East Meets West: A New Order for the Second World
The radiance of Western justice and success is the power that caused the east European nations and the Soviet Union to abandon what they were and attempt to become what we, the democracies, have made of ourselves.… It is a moment to seize.
—Foreign Affairs1
IN THE FALL OF 1989, a mood of triumph swept West and East alike. The long-suffering peoples of Eastern Europe (Poland, Hungary, Czechoslovakia, Bulgaria, Yugoslavia, and even more isolated Romania and Albania) had risen up. Remarkably and unexpectedly, the Soviet Union, the nation Ronald Reagan had christened the “Evil Empire” and the West’s nemesis of the postwar era, was crumbling. Having won a victory that was not only political, but also moral and ideological, the West now had an unparalleled, historic opportunity to spread the fruits of freedom and free markets, to unite Europe, and to break down isolation between the two worlds. There was, it seemed, a meeting of the minds at last: The West had supported the spirit of resistance embodied in the movements led by Polish Solidarity leader Lech Wałęsa and Czech playwright Václav Havel, and in the aftermath of their success, the peoples of Eastern Europe embraced the democratic ideals and financial support offered by the West.
The prevailing idea, in both East and West, was that Eastern Europe should look to the West not only for financial help and political models, but also for economic strategies and cultural identity. “Democracy,” “freedom,” “markets,” and “civil society” became the bywords of 1989 and the early 1990s. Talk of a “return to Europe” filled cafes in Warsaw, Budapest, and Prague. Discarding the Soviet-tainted “Eastern” association, and believing they had been unwillingly pulled away from Europe by the politics of the Cold War, Poles, Hungarians, and Czechoslovakians asserted that they belonged to Central Europe. The end of communism reinvigorated enduring discussions of a “return to Europe.”2 The image was of a “lost-child-returning-home,” as Czech sociologist Michal Illner has characterized it.3
Given the abandonment of communism, Western capitalism and democracy were seen as the only reasonable choices: virtually no alternatives to the Western capitalist models of reform espoused by the international financial institutions were seriously entertained on either side.4 Part of the reason for this single-mindedness was that the peoples of the newly dubbed Central Europe were looking for simple answers. With little warning of impending difficulties from within or from the West, they hoped that their transition to democracy and free markets would be easy. And as Central Europe espoused Western models, so Western and Central European nations alike expected the West to open its doors and accept new responsibilities, to come in with accolades, affirmation, and aid.
The Marshall Plan became the reference point for the aid the West would provide to the “other Europe.” Leaders, policymakers, and pundits in both East and West compared post-1989 aid to Central and Eastern Europe, and later, after the dissolution of the Soviet Union in December 1991, to Russia, with the post–World War II effort to rebuild Europe. Alexander King, who participated in the Marshall Plan as director of the European Productivity Agency of the Organization of European Economic Cooperation from 1957 to 1960, asserted that “A new Marshall Plan in Eastern Europe could be very successful in giving those countries the infrastructure and attitude in labor and management that will enable them to compete.”5 Offered as an economic life raft by the United States to the ravaged states of all of Europe after World War II, the Marshall Plan, after Soviet dictator Joseph Stalin refused its aid, had helped to reconstruct only Western Europe.6 Now, a post–Cold War “Marshall Plan” would accomplish similar objectives in the East.
Both plans celebrated, and even symbolically consummated, America’s winning of a war—first in a literal sense, and 50 years later in a symbolic sense. Both “Marshall Plans” were to assist “First World” Europeans—first to remake Western Europe, and 50 years later to bless Central Europeans in their “return to Europe.” Furthermore, Central Europeans could now accept the Western generosity that Stalin had prevented them from accepting in 1947.7 The words “Marshall Plan” became almost a metaphor for America’s role as a white knight. They carried a powerful sentimental appeal that called to mind one of America’s most celebrated moments of global leadership and enlightened self-interest. A “new Marshall Plan” implied that Americans were still capable of grand and unselfish acts—and Central Europeans did not hesitate to make that flattering connection. Solidarity leader Lech Wałęsa, speaking to a joint session of the U.S. Congress on November 15, 1989, proclaimed:
It is worth recalling this great American plan which helped Western Europe to protect its freedom and peaceful order.… And now it is the moment when Eastern Europe awaits an investment of this kind—an investment in freedom, democracy and peace, an investment adequate to the greatness of the American nation.8
Throughout the West, donor nations, agencies, and individuals expressed their commitment to helping Central Europe. The European Union (EU) established Poland-Hungary Aid for Restructuring the Economy (PHARE), the largest aid program to the region. PHARE focused on Poland and Hungary, the first nations to dismiss their communist leaders in fall 1989. Other nations of the Soviet Bloc, whose governments subsequently collapsed that same fall, later joined the list of recipients.9 The Group of Seven (G-7) countries (Canada, France, Japan, United Kingdom, Germany, Italy, and the United States) convened meetings to organize multilateral activities. The Group of Twenty-Four (G-24),10 a larger body that included the nations of the G-7 and most of Western Europe, was established in 1989 to coordinate assistance to Central and Eastern Europe. The G-24 was chaired by the Commission of the European Communities in Brussels, which was given an unprecedented role in coordinating international assistance.11
In the United States, legislation was enacted on the very heels of communism’s collapse. In the last days of November 1989, the U.S. Congress rushed through the so-called SEED (Support for East European Democracy) legislative package.12 Championing the two nations that had led the revolutions, SEED authorized nearly $1 billion “to promote political democracy and economic pluralism in Poland and Hungary by assisting those nations during a critical period of transition.”13 Other nations of the region were added later. In addition, President George Bush established “Enterprise Funds” to promote the development of the private sector and other initiatives that would make American know-how available to the region.
