kind of effective political economic authority over 11 time zones is a prescription for nothing, nothing but trouble. And in the same way that the collapse of the Ottoman Empire and the Hapsburg Empires and other empires created many of the problems throughout the middle east, the Balkans, the third world that we've been dealing with for the past hundred years, the collapse of the Soviet-Russian Empire is going to create many of the problems we and the rest of the world will be dealing with for the next hundred years.

In the late '80s, early '90s, there seemed a world of possibilities. I'm asking you to over-simply, I understand. But what went wrong?

What went wrong in Russia is a question that people are going to be writing libraries about and there's certainly no simply answer to the question.

I think that what went wrong fundamentally was, that people who understood that the Soviet Union had been a great failed experiment, sought to correct it by another series of experimentation, rather than by the slow, patient, block by block building up of a civil society.

I remember, in the early '90s, I think the most poignant slogan that you saw in Russia during the demonstrations was, "no more experiments." The people were terribly tired of being treated like laboratory rats. This effort to build the new socialist man, scientific socialism had left people feeling completely alienated from their authorities. And the one thing the Russian people wanted was, not to be treated like experimental material.

And unfortunately, what they got in the 1990s was, another series of experiments, where many of the scientists conducting the experiments were not even Russians, but were people sitting in offices in Washington, in the U. S. Treasury and the IMF. And I think much of the disillusion with the West, much of the hostility that Russians now feel, particularly towards the United States, is reaction to what they feel was another series of failed experiments.