Public Policy Currents

SPP Professor of International Commerce and Policy Janine Wedel wrote an op-ed that appeared in The Boston Globe on March 25, 2006, about “the strange saga of Harvard's involvement in US aid to Russia in the 1990s,” which involved Lawrence Summers, who recently resigned the Harvard University presidency. Wedel believes the case illustrates the overall failure of the US accountability system, and that Summers should be made to account for his role in it.

Wedel referred to a piece she wrote about the case ten years ago, in which she analyzed how Harvard economist Andrei Shleifer—a friend of Summers, who was then a Treasury official and a close-knit group of Russians and Americans were able to largely shape US economic aid policy and Russian economic “reforms” in the 1990's, while managing virtually the entire US flagship economic aid project for the country, worth nearly $400 million. “Summers helped Shleifer and Harvard gain noncompetitive government awards through arrangements that were highly unusual in foreign aid contracting at the time, according to US officials,” she noted. Later, in 2000, the Justice Department alleged that Shleifer and Harvard had conspired to defraud the US government. The case came to a head only last summer, with a negotiated settlement that required the university to pay $26.5 million in fines and Shleifer to pay $2 million.

“The Harvard case points to the failure of modern democracy to adapt its monitoring and accountability systems to a new breed of players exemplified by Shleifer,” Wedel wrote. “These peripatetic players have gained influence in the reorganizing, networked world in which authority has been diffused by the profusion of government outsourcing contracts and the end of the Cold War.” She goes on to argue that traditional accountability systems are ill-suited to cope with today's players, who are able to brandish influence, evade culpability, and gain deniability. “While Shleifer must pay a settlement and legal fees, it is too late for the Russian people, who, instead of wise guidance, got corruption and a system wide open to looting,” she concludes. “Until the United States devises better ways to track the networks and activities of these new players, it is destined to have an ever more untransparent and unaccountable system, with grave implications for democracy.”

For more information about Wedel, the author of “Collision and Collusion: The Strange Case of Western Aid to Eastern Europe,” or her latest op-ed, please visit her web site: Click here.