Western development agencies were similarly galvanized into action. They reoriented resources and diverted personnel from the “Third World” nations of Africa, Asia, and Latin America to the “Second World” of Central and Eastern Europe, and later the former Soviet Union. In the aid community, the Second World became where the action was. By the end of 1992, the twilight of the aid push to the former Communist Bloc, the G-24 countries had committed $48.5 billion in aid (including export credits, loans, and rescheduled debt), of which $18.1 billion was grants, to help the nations of the region (see Appendix 1: Tables 1-4).14 Meanwhile, following the collapse of the Soviet Union at the end of 1991, aid was gearing up farther east. By the close of 1992, the G-7 countries had committed $81 billion,15 of which $16.8 billion was grant aid, to the former Soviet Union (see Appendix 1: Tables 5-8).16 The now independent states of Russia and Ukraine were to receive the lion’s share of Western aid to the ex-superpower. These sums appeared to be in the grand tradition of the Marshall Plan—more than enough to extend a firm lifeline to the beleaguered inhabitants of the former Eastern Bloc.17
COUSINS IN THE EAST
Apart from providing the West with an opportunity for major philanthropy, the collapse of communism offered it an historic opportunity to reconnect with the East. For the West, it was understandable, natural, and practical to help “our cousins.” The region’s “transition” was likened to the recovery of an ill patient with whom “we” had close cultural and historical bonds and from whom “we” had been separated only by an accident of history. The nations of Central Europe had been torn from Europe and forced into the Soviet orbit by the politics of the Cold War, not free will. There was to be “integration” and “partnership” between East and West, concepts much more easily accepted with regard to Poland, Hungary, and Czechoslovakia than, say, Africa. Psychology played a role: social critic Pascal Bruckner has observed that “Our estimation of a nation is tied in with our capacity to identify with it, to project ourselves in it.”18 Indeed, the West’s capacity to identify with the peoples of the East lent a familial feel to the aid effort. Central Europeans were European. And the timing was fortuitous: the Communist Bloc collapsed at a moment when the idea of European unity (and a push for expansion of the European Community) was gaining great momentum in the West.
Not all of the newly independent countries of the Second World were considered candidates for joining Europe. The idea of European nations as aid recipients had upset the worldview of the development community. It could not readily classify the region as either “underdeveloped” or “developed”—the traditional development scheme, which, in application, is self-legitimating.19 To resolve this ambiguity, the more “developed” countries of Poland, Hungary, and what was then Czechoslovakia were categorized almost as Western European countries that needed simply to catch up.20 On the other hand, the “underdeveloped” countries of the Balkans and southeastern Europe were hardly candidates for “partnership” or “integration.” They had fewer historical and cultural ties to the West, generally had less “developed” national economies, and were less industrialized.
The “model” countries of Poland, Hungary, and Czechoslovakia, which were to be the first of the former Bloc countries to “return to Europe,” became the primary targets of most initial Western assistance. These countries, with Western Christian traditions, could claim deep historical and cultural ties to the West and identified with the West. During the martial-law crackdown of the early 1980s, Polish psychologist Zbigniew Nęcki noted that “we compare ourselves to Western countries, the most developed ones such as the United States, Japan, France, Sweden, and the Federal Republic of Germany.”21 Bulgaria and Romania, on the other hand, although also newly freed from the Soviet orbit, had an Eastern Orthodox tradition, and were inclined to look East. Further, the considerable intellectual freedom and permission to travel that Poles and Hungarians had enjoyed since 1956 gave them closer contact with the West than Bulgarians and Romanians, whose travel and intellectual freedom had been severely restricted.
One of the West’s key criteria for prospective partners was the extent to which a particular country figured in the West’s security, political, and economic considerations. With the Soviet Union still in existence, and taking care not to annoy their giant eastern neighbor, the nations of Central Europe banded together to join the West. Polish president Lech Wałęsa, Czechoslovak president Václav Havel, and Hungarian prime minister Jozsef Antall met in an ancient castle on the banks of the Danube River to sign the “Visegrád declaration” of February 1991, which called for the three nations to coordinate their international strategies, especially in the context of entry to the EU and the North Atlantic Treaty Organization (NATO). It was hoped that Western aid would help to bring these nations “up to the level of” their Western neighbors and thus help them prepare for entry.
Moving eastward from the Visegrád countries, there were many fewer potential Europeans, according to the donors. As nations and regions of the former Soviet Union came to the attention of the donors, decisions about their status had to be made. Here donors made a distinction similar to the one they had made in the Eastern Bloc between the “more developed” and the “underdeveloped” countries. In some schemes, the nations with nuclear weapons—Russia, Ukraine, Kazakhstan, and Belarus—were dubbed the more “developed” ones. Almost invariably, the “underdeveloped” countries were the ethnically troubled Central Asian republics of Uzbekistan, Kyrgyzstan, Turkmenistan, and Tajikistan and the southern Caucasus republics of Armenia, Azerbaijan, and Georgia. The Organization for Economic Cooperation and Development (OECD), for example, classified these nations under its traditional category of Official Development Assistance (ODA).22
Russia, with its mixed European-Asian background, was not quite “our cousin” or a candidate for joining Europe. But as a fallen foe it had to be pampered so as not to be provoked into reasserting its rivalry. Later, Ukraine, also geopolitically important, began to enjoy more Western political and press attention. As donors looked for an alternative to aiding Russia, Ukraine became the target of considerable assistance.
At first glance, the reasons for assisting the Second World appeared to be much the same as those for aiding the Third World: to hold communism at bay, to ensure economic and political stability, and to create markets for the West. But aid to the Second World was about more than just keeping those nations out of the clutches of communism. It was about exorcising the legacies of communism itself—a quest that implicitly required more dramatic and wide-ranging change than heretofore had been expected of the Third World. The Second World had been “misdeveloped,” not “underdeveloped” as the Third World, pundits said. Aid to India, as an example, tended to be couched mainly in terms of economic growth, not institutional and social change. But exorcising the legacies of communism in the Second World often required changing the very nature of recipient institutions, including those of banking, industry, international trade, social security, and health care.
According to the economic analysts and pundits of the time, change was supposed to be not only comprehensive, but accomplished quickly. Although a persevering debate about “shock therapy” versus “gradualist” approaches to reform raged in academic circles, the international institutions advocated and the leading donors supported, at least initially, the former approach.23 And so the Western missionaries of change came armed with slogans that emphasized both the difficulty and the necessity of radical and rapid change. Harvard economist Jeffrey Sachs (of whom we will see more in chapters 2 and 4) had three favorites:
1. You can’t cross a chasm in two jumps [you have to cross it in one].24
2. The dentist is cruel to pull slowly and faintly on a diseased tooth over a period of days. To shrink from what needs to be done merely prolongs the pain and agony.25
3. Suppose the British were to decide to switch from driving on the left side of the road to the right side? Would you recommend that they do so gradually, starting with trucks one year and cars a year later?26
The thinking of the day was that “we” had a once-in-a-lifetime “window of opportunity” to effect change. Many attuned to politics suggested that opposition to reform would more likely arise if reforms were made in a leisurely fashion. Many economists held that every change in the system would affect every other part of the system and lead to still more adjustments, so that all of the changes should be made at once. For these reasons, most agreed that it was imperative to demonstrate support for economic reform through aid that would deliver quick and tangible results.
