Boris Yeltsin and the lessons he taught us about 'hawks'!

So much has been written about Boris Yeltsin since his death that another article seems superfluous. This is particularly the case as nearly all the articles have had the same theme: that of a man who played an important roll in the fall of communism, but was temperamentally incapable of taking the lead in creating a balanced Western-style democratic-capitalist society because he was essentially an instinctive revolutionary rather than a thoughtful administrator or builder.

Yet, there is more to the story of why the economic reforms went so wrong!

Yeltsin seems to have had a pretty simple view of how a modern society operates. He was virtually a sitting duck for much of the extreme advice that he received - both from Russians and foreigners - because it fitted his instincts.

Psychologist, Daniel Kahneman (who won a Noble Prize for economics) and Jonathon Renshon, in discussing the drivers of foreign policy have written the following:

Modern psychology suggests that policymakers come to the debate predisposed to believe their hawkish advisors more than the doves. There are numerous reasons for the burden of persuasion that doves carry, and some of them have nothing to do with politics or strategy. In fact, a bias in favour of hawkish beliefs and preferences is built into the fabric of the human mind.

Yeltsin was getting plenty of “hawkish” and often careless advice.

In my first trip to Moscow in 1991, prominent economic journalist Mikhail Leontyev virtually lectured me over dinner on the how a market economy worked and on why radical action was needed in Russia. Being an experienced “market economist” I certainly knew that action was needed, but could see that Leontyev knew little about a modern capitalist society - with its legal and administrative frameworks - and was virtually proposing a disaster. I tried to argue with Leontyev, but it was useless as he was totally convinced that he was right.

Leontyev, however, was not alone. He was in the same “hawkish” camp of such “reformers” as Yegor Gaidar and Anatoly Chubais - and they were equally as ignorant as him. They wanted to pull the existing system down so that a new one could be built virtually from scratch, and do it quickly so that communism was firmly buried.

But it was not only the Russians!

The following year I was again in Moscow and met with Professor Richard Layard, of the London School of Economics, who was advising on economic reform. He told me that he and a colleague had boarded a Moscow bound plane in London with the idea that reform had to be carried out gradually and with care. However, by the time they had arrived in Moscow they had decided that it would be best to implement reform as quickly as possible, including the use of “shock therapy”. They thought there was a “less than 50 per cent chance of this working”, but that it was “worth a try”!

I was stunned. It was Layard’s first trip to Russia, but flush with enthusiasm he was willing to disregard his ignorance and offer such “hawkish” advice on the basis that it was “worth a try”.

The following year, 1993, IMF first deputy managing-director, Stanley Fischer, said of the conflict with parliament under Ruslan Khasbulatov: “If Yeltsin wins, then the reform program can succeed. If he loses, then that’s it for reform.”

With such advice it was not surprising that Yeltsin had little reason not to trust his “hawkish” instincts. Parliament was soon shot-up and a patently corrupt “privatisation” process put in place that, while it created a small middle-class, created millions of paupers and a handful of billionaires.

The Chinese pragmatists have clearly noted the Russian experience and have attempted to avoid its worst excesses - and ultimately, they might also avoid the unsurprising back-lash now occurring in Russia under Vladimir Putin.

But coming back to Kahneman and Renshon and to “foreign policy”. In a sense, Yeltsin would have seen himself as conduction a policy against a foreign “evil” that had been imposed on Russia by Lenin and the Bolsheviks.

And here I can’t but help think of the so-called neo-conservatives who have driven US foreign policy under George Bush. The ingredients of the Russian reform story are all there in Iraq.

Like Yeltsin, Bush seems to have a rather simple view of the world combined with “hawkish” instincts. This made Bush easy prey to “hawkish” advisers out on a mission to transform the world. At all levels there was ignorance and intolerance of other views - particularly anything that urged caution and care.

Indeed, the chances of the US Iraq venture succeeding were always so slim that one wonders whether at least some of its advocates considered it a “less than 50 per cent chance”, but “worth a try”.

And once in Bagdad, the US just kept going with its “hawkish” attitudes. Not content with over-throwing Saddam Hussein, they forced the almost complete collapse of the existing administrative and security apparatus so that it was buried for good and a new one could be built from scratch.

“Stuff happens”, said Donald Rumsfeld, and - indeed - it does! The phoenix that arises from the ashes of Iraq is likely to disappoint the “hawkish” advocates of that venture just as the Russian phoenix now disappoints the “hawkish” reformers. Sadly, it was all to be expected.