Russia’s Self-Inflicted Wound - The American Spectator | USA News and Politics
Russia’s Self-Inflicted Wound
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Russia’s invasion of Ukraine and its global impact will go down in history as one of the greatest self-inflicted wounds and debacles in modern history. Poorly calculated, self-defeating, and lacking moral conscience, it defies the very definition of an advanced civilization in the 21st century. More confounding is that the invasion totally set back the Russian economy from a path that was set for it by Vladimir Putin’s two predecessors. Putin’s gnawing preoccupation of restoring the former Soviet empire by brute force has only threatened the standard of living for the Russian people and closed it off to the full benefits of the modern world. The actions of one man upended what could have been a path to greater opportunity and advancement. The promise of Russia more than 30 years ago was destroyed overnight.

It was in 1988 that I was asked to lead the U.S. government in negotiating (unbeknownst to us at the time) the last trade and economic agreement with the Soviet Union. We were coming to the end of the Cold War, Mikhael Gorbachev was president, and glasnost and perestroika had become part of the global vocabulary to convey a new era of freedom both in the marketplace and in freedom of expression.

At the time, the Soviet Union, which encompassed 15 republics across 11 time zones, including Ukraine, was facing crippling recession and growing doubts about its geopolitical future. Given that backdrop, President Reagan’s administration was split on how to respond to the country’s growing dilemma. Some argued that the United States was about to win the Cold War after years of aggression and global rivalry, and we should just let the country flounder.

Then there were those of us who were convinced that the path forward should not be so much retributive as empathetic in supporting the country to find its place in a new global order. The Soviets simply had no firm footing in the world of capital markets or allowing its people the freedom to express their thoughts. A strict central command economy had put the country into an economic straight jacket, and the United States could help offer a lifeline that would support what promised to be a difficult transition.

As a consequence, we came up with a proposal that was as simple as it was promising. To work with the Soviets, we offered to set up 15 separate working groups broken down by industry sectors and commercial function such as technology, basic industries, and consumer goods. In turn, we would have senior U.S. corporate executives and experts from those industries get together with their Soviet counterparts to share their advice and support and to forge a path that would integrate Soviet business into an increasingly globalized world. We realized that the Soviet economy would be dramatically changed if the country could only diversify and become more integrated in the free marketplace. Rich in natural resources, the Soviet Union needed to broaden its economy into new sectors that could help lift the standard of living for its people and provide goods and services to the global market more broadly. After all, the country had one of the highest concentrations of Ph.D.s and technical experts in the world. And the United States could certainly benefit from the increased trade ties as well.

In a memorable briefing before the National Security Council, headed by its chairman at the time, Colin Powell, I made my case before a divided room. Little did I know that Reagan had already quietly signaled his desire to treat what he had called the “evil empire” with empathy and a desire for collaboration. After an intense two-hour meeting, the two-way engagement approach won that day in the White House Situation Room.

Soon I was on a plane to Moscow with a team committed to negotiating a constructive and auspicious agreement with our erstwhile adversary. Meeting up with hundreds of U.S. and Soviet corporate leaders in Moscow during the annual conference of the then-U.S.–Soviet Business Council, we were able to visibly show that we were entering a new era in our bilateral relations. In a festive ceremony, we even planted several trees that we brought on our government plane for the occasion. We hoped that the saplings would grow into large and strong symbols of what we were in the process of putting in place.

Despite our efforts to set a path of economic stability and promise based on diversity and closer bilateral and global ties, Russia did not forge the promising path we had hoped.

The implementation of the agreement started off with great flourish. Not only had the United States opened the door for itself, but others became engaged in business as well. Teams of Western accounting firms, nonprofit organizations, and corporations poured into Moscow. When one stayed at one of the city’s hotels, one heard Italian, Spanish, Chinese, French, German, and other languages in the lobby with greater volume than ever. And Soviet business executives were more than anxious to do business, particularly budding oligarchs who more than anyone understood the potential for generating profit.

One of the most visible signs of this new economic era was the entry of McDonald’s in 1990. The very symbol of entrepreneurialism and capitalism, the restaurant chain decided to set up its first location and its largest store anywhere on the globe in downtown Moscow. From day one it faced some formidable obstacles, carryovers from the past. The Moscow City Council wanted a piece of the action in return for granting permits. McDonald’s quickly learned that it could not wire its profits to overseas bank accounts. Bringing free market principles into play would not be easy.

At the same time, McDonald’s realized that quality supplies to make Big Macs and fries were impossible to come by. Each obstacle to success would need to be met one by one. If generated revenues could not be taken out of the country, then they needed to be put to good use domestically. Cattle that met McDonald’s beef standards would be raised on nearby farms. Potatoes specially grown to the quality of the chain for its French fries would be grown in fields outside of the capital. Boston lettuce and beef tomatoes would be cultivated in local greenhouses.

When McDonald’s opened its first mammoth restaurant, thousands stood in line for Happy Meals. I was among them in the first days of its launch to be a part of history in the making. Every seat was filled. If you were to meet someone for lunch, you would let them know in which section they would find you. Huge murals depicted global monuments — the Statue of Liberty in one area, the Eiffel Tower in another, the Great Wall of China in yet another. It was a visible reminder of a new age and would spawn over 850 restaurants across the vast territory of Russia.

At the same time, however, there were ominous signs along the way. By 1991, President Gorbachev was succeeded by Boris Yeltsin, who would then be followed by his Prime Minister Vladimir Putin nine years later. During this period, all 15 republics broke away from the Soviet Union, establishing their own independent governments and economies, a development that Putin would call “the greatest geopolitical catastrophe of the century” in 2005.

Despite our efforts to set a path of economic stability and promise based on diversity and closer bilateral and global ties, Russia did not forge the promising path we had hoped. Although he gave lip service to working towards economic diversity, President Putin continuously stewed over the breakup of the Soviet Union and became more obsessed with the country’s military might and global presence. Syria, Crimea, the republics of South Ossetia and Abkhazia in Georgia, and other territorial and political targets were in Putin’s sights. Every minute spent on plotting political grabs outside of Russian territory was a minute turned away from building a vibrant economy for the Russian people.

This current chapter in Russian history, of course, has yet to be written, but we know that its forced decoupling from any sort of globalism that it had enjoyed is tragic. We know that the ruble has depreciated against the U.S. dollar by more than half on the heels of soaring inflation. Russian stocks traded on foreign markets have fallen by 98 percent, and the country’s credit rating has been downgraded to junk status. The list goes on. Even if Russia magically withdrew from Ukraine and tried to restore its global standing, it would take months, if not years, to climb out of the hole it has dug for itself. (READ MORE: Putin’s War)

With its invasion of a sovereign country, its self-inflicted isolation, and the sanctions leveled against Russia, the prospects of significantly raising the standard of living for its people even over the long term will be nothing more than the dream so many of us once had hoped would become reality.

And by the way, those trees we planted in Moscow in 1988 to embody the new relationship between our two countries? They now have withered and died.

James P. Moore, Jr. is the Founder and CEO of the Washington Institute for Business, Government, and Society and was the chief negotiator for the United States in the last trade and economic agreement with the Soviet Union in 1998.

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