American and European donors generally operated according to different projections of how long “the transition” would take. U.S. aid planners appeared to place more faith in change. They designed the aid effort on the assumption that “transition” would take just five years and that assistance would thus be required for a five-year period only. The American strategy was to “get in and get out,” which recalled wartime strategy in the quick and certain impact it anticipated.27 After five years, the recipient nations would “graduate,” implying that, if they completed the American-designed course, the United States would certify them as having attained the benchmark of no longer needing aid. By contrast, Europeans, with generally deeper cultural ties and wider contact with the nations contiguous to the east, conceived of a commitment of a decade or more.
Whatever the time frame, the questions of how much aid the West would provide and the speed of transition became intertwined. The principle was, as anthropologist Gerald Creed put it, “the quicker you change the more we’ll give; the more you give the quicker we can change.”28 If the West declined to send aid or sent insufficient aid, argued aid proponents, the nations of the Second World might fall into a chaotic abyss, suffer economic collapse and political turmoil, and even revert back to communism.
Thus, in the early days of independence, Central and Eastern Europe and the West were agreed: the West would help the East, and the East would show its gratitude through loyalty and quick reform.
THE WEST AS SAINT AND SAVIOR
For the peoples of Central Europe, Western assistance was never in doubt. They were predisposed to believe that the West cared and would fulfill its promises. Ironically, life under communism was largely responsible for this belief: two generations of isolation and communist experience had made the West a potent symbol of both good and evil and a curious “mixture of imitation and infatuation, jealousy and principled rejection,” as anthropologist Chris Hann has described it.29 The West as both saint and demon were powerful themes of life in the East, themes that did not evaporate with the collapse of communism. These themes set the stage for two distinctive phases in East-West relations in the Cold War’s aftermath.
The East’s idea of the West as saint (and the West’s idea of the East as oppressed) provided the underpinnings for a period of intense euphoria, or Triumphalism, that occurred after the collapse of communism. It was a honeymoon between East and West in the spirit of a break from the past and a new start. This phase was relatively short, lasting roughly from 1989 to mid-1991 in the Visegrád countries. The late Rita Klimova, who served as the first Czechoslovak ambassador to the United States after the fall of communism, said that her compatriots then “imagined the United States to be a kind of rich Soviet Union.” Her implication was that Central European recipients anticipated some continued economic dependency, with the West taking the place formerly held by the Soviet Union, but that the rewards for them would be greater than during the period of Soviet hegemony.30 Some observers have compared these anticipations to Cargo Cults.31 Indeed, the model of dependency on Big Brother, combined with ideas of Western prosperity, had formed the basis for aid expectations that would be difficult, if not impossible, to meet even under the best of circumstances.
Isolation, relative unavailability of consumer goods, and generally lower standards of living under communism had contributed to idealized views of the West. Particularly for Easterners who had not traveled there, people in the West seemed to live “the good life,” or at least a less trying one. The West was a source of precious goods, money, and opportunities. In Poland, for example, where the peasantry had undergone nearly a half century of urbanization and many had traveled to America to work, America was perceived as a land of milk and honey. The waves of immigration to the New World (more than nine million Americans claimed Polish origins)32 had mostly come from the peasantry and had sustained contact between Poland and the United States. During times of perceived national dispossession and hardship, such as the martial law imposed in Poland in the early 1980s, millions of households received relief parcels both from private relatives abroad and from religious and charitable organizations. Images of the prosperous West were refined to commercial icons: imported Swiss chocolates, French perfume, German wine, Viennese coffee, Bic razor blades, Johnny Walker whiskey, and Marlboro cigarettes could be purchased only in Pewex stores, retail outlets operated by the Polish government where Poles could buy imported goods for hard currency. Associations with the West, including Western products or relatives living abroad, were status symbols. Many Poles gained status in the eyes of their peers because they had worked or studied in the West or made friends with Westerners.
Furthermore, many Central Europeans had experienced the West as the standard-bearer of freedom and democracy, despite the official propaganda that promoted the West as demon in the game of East-West rivalry. As anthropologist David A. Kideckel has noted:
Generations of communist state leaders used images of the West as bête noire, manifestly for consolidation and maintenance of their own power in society. For example, the chronic economic difficulties and shortages in the socialist states were regularly blamed on the machinations of the imperialist powers, Wall Street bankers, and financial lackeys like the International Monetary Fund.33
This negative image of the West was promulgated through the state-controlled media. However, these media were often not taken at face value: Many Central and Eastern Europeans found the official form of the news aired on television and printed in newspapers in conflict with the facts of daily life. They therefore distrusted official renditions, and, as Václav Havel put it, learned to “live in the lie.”34 This undercurrent of disbelief actually endowed the media with a powerful effect; often, people reactively assumed that the truth was the opposite of whatever the media claimed. In the early 1980s, one Polish physicist who was a visiting scholar in the United States was surprised to learn that racial segregation was a fact of life in South Africa. She had assumed that the Polish media had invented apartheid.35 As Gerald Creed has observed, only after communist criticism of the West ceased to be part of official rhetoric did Central and Eastern Europeans entertain the idea that such criticism could be valid.36
Against the backdrop of East-West rivalry, Western actions during the Cold War encouraged black-and-white views of the West as right and the East as wrong. The West warmly welcomed defectors from Central and Eastern European countries. Radio Free Europe and Voice of America broadcasts presented benevolent images of America and the West. Politicians and diplomats expressed sympathy for the “casualties” of communism. And Western supporters funded resistance movements such as Poland’s Solidarity movement both before and after it was outlawed by the communist government in the early 1980s. Support from outside helped to sustain the Opposition, as one prominent activist pointed out:
The Opposition’s main source of financial support was the West. Donations came from inspired individuals, from subscriptions, trade unions, social and political organizations, as well as from corporations, Polish emigré organizations, and government bodies such as substantial grants [about $1 million] from the U.S. Congress.37
Such Western acts of compassion during the Cold War enhanced the view of the West as saint and played no small role in Central and Eastern Europeans’ expectations of Western help after the Cold War. Many in the East believed that the West would readily come to the assistance of the oppressed peoples of the East.
As the Berlin Wall fell, these idealized views crystallized to form an even more potent image. In the months after the revolutions of 1989, the West was much more than a saint. It became a savior. The triumphalism of the subsequent end of the Cold War left little room for voices to temper idealized views of the West or quell expectations of its role in Central and Eastern Europe’s transformation. Misleading information circulating in the press in 1990-91 fueled expectations. For instance, Polish news reports that the West was sending billions of dollars in aid neglected to explain that this aid included export credits and loans that would have to be repaid. And the flood of visitors from the West conveying their interest in the region and their willingness to help contributed to a whirlwind of goodwill and anticipation—one that encouraged the East’s predisposition to the idea that the West cared, would be involved, and would make good on its promises.
