By PAUL LIKOUDIS
Journalist Anne Williamson, an authority on both Russia and international finance, testified before the House Banking Committee Sept. 21st, and provided a disturbing picture of how American taxpayers have funded and empowered a new "Russian" criminal class - a kleptocracy - that is looting the country with the support of the U.S. foreign policy establishment.(See The Wanderer, Sept. 30th, p. 1 for more on this.)
Her testimony raised so many intriguing questions, The Wanderer sought her out for an interview, which was conducted by telephone with the journalist from her New York City home.
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Q. Would you introduce yourself to the Wanderer's readers? What is your academic background? How long have you worked as a journalist in Russia? How is that you became interested in what we might call "the money question"?
A. I am a native Coloradan who grew up on a cattle ranch, and because my brothers didn't have much to do with me, I read.
My parents had a wonderful library and I began a wonderful romance with Russian literature. I determined I would eventually read the literature in the original language, but I did not have an opportunity to do that until I attended college.
I am not an academic. I have a B.A. in history from Northwestern University, where my interest in literature expanded to history and other matters. I actually visited the Soviet Union the first time in 1971 and I hated it. I dropped the subject, and did other things in life.
For some reason, I again became interested in Russia in the '80s, and so I got out the language books and started reading. Lo and behold, a fellow named Mikhail Gorbachev came to power, and for once I was 15 seconds ahead of my times.
When the Soviet Union opened up, American journalism was not ready to cover the story. There was a very small contingent of American correspondents in Moscow, living in the insular communities of foreign embassies, and relying on translations of the news passed on by official sources.
As a profession, there was a group of people - journalists - unprepared to deal with this large country that was just starting to open up. And so, I had a real opportunity to start as a journalist with The Wall Street Journal.
Initially, I would go over with the Journal on three-month stints, and wrote about theater, art, and film, and I also did some work for the editorial page. Then I began to write for many other publications. There was a demand for information, so I worked for everybody from Art and Antiques to Spy magazine, and The New York Times.
Then, when the story began to change from a cultural story to an economic story, my focus changed too.
When I first encountered people from the World Bank in the autumn of 1991 at the swank newly opened Metropol Hotel in Moscow, I realized there was going to be a disaster. These people were totally wrong, had totally incorrect ideas they were going to apply to this country.
Here, we had what is probably the most naturally wealthy country on earth, center of the last world empire, collapsing. History tells us that all empires are looted when they collapse, and that was a reasonable expectation for the Soviet Union as well; but what was different was that, to my knowledge, this was the first time in history that the alleged victor, the U.S., decided to fund the looters, as led by [Boris] Yeltsin, who is and was a usurper, not a democrat.
Q. Why were you invited to give testimony to the House Banking Committee, and who invited you?
A. I was invited by the chairman, Jim Leach. Oddly enough, I am one of the few people who knows the entire story - at least as much as can be known by one person - from the beginning up to now, because we have suffered a lot of propaganda on this story.
I was a person who knew the names, the deals, and the scandals.
Q. Describe for Wanderer readers what it was like for you to give your testimony to the committee, and to listen to the other expert witnesses describing how the Harvard Institute for International Development and the U.S. government set up a Russian kleptocracy.
A. Just the experience of testifying is interesting. Most people would be appalled if they knew how disorganized hearings are. This is not reflective of the chairman, but of how large our government has grown. You have the problem of this big beast that can't keep its eye on every pie it has its finger in, so it is a mad scramble for them to prepare for the hearings.
I was invited to prepare a number of questions for other witnesses, and I spent a lot of time doing that. Unfortunately, not all these questions were asked, because congressmen are not prepared to follow up - again, a reflection of the size of our government and the number of subjects these people have to be familiar with.
Q. When you and the other experts were testifying, did you perceive any interest or outrage among the banking committee members at the catalog of crimes recited, or was it just a ho-hum, routine affair?
