The strategist Albert Wohlstetter liked to observe that when policymakers talk about a "calculated risk," it usually means they haven't done any calculation. What they're really describing is a simple gamble, a roll of the dice.
Wohlstetter's remark is a useful rejoinder to recent characterizations of the Clinton administration's policy toward Russia as a calculated risk -- a reasoned bet that the benefits of economic reform would outweigh the dangers of corruption.
"Calm down, world," Deputy Secretary of State Strobe Talbott told Newsweek this week. "We have been aware from the beginning that crime and corruption are a huge problem in Russia and a huge obstacle to Russian reform." The administration has stayed engaged, Talbott explained, because "the problem will only get worse if you isolate Russia."
Reassured? I'm not. Talbott's calm discussion of the looting of Russia strikes me as part of the problem. Similarly, the statements issuing from Vice President Gore's office this past week smack of the same "we've-read-intelligence-and-we-know-best" tone.
It would be more reassuring if these folks told the truth: Our policy toward Russia has been a crapshoot, and growing evidence -- symbolized by recent news reports on the alleged $10 billion Russian money-laundering operation through the Bank of New York -- suggests that it hasn't worked.
To get a clearer picture of why our Russian gamble has gone wrong, it helps to go back to the beginning, before the Clinton administration took office. For, like most serious errors in judgment, this one has deep roots.
The early history of the Russia mistake was explored this year in "The National Interest" by Fritz Ermarth, who for many years was one of the CIA's top Soviet analysts. He writes that the corruption issue surfaced in the spring of 1992 after budding reformers in the Yeltsin government decided to hire a U.S. private detective firm called Kroll Associates to search for at least $20 billion that had been looted by the KGB and stashed in offshore accounts.
Kroll's investigators wanted help. So Ermarth, who was then chairman of the National Intelligence Council, talked with colleagues at the CIA, NSA and other agencies. "Specialists in collection disciplines informed me that we could indeed help, although at some risk to our sources," Ermarth writes. But a policy decision was needed, so he took the matter to the Bush National Security Council's top Soviet specialist, who assembled various other officials.
"The answer was no," Ermarth recalls. "Some worried about risk to intelligence sources. But the main rationale was the following: Capital flight is capital flight. . . . It doesn't matter who has the money or how it was acquired, even if by theft; so long as it is private, it will return to do good things if there was a market."
That same mistaken judgment continued into the Clinton administration. Two things seem clear from conversations with knowledgeable officials: The CIA reported extensively during the Clinton years on the pervasive corruption surrounding the Yeltsin government, and the administration nonetheless chose to embrace Yeltsin and his crew.
Clinton's first CIA director, James Woolsey, took a special interest in Russian corruption. He was briefed in 1993 about a money-laundering operation involving a Vienna-based concern known as Nordex, headed by a man named Grigori Loutchansky. The agency briefed officials at the Justice Department, FBI and other agencies about Nordex and Loutchansky in mid-1993, and the CIA reportedly put him under surveillance in Vienna.
Woolsey was thus astonished when his analysts showed him a Russian newspaper photo of Loutchansky shaking hands with President Clinton at an October 1993 fund-raiser. Woolsey at first thought the photo might be a fake, so he took it to Anthony Lake, the president's national security adviser. He never heard anything back. Despite Woolsey's intervention, the Democratic National Committee later invited the Russian mobster to a 1995 fund-raiser at the Hay Adams Hotel; Loutchansky couldn't attend because the State Department wouldn't give him a visa.
Woolsey also ordered a special 1994 national intelligence estimate on Russian organized crime, restricted to top government officials.
By 1995, Vice President Gore was taking a more active role in Russia policy, working closely with Yeltsin's new prime minister, Viktor Chernomyrdin. The CIA continued to provide intelligence about the looting of Russia, both by organized crime and by the new class of business oligarchs who were siphoning assets into their offshore accounts.
One 1995 report discussed Chernomyrdin's activities in some detail. CIA gossip had it that the report came back with "bull----!" scrawled in the vice president's handwriting. The New York Times reported the story last November, but a senior intelligence official said this week that the agency never found any piece of paper that would confirm the dismissive comment, that none of the analysts who regularly brief the vice president recalls such an episode and indeed that the vice president has been "one of the most avid and receptive consumers" of intelligence about Russian corruption.
After the Times story, a CIA ombudsman examined whether the agency might have pulled any punches in its reporting on Russian corruption to suit White House preferences. The ombudsman concluded: "My review of CIA's published material persuades me that it has reported to its readership persuasively and in depth that crime and corruption are pervasive problems in Russia." The agency has also published more than 100 intelligence reports since 1998 on Russian crime and corruption, the senior intelligence official said.
Policymakers were also warned, at least in general terms, of the danger that IMF loans to Russia might be caught up in the miasma of corruption. The intelligence official wouldn't comment directly on whether the agency knew about diversion of IMF funds to offshore accounts, citing the current criminal investigation into the Bank of New York case.
The bottom line is that Clinton and Gore had lots of warnings about Russian corruption under Yeltsin's banner of reform. And the question continues to be: Why didn't the administration do more to stop it?