BUILDING THE AID MACHINE
As it ground into gear, the Western aid effort seemed to be all that the East could hope for. Western packages combined multinational aid (mostly loans from the international financial institutions, notably the International Monetary Fund [IMF] and the World Bank) and bilateral assistance (often supplied by an array of “private” providers, such as consulting firms and nongovernmental organizations [NGOs]. The idea that the aid effort to Central and Eastern Europe, and later Russia and Ukraine, was unique—and not akin to Third World aid efforts—prompted Western donors to reorganize their aid efforts and management institutions to suit the gravity and import of their task. All manner of Western governmental agencies scrambled to take part in the action: in the United States alone, some 35 federal agencies, including the Departments of Energy and Labor and the Environmental Protection Agency as well as the United States Agency for International Development (USAID), got involved in the aid effort.38
Aid operations to the Second World differed from those to other regions in the role played by foreign policy officials and agencies, the higher visibility in the press, the interest taken by legislative bodies, and the considerable political sensitivity surrounding them. USAID official Steve Dean characterized the sentiment at the time: “I don’t think the agency [USAID] has done anything like this [before]. Communism doesn’t fall every ten years. I don’t think you could compare it with anything else [in Latin America, Africa, et cetera]—not with the scope in this region.”39
With large sums appropriated and pressure built up to disburse them and to show results, donors cranked up their aid machines quickly. Aid programs in the areas that donors established as priorities—generally economic reforms such as the privatization of state-owned industries or private-sector development, as well as areas given less attention such as public administration, health, or local governance—were to be coordinated at meetings attended by representatives of the G-24. The very founding of the G-24 especially to coordinate the Central and Eastern European effort illustrated the import initially placed on that effort.40
The high profile of the undertaking led the United States to appoint a special Department of State “coordinator” who was primarily responsible for policy formation and coordination, while USAID created the Bureau for Europe and the New Independent States to manage its programs. The Assistance Coordination Group, chaired by the State Department, managed assistance to Central and Eastern Europe, while the Office of the Coordinator for U.S. Assistance to the New Independent States (appointed under the Freedom Support Act of 1992) handled assistance to the former Soviet Union provided by a number of agencies. In the United Kingdom, aid to the region was supervised primarily by the Foreign and Commonwealth Office, responsible for foreign affairs, rather than by the Overseas Development Administration (ODA). In Germany, the Ministry for the Economy (Bundesministerium für Wirtschaft) handled aid to the former Communist Bloc, not the traditional Third World aid arm, the Ministry for Economic Cooperation (Ministerium für Wirtschaftliche Zusammenarbeit).
Most aid work, whether funded by the United States, the EU, the United Kingdom, or Germany, was contracted to consulting firms and other providers. On their own, donor agencies generally lacked the resources to carry out aid agendas. Civil servants administered aid projects: they issued calls for proposals and evaluated them, organized competitive bidding, and managed task orders and projects. Any firm could compete, and the donors ostensibly followed fair and transparent selection procedures. In practice, however, those consultants and NGOs that had won previous contracts and/or put considerable effort into learning a contracting system and developing contacts were those most likely to be successful in contract competitions. In the United States, a cadre of “Beltway Bandits,” Washington-based firms or firms with Washington offices, were experienced at winning USAID contracts. Successful competitors, especially at the beginning of the aid effort, tended to have worked in Latin America, Asia, or Africa. Later on, those who had worked in Central Europe were advantaged in winning contracts farther east. In 1992, Andrew Rasbash, economic adviser to PHARE in Poland, observed that “everyone wants to be involved in Poland.… If they get their foot in the door here, then they can go to Ukraine.”41
Heading the award lists tended to be accounting firms, notably the “Big Six”—Deloitte & Touche, Coopers & Lybrand, KPMG Peat Marwick, Arthur Andersen, Ernst and Young, and Price Waterhouse. The Big Six, with track records in the Third World, appear to have been designated by the major donors as the most suitable agents of Central and Eastern European “transition.” These firms received contracts from USAID, the EU, the British Know How Fund, the World Bank, and the European Bank for Reconstruction and Development (EBRD). They cornered a large portion of USAID contracts to Central and Eastern Europe and the former Soviet Union.42
With many jumbo “umbrella” and “omnibus” contracts, the Big Six had more substantial and all-encompassing portfolios in Central and Eastern Europe than in the Third World, at least partly because the scope of work in the former was conceived of as much broader than in the latter. Donors retained the Big Six for a variety of tasks, from auditing, privatizing, and setting up stock exchanges, to writing tax and environmental legislation, to activities that could hardly have been further afield of these tasks, such as assessing the changing position of women under “transition.”
The pressure to spend money quickly appeared to have played a role in the choice of contractors. An aid program’s “success” was often evaluated simply in terms of having spent money. As one U.S. congressional staff member put it, “AID is supposed to move the money. That’s what managers in Washington look at, that’s what Congress looks at.”43 Ambassador Richard L. Morningstar, U.S. assistance coordinator to the former Soviet Union, has recounted that
the pressure to get money out the door … that’s why we favored large contractors, which met with some success. Programs in that part of the world are not a lot different from R&D [research and development] in a business because no one has done it before. Time was not given by virtue of political necessity, and so the program got skewed toward big contractors and large technical assistance programs.… At a time when there’s pressure to get money out quickly and there’s a lot of money, it’s a lot less risky than giving contracts to small contractors.44
The climate of urgency led donors to attempt to build some flexibility into the aid machine by changing or circumventing standard foreign aid procedures. For example, competition could be waived by USAID’s assistant administrator under “notwithstanding authority,” an exception introduced especially for use in Central and Eastern Europe at the inception of the aid effort.45 Notwithstanding authority was invoked in contracts granted for USAID’s linchpin privatization program in Central Europe, as well as in its privatization and economic restructuring package for the former Soviet Union.46 Moreover, some USAID awards were approved for “foreign policy”—that is, national security reasons—a justification that career procurement officer Stanley R. Nevin said, to his knowledge, had not before been used in USAID.47
Aid donors generally established funding ceilings, under which contracting decisions could be made without competition. EU rules stated that all projects above 50,000 ECU (European Currency Unit)—the common currency used in Europe—had to be competed in all 15 member states. Likewise, competition for British Know How Fund awards above 50,000 pounds was obligatory.48
Thus, within a matter of months after the revolutions of 1989, donors had at their fingertips new agencies, procedures, and mechanisms to facilitate aid efforts in the Second World.
A MARSHALL PLAN OF ADVICE
With the superstructure of the aid machine in place, it might have seemed to innocent observers in both East and West that implementation was the only obstacle to relief for millions of Central and Eastern Europeans. But even as the aid effort was in its nascent design stages, portents of trouble were beginning to appear.