A. No. It wasn't routine. On the Democratic side, we had a lot of simple-minded questions. After my panel, which included former KGB agent Yuri Shvets, who was sitting to my right, and who had been stationed in Washington in the late '80s, one of the Democratic congressmen from Texas asked, "Well, Mr. Shvets, did you ever expect in all your life that would be testifying to the United States Congress?"
It was time to get out the democracy violins. The Democrats are trying to save the administration with the lines, "Russia didn't blow up," "We have elections," "There has been progress," "It is not all a failure," "What else could we have done?"
This is the mythology they are trying to put over on the administration's policies.
On the Republican side, you did have some good questioning, a sense of outrage, but these men do not have enough of the details to press the case. Additionally, I wonder if they even had the details, they would pursue it. This imperial Washington is jealous of its power and both parties want to keep in place the institutions and funding to pursue empire.
Q. Are you surprised the press did not publicize your testimony or that of the other critics of US/IMF financial policies in Russia?
A. Not at all. The press has misled the public throughout this decade about our policies and their results. If any institution is most culpable, it's not the politicians who are just doing what we'd expect, it's the media.
The press has badly let down American liberties because citizens can only respond to the information they have. The media in the '90s have become far more concerned with the protection of power than with citizens' rights and liberties.
Q. You said in your testimony that the affairs of the Harvard Institute for International Development are now being probed by a grand jury in Boston. What's the story there?
A. The Harvard Institute for International Development [HIID] succeeded at one thing: privatizing our bilateral aid program.
This was done by a group of Harvard-connected political appointees within the Clinton administration in late 1992, early 1993. Larry Summers was at the heart of that, along with other appointees: Carlos Tasqual, from the National Security Agency; Thomas Dines, at USAID; and various other figures who formed something called the Steering Committee.
This committee recommended, and AID [the Agency for International Development] quickly agreed, to give HIID the contract to manage our aid program. AID agreed because they had never dealt before with an industrial country, didn't have Russian experts or the appropriate personnel mix to determine the program with confidence.
Without competition for this AID contract, which is contrary to government rules for public grants, HIID got control of hundreds of millions of dollars of our money. HIID itself received $55 million for their operations; but they controlled the delivery of hundreds of millions to Western contractors on Russian programs.
Jonathan Hay, head of HIID in Moscow, and Andre Schliefer, a protege of Larry Summers, in Cambridge, were in charge of the whole project.
Hay had been working closely with various individuals presented as "eager young reformers" to the American public. American policy became the bribing and support policy for preselected figures in Russian society. American taxpayer money made these people significant, and by targeting the money at them and them alone, our policy silenced and frustrated other voices for reform, other legitimate actors.
Over the life of this arrangement, HIID got into voucher privatization, the development of the equities market, legal reform, and other matters. To do this, they set up artificial institutions - the Russian Privatization Center, the Resource Secretariat, the Institute for a Law-Based Economy, etc. The Russian SEC and these institutions had as their heads those Russians we had targeted to be the new ruling class we hoped to create.
These institutions were funded by foreign aid, some of which was USAID, World Bank, individual governments (Sweden, et al.). The important point is those loans are the obligation of the Russian people to pay back, but the money went to individuals to control and spend, and they misspent it.
For instance: A fund was set up by the World Bank called Pallada, which was to manage a percentage of funds that was shaved from each privatization and pooled. These funds were to compensate Russian victims of security fraud. A $5 million grant was given to Pallada to manage these funds, and to deal with redemptions. The American and Russian management simply consumed those funds on salaries, benefits, bonuses, and never paid a single claim. When this came to the attention of the Russian Duma, they then began paying claims.
But the upshot was that this Pallada was sold to State Street Financial in Boston, but the American taxpayers did not receive the sale price. Instead, individual players in Moscow got money, people like Jonathan Hays' girlfriend, Beth Hebert.
Also, through another institution, the First Russian Depository, these Americans and their Russian allies profited personally. Andre Schliefer's wife, Nancy Zimmerman, a former employee of Goldman Sachs, who operated a firm called the New Era Fund, was utilizing the Institute for Law-Based Economy (ILBE) for her private business regarding Russian bonds.
