Archive for Wednesday, November 3, 2004

Russia demands attention

November 3, 2004

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— "There is a bear in the woods," the announcer solemnly intoned. "For some people the bear is easy to see. Others don't see it at all. Some people say the bear is tame. Others say it's vicious and dangerous. Since no one can really be sure who's right, isn't it smart to be as strong as the bear? If there is a bear?" Twenty years ago, President Ronald Reagan used this commercial on nationwide TV with devastating effect.

No one had to ask what the bear symbolized: It was Russia, of course.

Reagan went on to win both the 1984 election and the Cold War itself.

But today Americans must ask themselves if a shadow of that old bear is back.

Despite years of reform, the rule of law in Russia is in decline. Elections are suspect, when allowed at all. Restrictions have been placed on the press. There is a climate of fear with regard to the government. Allegations of corruption are rampant.

Twenty years ago, America's best defense against Moscow was a strong military. Today, our best defense against the emergence of the old, globally belligerent Russia ought to come from putting pre-emptive pressure on the government of President Vladimir Putin. Sadly, it is a course we have mostly neglected.

A featured speaker at two prestigious symposiums in Washington recently was a Russian government minister around whom allegations of corruption swirl.

Leonid Reiman, Russia's minister of information technology and communications, was given prominent speaking roles at conferences that also featured Commerce Secretary Don Evans and Energy Secretary Spencer Abraham.

Americans involved in the conferences should have insisted on another Russian representative.

We Americans know that the rule of law is a cornerstone of economic prosperity. Strict -- and enforced -- rules against both public and private corruption give investors the confidence they need to take the steps that make economies grow.

When corruption is rampant, economies fail to thrive.

Even Reiman himself, when asked publicly at one of the conferences, acknowledged that public corruption is a problem in Russia. He claimed new moves toward transparency in government will combat the problem by making corruption harder to hide. We should be forgiven if we fail to feel reassured.

It's difficult to imagine there is a genuine trend toward government transparency in Russia, where the broadcast media is controlled by the state and other media is looking nervously over their shoulders.

Russia is a country where even its richest man is not safe. Oil tycoon Mikhail Khodorkovsky has spent the last year in jail and his company, Yukos Oil, may be driven out of business by the end of this year. Khodorkovsky's no saint, but his "crime" essentially came down to this: Putin saw him as a rival.

Envision a scenario in which Microsoft's Bill Gates made moves to challenge President Bush for re-election -- and Bush responded by tossing Gates into jail and bankrupting Microsoft.

Imagine the chilling effect that would have on political freedom here and you have some idea what is going on now in Russia's infant democracy.

With international concerns mounting, Putin must demonstrate that he and his government are putting out a welcome mat for business and investment. Instead of a welcome mat, investors should see in the prominence of Reiman a red flag of warning.

According to confidential sources, the Russian National Anti-Corruption Committee, a very prominent independent civic group, believes Reiman has conducted dubious practices, such as siphoning money out of state enterprises for which he is responsible.

Reiman is suspected of being the ultimate owner of several telecom and financial assets in Russia and has been accused of using his state position to channel business to companies in which he is believed to have a significant personal stake -- and to weaken competing businesses.

Yet, Putin keeps him in charge of a prominent ministry and Americans honor him with speaking opportunities at prestigious, Cabinet-level business conferences.

Investors will not have confidence in Russia unless they are convinced that official corruption is in its past.

America can't, and shouldn't, try to run Russia's internal affairs, but we certainly can do a better job of insisting on honest business relationships. Pretending we don't notice the corruption is no way to help.

-- Amy Ridenour is president of The National Center for Public Policy Research (www.nationalcenter.org), a Capitol Hill think-tank. Her e-mail address is aridenour@nationalcenter.org.

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