One such portent was the initial hint of suspicion on the part of Central and Eastern Europeans that aid from the West was seriously mismatched to their needs. Despite talk of a new “Marshall Plan” for reviving the economies of the former Communist Bloc, few Western policymakers had advocated a serious commitment on the order of tens of billions of dollars in capital assistance. In the United States, for example, this magnitude of capital investment never hit the budget agenda, although some politicians and pundits called for such an investment. “We didn’t do a Marshall Plan,” a catch phrase of later years, was an acknowledgement that a comprehensive aid package for Central and Eastern Europe (implying strategic planning, commitment of high-level officials, and, above all, massive capital assistance) was not made available. As early as May 1990, the United States had ruled out a modern-day Marshall Plan for reviving the economies of the former Communist bloc.49
Still, there remained a huge disconnect between Western plans and what Central and Eastern Europeans believed was possible. Minister Witold Trzeciakowski, Poland’s aid coordinator from 1989 to 1990, has stated that when he called, in 1989, for a $10 billion “Marshall Plan” for the former Eastern Bloc, he envisioned not only aid in large amounts, but also an aid package largely of grants, as in the Marshall Plan, not primarily of technical assistance and loans.50 Although the Marshall Plan had consisted of nearly 90 percent grant aid—largely capital assistance to rebuild war-damaged infrastructures and industries—as of the beginning of 1992, Western aid to the former Eastern Bloc offered little more than 10 percent in grants.51 Most aid to the region was in the form of export credits, loans, and debt relief. Technical assistance through advisers who provided expertise and training made up the bulk of grant aid. American technical experts had played key roles in the Marshall Plan, but as part of targeted, strategic assistance that accompanied massive capital investment.52 It was not until 1993, Trzeciakowski says, that it finally became clear to him that a new Marshall Plan would not be forthcoming.53
Because few people in the region, including officials, had anticipated that the assistance would take the form it did, an even wider gulf was created between Marshall Plan rhetoric and the aid that was sent. Discussions about aid occurred in a highly charged political climate, in which the main actors were only beginning to confront the enormous task of converting social aspirations into reality. Even the highly educated and well-traveled elite generally had little knowledge of Western assistance goals, institutions, and results in the Third World.
The recognition on the part of Western officials of the limits of assistance (a “Marshall Plan of advice” or a “Mini Marshall Plan”), as Western aid officials sometimes referred to it among themselves, did not seem to affect the expectations of billions of dollars in aid in the East. As Poland’s chief coordinator of foreign assistance, Jacek Saryusz-Wolski, explained in 1991, at the height of the country’s frustration with aid efforts: “When people in Poland hear that billions of dollars come to Eastern Europe, they expect that Poland gets one-half or one-third of that money.… Very often people ask us what happened to it.”54 In 1992, Polish president Lech Wałęsa articulated the growing resentment when he spoke at the European Parliamentary Forum in Strasbourg, charging that “it is you, the West, who have made good business on the Polish revolution.… The West was supposed to help us in arranging the economy on new principles, but in fact it largely confined its efforts to draining our domestic markets.”55 Similarly, Hungary’s chief aid coordinator, Béla Kádár commented that “the public learns from official statements that the Western world has transferred resources on the order of $40 billion to $70 billion so far to promote transition in the post-communist countries. One has to ask, where have all these billions gone?”56
Where indeed? There was a considerable gap between donors’ allocations and actual disbursements in the region. In 1992, only an estimated 11 percent of the committed monies had actually been disbursed.57 Not only was there a wide gap between the loose rhetoric about a Marshall Plan and the donors’ actual promises, but another chasm yawned between the donors’ promises and their deliveries.
Assistance to Central and Eastern Europe bore little resemblance to postwar aid in still other ways: The Marshall Plan, which entailed strategic and targeted assistance and the commitment of high-level officials, was directed by the United States, the world’s only economic superpower at the time. The aid effort to the Second World, on the other hand, involved many donor nations that dispensed limited funds among many recipient targets and projects. The nature of the aid efforts coming from Western Europe and the United States were necessarily distinct, reflecting differences in politics and cultures, ties to recipient nations, and strategic agendas. Each donor nation dispersed resources among myriad constituent groups, each of which laid claim to a piece of the pie.
With regard to U.S. assistance alone, the State Department was given only a nominal “oversight and coordination” role. The SEED legislation of 1989, which made possible U.S. aid to Central Europe, established some 25 priority areas and called upon the expertise of up to 35 federal agencies, all with their own agendas. Similarly, the Freedom Support Act of 1989, which authorized U.S. assistance to the former Soviet Union, engaged 19 agencies.58 The legislation did not consider how the expertise of all these agencies was to be coordinated, and there were few guidelines for managing the process. The structure of U.S. coordination to the former Soviet Union was so convoluted that Congress asked the General Accounting Office (GAO), the body charged by Congress with investigating how appropriated monies are spent, to investigate. GAO’s subsequent report was titled “Former Soviet Union: U.S. Bilateral Program Lacks Effective Coordination.”59
Also less than optimal was the lack of coordination among the various donors, which carried out both diverse and often overlapping aid programs. As Ambassador Robert L. Hutchings, Special Adviser for East European Assistance, Department of State, acknowledged in congressional testimony, “There is too much duplication and competition among donors, and too little coordination of activities so that we can make the best and most effective use of our collective resources.”60 Bilateral donors tended to operate in isolation from one another and often, in priority areas, to compete for projects.61 The very structure of bilateral aid lacked incentives to encourage sharing pertinent information or working together in the interest of the recipient nation. An evaluation of a British Know How Fund employment project in Hungary described a duplication of effort that was far from unique:
The project was successful in its immediate objectives. However, unknown to the British, at the same time, the Hungarians were receiving Canadian assistance with World Bank funding to establish a wider network of Job Clubs.… With the benefit of hindsight this may not have been the best use of scarce resources from both donor and recipient.62
But some donor officials argued that time and money were often wasted by requiring recipient governments to correspond with a wide variety of agencies, each with its own procedures, criteria, and information flows. Reducing project duplication, for example, would have required each specific donor to review other donors’ projects before issuing a call to potential contractors for proposals. With individual strategic goals, capabilities, and time frames, it often was not in the self-interest of bilateral donors to coordinate assistance.