In a word, all these artificial institutions were set up as personal fiefdoms for the HIID people and their Russian allies.
The Boston grand jury is investigating the conversion of taxpayer assets into the personal property of these Harvard-connected people, along with their dealings in the Russian bond market.
This investigation has been going on for two years, and I have been told by one lawyer in the Department of Justice, that the Clintons understood very well what they were doing when they fired all U.S. attorneys after the first inauguration: Every U.S. attorney understood they are political appointees and they are never to bring a case against the Clintons.
The main point to keep in mind about this grand jury is the length of time it has been seated and that no indictments have been filed, even though we know, for example, that Pallada was sold to State Street for between $2 and $10 million.
Q. Can you give a brief picture of what life is like for ordinary Russians today, after nearly a decade of U.S. financial aid? What are the dominant features of Russian economic, political, and moral life?
A. Essentially, whatever stability the IMF has claimed it brought to Russia, prior to August 1998, such as a "stable ruble," was done at the expense of the wages and pensions of the Russian people, which went unpaid.
That's how the Russian government met IMF guidelines. The IMF says it was trying to create free markets; but in free markets, labor receives its compensation. This puts the lie to the IMF's claim that that is the purpose of their work: to create open, free, and stable markets.
People are very poor, and totally alone. All their institutions have been eliminated or ruined. There is nowhere the Russian people can look for succor. The legal system does not work; the political actors are unaccountable; the police are considered a threat; you see large groups of young women turning to prostitution in the villages, which was never seen before.
All finance, money, cash, and benefits are flowing to Moscow, and are not being redistributed back to the communities. Wealth of every kind is going abroad, leaving the people totally destitute. This is how the system of plunder is designed in Russia today.
Q. In your testimony, you lament that, under the Clinton administration, the U.S. Treasury Department has usurped the role of the State Department in setting foreign policy. In your opinion, what is wrong with this, and why should Americans care?
A. Our foreign policy since the founding of the Federal Reserve System is best understood as a function of the dollar. Our money today is a government-funded pyramid scheme, which survives only as long as the base expands. Therefore, our foreign policy at its very heart is tied to the foreign expansion of the dollar.
The dollar has to retain integrity as a paper fiat currency because that is the source of our federal government's power and control over us in the most vibrant economy on earth.
Our foreign policy is succeeding only by killing Eastern European Christians, wars in Iraq and Sudan....
Throughout the '90s, broad money has increased 11% per annum. We have been exporting that excess liquidity to emerging markets. We collapsed many of these economies because these countries didn't have the cultural and legal framework for the volumes of money they were receiving from the United States and the West.
They collapsed from the economic irrationality of all this; this threw hundreds of millions of people back into poverty; then we began to export this excess liquidity through IMF bailouts, which enabled the IMF to intrude even more deeply into these national governments. The IMF takes power in the central banks, where it acts as GOSPLAN, or central planner.
Now, our policy is to export inflation through war. We have over $50 billion in Serbia. How much have we spent in Iraq? What has happened as a result of all this? Commodity prices have collapsed around the world, beginning in Asia; this rolled Russia, which is so dependent on exports of its natural resources; Brazil has to have a bailout; Mexico will need another; China will devalue; Japan has not been cured.
The point is, these nations are trying to export their way back to health. We're receiving the exports, and our manufacturers cannot compete on price with these goods. This is deflation. Deflation is slowly moving toward us and it will arrive. We've seen the first signals, the sell-off of foreign holdings.
Q. Also in your testimony, you speak of the damage caused by the Federal Reserve to this country in language seldom heard since the 1930s, blaming it for the social, cultural, political, and moral decline of the nation. What is your inspiration for this analysis, and why do you raise this issue at the risk of endangering your career and credibility?
A. First, I raise this issue because I believe it is the truth and it is not difficult to build a strong argument in favor of my statement.
