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U.S.: Administration Called Naive On Its Dealings With Russian Corruption

Experts on Russia are telling American legislators that the administration of U.S. President Bill Clinton has been naive about how to deal with Russia as it emerges from seven decades of communist rule. On Wednesday, two witnesses told a congressional committee hearing that the Clinton approach encouraged corruption in Russia. RFE/RL's Andrew F. Tully reports from Washington.

Washington, 7 October 1999 (RFE/RL) -- A former U.S. ambassador to Belarus and a former CIA official told an American Congressional committee that the administration of President Bill Clinton has not been vigilant enough in addressing Russian corruption.

The first witness to testify Wednesday before the House of Representatives Foreign Relations Committee was David Swartz, whom former U.S. President George Bush -- a Republican -- named as ambassador to a newly independent Belarus in 1992.

Swartz said he resigned his post two years later, after Clinton -- a member of the opposition Democratic Party -- became president. Swartz said he felt the new administration was "naive" about the new Russian leadership.

"From my vantage point as a holdover ambassador in those first months, and with lengthy experience in the region, I felt that the new administration was too willing to take at face value punitive reformists and white-head, sort of, credentials of (Russian President Boris) Yeltsin himself and the people around him."

The former ambassador to Belarus said the Clinton administration's policy approach encouraged the culture of corruption in Russian business and government.

"The sum total of all of this, in my view, was a creation of a climate -- creation of a climate -- in Moscow of political and economic promiscuity where the impression reigned of a high U.S. tolerance level for these activities across a broad spectrum of the unofficial and official Russian community."

Swartz was followed by Martin Ermarth, a former official of the U.S. Central Intelligence Agency and the White House's National Security Council. Ermarth agreed that the Clinton administration's policies left Russian business corruption unchallenged.

"What we call economic reform in Russia has really not created the market economy or capitalism that most hoped for. Rather, it created a kind of crony capitalism without much capitalism, or I'd call it 'phony crony capitalism,' where insider privatization in alliance with corrupt officialdom has produced a system dominated by a few powerful individuals or entities who strip wealth out of the country and send it abroad, rather than investing to create wealth and prosperity at home."

A member of the International Relations Committee, Congressman Sam Gejdenson, a member of Clinton's Democratic Party, defended the president. He said Clinton had taken an amorphous Russia policy developed by Bush and, as he put it, "gave it some form."

Gejdenson complained that the president's opponents, who urge reducing America's engagement of Russia, seem to be wishing for a return to the Cold War days.

"It sometimes seems to me there's a nostalgia -- 'Gee, if we only had this dictatorship that we knew how to confront rather than the unsure future of dealing with a country trying to become democratic.'"

Gejdenson said it would be, in his words, a "disaster" for America to begin limiting its ties with Russia.

Another Democrat, Congressman Tom Lantos, said the Clinton administration is in no way responsible for economic and political trouble in Russia. Instead, he attributed it to the nation's economic hardships.

Lantos noted that the former East Germany, with 17 million people, has received what he called a "transfusion" of $100 billion a year from West Germany since Germany was unified, and the new Germany is now thriving. But Russia, he said, has 150 million people and has received only about $1 billion a year in direct economic aid from the Western democracies.

"I simply think that is wholly unrealistic to look away from the economic realities. The West hoped that they can facilitate the transformation of Russia from a totalitarian police state with a dysfunctional economy into a vibrant democracy with a functioning capitalist economy without any help."

American legislators have become increasingly concerned with corruption in Russia since August. At that time, reports surfaced of an investigation into the "laundering" of Russian currency through accounts at the Bank of New York. Some news accounts have said that as much as $15 billion may have been moved through these accounts. At least one Western news organization has reported that some money that the International Monetary Fund loaned to the Russian central bank may have been involved. There has been no evidence that any IMF money has been laundered.

On Tuesday, prosecutors in New York filed charges against three people -- all of them Russian natives -- and three small companies on charges of illegally accepting money from Russia and transferring it without the proper licenses. Federal prosecutors say they expect to file additional charges in the case.

Money laundering is moving illegally earned funds through several bank accounts until its source is obscured and appears to be legitimate.