Nevertheless, “aid coordination” was a popular topic of discussion among donors, and many meetings, including those of the G-24—charged with the daunting task of coordinating all the programs—were devoted to this purpose. Meetings among G-24 officials at high political levels bore few concrete results in coordinating specific projects, because the officials present often were not at the working level and not well enough versed in actual conditions and projects. As Alan Mayhew, the former head of the EU’s PHARE program, summed it up, “The G-24 coordination process never coordinated.”63 Through invocations that would continue for the duration of the aid effort, officials called for “better coordination” and critics decried the “lack of coordination.” The Institute for East West Studies, which conducted several studies of aid to the region, concluded that “emphasis should not be on increasing financial commitments but rather on improving disbursement procedures of the donors and the absorptive capacity of recipients.”64
To rectify problems of coordination (or at least to appear to be doing so), donors widely discussed and even set up some databases and “clearinghouses.” One clearinghouse that received a lot of attention was set up by the OECD. The OECD Register, an online database of technical assistance to Central and Eastern Europe, was located at OECD headquarters in Paris. Established for use by donors and recipients in planning and coordinating aid projects, the information contained in the Register ostensibly provided “an overview of assistance being given in relation to needs and priority areas, with a view to identifying duplication, overlap, mismatches and gaps.”65 But no database or technology, no matter how sophisticated, could overcome the fundamental reality that programs were set up to serve the strategic and cultural agendas of individual donors. Technical mechanisms could not provide incentives to solve problems that were fundamentally political.
However, there were cases in which multiple donors funded “demonstration” projects, often high-profile ones, as we will see in chapters 2 through 4. Some donor officials suggested that coordination among donors could occur when they worked together, even sharing costs, on specific large and complex projects.66 But only in cases in which multiple donors saw individual benefits in coordinating projects did aid coordination occur.
Just as important as impediments to coordination, neither the organization of the aid effort itself, nor the pressure to spend quickly, were generally conducive to innovating, incorporating recipient input, or dealing effectively with the societies of the region. Despite new mechanisms, institutions, and programs created amid the excitement of the aid effort to the Second World, the nuts and bolts employed in much of the effort were similar to those employed in the Third World. This was partly due to long-established regulations and procedures, designed to minimize misuse of funds, that could not be bypassed or could be skirted only through the special authorities or high-level political interventions described earlier. As the EU’s Mayhew reported, to reduce corruption, the PHARE program was “set up in the African style … where you have a delegation in country that has to carry out all sorts of checks, so it becomes bureaucratically very heavy.”67
Further, although donors perceived the Second World as unique, they had little real understanding of its historical, economic, political, and sociological experiences, and little organizational capacity to deliver new programs. Following 40 years of Cold War foreign aid, during which capitalist and communist countries aided the Third World in an attempt to buy loyalties, the aid programs most available were those that had been implemented in the Third World. Almost by default, donors set many of them into motion. Many were ill-matched to recipient needs and stifled innovation.
For example, USAID, with its panoply of preexisting, standardized rules and congressionally mandated regulations, generally discouraged risk taking and allowed little flexibility.68 There was pressure to put a well-crafted square peg into the latest round hole, in the manner of “We have this program in Honduras. We can implement it in Hungary.” Civil servants who had handled Cold War aid were given Second World assignments, in which, they strongly suspected, their careers would benefit more by fulfilling bureaucratic mandates and maximizing spending than by developing programs tailored to recipient needs. Almost any bureaucrat, no matter how removed from the setting or lacking in host-country expertise, could perform adequately simply by adhering to the guidelines.
Standard contracting procedures also worked against aid flexibility. Under a long-developing body of regulations,69 contracting procedures could be numbingly complex and time consuming. Administered from Brussels, PHARE was constrained by regulations designed to ensure fairness that often worked against effectiveness. The mandated “geographical balance” among its 15 member states sometimes meant not hiring the consultants with the most expertise. This point was not lost on the recipients. As a Polish newspaper reported in 1994: “In the post-war years everyone knew what the Marshall Plan was. Today in Central and Eastern Europe it is common knowledge that there are strings attached to the money coming from Brussels.”70
And so the donors’ bureaucracies, largely designed for operations elsewhere, rattled and clanked into Central Europe, and later into Russia and Ukraine. There they encountered, and colluded and collided with societies that functioned in some fundamentally different ways from their own. A high-level donor official characterized the challenge as such: “The bureaucracy puts all sorts of obstacles in the way to prevent you from reaching your political objectives and then criticizes you for failing to meet them.”71
DILEMMAS OF AID RELATIONSHIPS
One of the most critical aspects of aid-program structure was the extent to which it incorporated recipient input (and from whom it drew this input). The EU tended to treat the nations of Central Europe more as potential partners than did the United States. This difference in attitude was evident in the way control was exercised and recipient input structured. U.S. assistance maximized Washington’s control over aid to Central Europe, with planning and management authority in the United States, rather than with U.S. personnel overseas. Important decisions (as well as many less important ones) were made at home, rather than in the field. At first, USAID field representatives had no signature authority to disburse funds and served only as advisers to the U.S. ambassador in the recipient country and reporters to Washington. Because USAID staff in the region generally had little authority (a clause in some consultants’ contracts stipulated that any agreements made with USAID representatives overseas were not legally binding), decision making was often delayed.
And information did not always flow well from Washington. USAID officials in the field sometimes learned about contracts signed in Washington only when contractors arrived on assignment. As USAID’s Budapest representative remarked in 1991, “I get surprised every day [when] people on contract for USAID call and I don’t know anything about it.”72 Following congressional direction that authority be delegated to the field (“in order to avoid planning and contracting in Washington for specific activities without the concurrence of the people in the field who have more intimate knowledge of the particular country”), Washington-based management changed somewhat in early 1993,73 although field representatives still lacked the authority of their Third World counterparts.
Throughout the aid effort, Central European recipients pointed out that they had little or no input into aid decisions, and often were not consulted in advance or even informed of decisions.74 Officials in Warsaw, Budapest, and Prague complained that their concerns were ignored despite the presence of American-government aid bureaus in these cities and numerous fact-finding missions from the West.75 Polish officials responsible for aid coordination were unable to obtain reliable information about how much U.S. money was being spent on particular projects, although the local USAID office was just several blocks away. In 1992, the GAO looked into U.S. aid to Poland and Hungary, the major recipients of U.S. aid to the region at the time. GAO reported that, in Hungary, many assistance transactions, including those of the United States, occurred without the knowledge of the Hungarian government’s assistance coordination unit.76
As late as 1994, speaking before a Polish parliamentary commission, Minister Jacek Saryusz-Wolski, aid coordinator of Poland, reported:
The principle of distribution of [American aid money] is such that we, as an agency, are simply informed about what they are doing with that money. At the most, we can protest, or object to a particular type of activity that we don’t like. But the Americans do what they like, and we must accept that, at the most voicing our veto.77
In contrast to U.S. aid, EU assistance to Central and Eastern Europe was structured to compel input from recipients, as well as from in-country representatives. Many of the EU’s PHARE programs were administered through Program Management Units (PMUs), which were set up either inside the government ministries or in parallel with them.78 Although EU representatives typically were assigned as advisers to PMUs, the PMUs were staffed and directed by recipients, who naturally had access to local contacts. EU representatives sometimes worked alongside their local counterparts, shared office complexes for several years, and developed collegial relationships. Some high-level EU representatives were keenly aware that their host officials were to be treated as equals. One such official remarked that “One day he [the host official] may well be my boss [in the EU structure].”