Money goes so deep to the core of a country's culture and economy. The Federal Reserve System, by getting control of that, has really gotten control of the United States through the creation of booms and busts. With a boom like the one that is going on now, the Fed fools the population. It can quiet the population's natural suspicions; and when the bust comes, the people look to government for respite, which is happy to respond because that means more debt and more profits for the Fed.
Americans are so poorly educated in schools, especially in economics, that the American people are successfully manipulated by the government. So, of course, a person like myself discussing the nature and role of money and the hijacking of our money by the Fed must be ostracized. You can't have truth tellers on this issue highlighted.
So I shouldn't be surprised that you never heard of me before I gave my testimony in Congress.
There is one person on the banking committee, Cong. Ron Paul, who understands these issues perfectly. He is a very strong advocate on sound money; yet he is considered a fringe person by the other committee members.
Q. In your opinion, what is the most important thing Americans should know about their money and the way the national and global economies are managed?
A. Americans' money is not a reflection of value or true economic worth, but rather a reflection of the interests of political and financial elite who are the creators of the money. And it is in the interest of this group of people - politicians and bankers - to create public debt.
The dollar today is a debt instrument, not a unit of enduring economic value.
Q. Patrick Buchanan is taking a drubbing for his new book, A Republic, Not an Empire, for saying Americans should question the way the international financial elites are tying America down "like Gulliver" with foreign alliances and military agreements, and this will inevitably lead to war.
Have you read Pat's book, and if so, do you agree or disagree with his analysis?
A. I have not read Mr. Buchanan's book, but his argument is one with which I am familiar, and it is a legitimate argument to make. What's interesting to me is that the commentary regarding the book does not address his argument, but Buchanan personally, and is composed mostly of ad hominem attacks.
I observed at the Banking Committee hearings inadvertent support for Buchanan's ideas, that is, that by essentially allowing the Yeltsin government to loot Russia and plunder our aid money, NATO's expansion was ensured; and this was a fortunate tradeoff.
I am at a loss to understand how the expansion of NATO serves American interests or liberties.
In Russia and Eastern Europe, the view of America is of a power bent on world domination. This notion of American domination is frightening to the rest of the world.
Q. You have a new book coming out soon on Russia. Can you tell us about it?
A. The book is Contagion: The Betrayal of Liberty, Russia, and the United States in the 1990s. This book can be read in two ways, either as a discussion of the international financial system as it exists today, with Russia as the latest demonstration project; or as a history of Russian reform under Boris Yeltsin.
The book was contracted to Farrar, Strauss, and Giroux, a prominent New York literary house, in the winter of 1993. I could not complete the book on time, because it's hard to write about a moving target. The publisher took advantage of this to break the contract. When the book was completed in the autumn of 1997, the publisher refused to read the completed manuscript.
That manuscript said, stated outright, that the Russian bond market would collapse before December 1998. It collapsed in August. I point this out because the book could have been on the market before the collapse, and the publisher and I could have done very well.
Yet, the publisher maintains there is no market for this book.
Since 1997, I have simply updated the book with new evidence, and this evidence sustains my analysis and my arguments.
The book has gone from publisher to publisher, some of whom have sat on it for five months, then they back out. My own agent has concluded the book is too threatening to the interests of publishers. I have even been told by one editor of the most prominent academic publishing house, and I'm quoting, "Your book is critical of government policy. This house does not publish books critical of government policy."
That letter was signed by Herb Addison of Oxford Publishing.
I have been told that [international financial wizard] George Soros purchased my contract from Farrar Strauss, since I trace many of his activities in Russia; and I can tell you those activities were not philanthropic. Also, I know an editor at The New York Times who copied my manuscript without permission.
The New York Times editor then leaked information from the book to at least one of the book's subjects. I know this to be true because that subject then contacted an associate whom the subject believed mistakenly was the source of the information that the subject found so upsetting and threatened this associate with legal action! It was quite outrageous as this person never was a source for anything in my book.
No matter what publishers decide, this book will be available to the public before Christmas.