Responding at least in part to recipients’ requests and political considerations, the EU began to supply more capital assistance to finance trans-European network projects, in the form of railway lines, roads, and border infrastructure, following a Copenhagen summit in June 1993.79 As one EU official explained, “Investment finance is more visible to the public. That’s one of the reasons we’re going into it.… [Investment] can be seen and touched.”80 In the mid-1990s, as U.S. assistance to Central Europe was winding down, the EU’s PHARE program continued to evolve. PHARE began to fund projects to support pending EU members in the EU’s “pre-accession strategy.” PHARE became a major component of this strategy, “designed to help them [selected Central and Eastern European countries] align their political, economic and legal systems with those of the European Union.”81 In June 1998, the European Union adopted guidelines reorienting the PHARE program from a “demand-driven” program to one addressing the priorities of the “Accession Partnerships.”82 The new PHARE guidelines emphasized institution-building and investment support.83
However, the EU was much less partnership-oriented in its TACIS (technical assistance for the Commonwealth of Independent States, or CIS) program. Because Russia, unlike some Central European nations, was not a pending EU member, the EU was not driven by the necessity to harmonize laws with Russia. Although PHARE was composed both of technical assistance and investment, TACIS was confined almost entirely to technical assistance, as the acronym indicates.84 Further, TACIS, which was centered in Brussels, entailed much less delegation to its in-country representatives than did PHARE. (TACIS had a coordinating unit in all NIS countries, but with delegations only in Russia, Ukraine, Georgia, and Kazakhstan.)85 Although there was to be increasing decentralization away from Brussels, Michael B. Humphreys, counselor for the European Commission Delegation in Ukraine, explained that the TACIS countries should first prove themselves: Brussels, he said, has “less confidence in the ability of [TACIS] countries” [to manage their own programs] than it did in the PHARE countries.86
The EU and most other donors operated in standard (Third World) fashion in that they structured aid through government-to-government relations. By contrast, the target of U.S. assistance was almost exclusively the “private” sector. This allowed the United States to develop some “innovative ways of delivering assistance,” as Ambassador Robert L. Hutchings of the Department of State rightly stated in congressional testimony.87 One notable example of this innovation was the Enterprise Funds designed to support private business, discussed in chapter 5.
However, such a radical avoidance of government also resulted in problems. Supporting “private” actors was a way of bypassing recipient governments that were seen as suspect and full of holdover communist bureaucrats. Government-to-government links were intentionally weak. A 1992 letter from the Department of State to the GAO stated: “We have also designed our programs to deliver assistance primarily to the private sector rather than to the government. Indeed, we have intentionally avoided government-to-government aid agreements, which contrasts with the EC PHARE program approach.” As the GAO concluded, the fundamental drawback of this approach was that the U.S. assistance program “lacked coordination in working with the host governments.”88 The weakness of government-to-government links sometimes resulted in a lack of mechanisms to establish aid priorities and instruments. This made it difficult for aid coordinators in the recipient countries to anticipate and coordinate projects.89 Thus, in the case of U.S. assistance to Central Europe, neither government was systematically involved, communication channels were often unclear, and consultation on the recipient side was weak. As we will see especially in chapter 2, this meant that U.S. economic aid to Central Europe was not set up for optimal access to recipient governments or local contacts.
By contrast, as detailed in chapter 4, there also were cases in which aid contractors, with carte blanche from the donor, colluded with selected recipient elites, bypassed aid regulations, and were subject to little or no donor oversight. For example, U.S. aid to Russia delegated its economic aid portfolio to a private entity—the Harvard Institute for International Development (HIID)—which worked exclusively with a specific circle of “reformers” in (and out of) government and excluded other reformer groups in (and out of) government. As we shall observe, both extremes—of avoiding government contacts, as in the U.S. economic aid strategy to Central Europe, and of working with only one group in the government, as in the U.S. aid economic strategy to Russia—had problematic outcomes. Whatever the results, the tension between policies that regarded Central and Eastern Europeans as potential First World partners (and usually allowed for more recipient input and flexibility in programming) and the practice of aid as usual (bureaucratic procedure and precedent) became a significant feature of aid efforts.
Thus, despite talk of resurrecting a First World model through a “Marshall Plan,” donors, in a hurry and with restricted and scattered resources, largely implemented a Third World model. Neither model was informed by sociological, political, or economic insights from the Second World or took into account the historical legacies of nearly a half century or more of communism from Berlin to Vladivostok.90 But these legacies would be a key ingredient shaping perceptions and relations between East and West and, ultimately, aid outcomes.
PRIDE OF THE SECOND WORLD
Although in theory, donors recognized the distinctiveness of Central and Eastern Europe, the point of reference for many aid providers was their Third World experience. This was an insult to people who were proud of their achievements and of their historical and cultural ties to the West. Despite Soviet domination, the nations of the Second World had made significant progress in the decades following World War II. They had rebuilt war-torn infrastructures, industrialized their economies, and educated their populations. Hungary and Romania, for example, routinely scored in the top three in the International Mathematical Olympiad, an annual international secondary-school competition.91 As Walter Mientka, Secretary of the Olympiad Advisory Board, explained, “The former socialist countries always did quite well.… The key is the nature of their education.”92 Literacy levels and educational standards generally far surpassed prewar levels.
Many Central and Eastern Europeans considered themselves exemplars of European culture and civilization and saw communism as a forcibly imposed alien system. They were insulted to see their nations likened to Third World ones and not to be consulted about the course of development.
This sentiment contributed significantly to difficulties of the United States in working out bilateral assistance agreements with many countries in the region.93 When the United States presented boilerplate aid agreements typically made for the Third World to the Visegrád countries (Poland, Hungary, the Czech Republic, and the Slovak Republic) and expected them to sign on the dotted line, all four evinced reluctance to comply. Their officials explained that the hesitation was due in large part to being treated like Third World peoples. Of particular concern to recipient officials were the U.S. requests for diplomatic immunity and privileges for all technical assistance workers—that is, for aid-paid consultants who did not have diplomatic standing (and thus did not already have such privileges). The draft agreements also included requests for aid workers to be exempted from income taxes and duties on alcohol and tobacco, a request that also was viewed as unnecessary “high living,” and was poorly received.
The Visegrád countries responded by delaying the completion of bilateral negotiations for several years and refusing U.S. requests for American diplomatic immunity. Their officials indicated that no other donor countries had made such requests, and that, although such arrangements might be acceptable in Third World settings, they were not in Central Europe. As one official remarked, “We have flatly refused [the request for diplomatic immunity]. It is the product in our eyes of some bureaucrats who have difficulty distinguishing the Czech Republic from Shangri-La.”94 Although an August 1992 cable from the U.S. Department of State addressed to the ambassadors of all Central and Eastern European posts urged them to conclude bilateral agreements as quickly as possible,95 two years later (in July 1994) protracted negotiations were still under way in the Visegrád countries. Poland never signed the agreement, although in time the Polish government granted consultants privileges through other means.96
Although few Western officials expressed frustration with their Central and Eastern European counterparts in public, they sometimes denigrated them in private: “They just can’t handle it,” “They are so disorganized,” or “They have no sense of democracy.” Underlying these views was the common Western perception that the new Eastern leaders were either unreformed communists or former dissidents. Neither had any experience with democracy, and all were terribly disorganized. Western aid representatives who treated them as “communist” products replicated the very ethnocentrism that Central Europeans had hated in the Soviets.
While affronted pride was widespread in the region, the Czech government was more emphatic than its Central European neighbors in responding to what the West offered. It spurned much of the aid. If the Third World was defined as a region in which governments received development assistance,97 and if accepting aid signaled that “we’re not yet part of the West” and meant remaining in a supplicant position, then the Czech government’s stance was a way of defining the nation as already part of the West, refusing risk of any affronts to national pride. By refusing to play by the West’s rules, Czech officials differentiated themselves both from their neighbors and from Third World associations. In a speech at the World Bank in 1993, Prime Minister Václav Klaus (previously minister of finance) explained that “after three years of relatively successful fundamental systemic transformation of the Czech economy and society, my experience tells me that the role of external factors in this process is relatively small and that the reform begins and ends at home.”98 Zdeněk Drábek, former aid coordinator of Czechoslovakia, further elaborated: “Many Czechs now proudly believe that Westerners have little to teach us, to show us, to advise.… The attitude has been essentially that we don’t need the money.”99 By, in a sense, beating the West at its own game, the Czech Republic may have helped make itself “deserving” in the competition for the bigger Western favors of membership in the EU and NATO.
Western donors had tended to assume that the East would take whatever was offered. After all, the aid was a gift. Why were they complaining? What the donors had failed to see was that to many Central and Eastern Europeans, a gift was something designed to serve the needs of the recipients. The two sides had differing expectations for what the “gift” would consist of and just what constituted “help.” In the East, “help” from the Soviet Union had usually been regarded as no help at all. Help from the West, on the other hand, in some Eastern countries had come to mean either tangible goods like relief packages or, in the context of an active, organized underground resistance, sizable sums of hard currency to fund opposition activities. The realization that Western “help” now often meant advice, not cash, hit hard.
The issue was a critical one. Anthropologist Marianne Gronemeyer argues that the success of many aid efforts depends on whether aid is interpreted as “help” by the recipients: “However obviously fraudulent use of the word ‘help’ to describe development aid may be, the word continues to be taken as the gospel truth, not least by those upon whom the fraud is committed.”100
Just as “help” wasn’t really help in the new parlance that invaded Central and Eastern Europe, “partnership” wasn’t really partnership. Lurking beneath the donors’ rhetoric of partnership were telltale patronizing idioms, such as that of the development practitioner as physician. The physician-patient analogy implied that the doctor knew best, that the ailing patient would take gratefully to the treatment—no matter how painful—and that the patient was generic (the results would be uniform and predictable from recipient to recipient). János Kornai, an economist and expert on centrally planned economies, wrote in an article on medical metaphors in economics that while much of economic theory “tries to outline the ideal economic system or its individual parts,” a reasonable physician does not ask whether the anatomical structure and physiological functioning of the healthy human organism is ideal, or whether, for example, an optimal human organism should have two hearts.101
In time, the paper-thin deceptiveness of the slogans of transition became apparent. Although metaphors of turning fish soup back into an aquarium, having a tooth pulled, or crossing a chasm were colorful ways of explaining a position, they represented a bumper-sticker mode of thinking. After all, what made “transition” away from a centrally planned economy like resurrecting fish from fish soup, like having a tooth pulled, or like crossing a chasm? As anthropologist Mark Hobart has pointed out, when the metaphorical images so frequently used in development discourse to justify policies are removed, “the degree to which many theories require modification or rethinking is remarkable.”102
These metaphors seemed especially ludicrous in light of the legacies of communism that would figure prominently in the aid story. According to Marxist theory, the state was eventually supposed to have withered away. The reality was that, under communism, Eastern European states had developed “state socialism”: strong, centralized bureaucracies that maintained their power by controlling the distribution of goods and services.103 The tradition of tight integration between politics and economics rendered separation of the spheres difficult—and made it nearly impossible to depoliticize post-1989 assistance. Because so many areas of the economy and life were under political control, the detachment of political motives from economic ones was unthinkable for many Central and Eastern Europeans. As a consequence, even after communism had been dismantled, the tradition of suspicion continued—and infected Eastern perceptions of Western motivations.
Moreover, donors’ agendas were inherently political. Donors set out to tear down communism and to encourage civil society and democracy. Although these agendas were welcomed by most Eastern Europeans, they exposed the intrinsically political nature of “economic” aid. As suspicion surrounded Western motives for supplying aid and the new leaders who accepted it, the idea of the “West as demon” would also resurface in powerful ways. Many people began to believe that perhaps the communists had been partially right about Western imperialism and capitalist exploitation.
Amid the euphoria of the early months of the aid effort, these difficulties had barely started to become apparent to the Central and Eastern Europeans eagerly awaiting bounty from the West. It was not until later—into 1991, 1992, and beyond—that the East began to recognize that Western “help” meant mostly advice—and that this advice was not necessarily designed to benefit and serve the needs of its recipients. Only then could a Czech politician launch his political career by waging a campaign against a Western aid program; only then would Polish President Lech Wałęsa angrily charge that “it is you, the West, who have made good business on the Polish revolution.”104 Most important, it was not until then that many people across Central and Eastern Europe, from factory workers and truck drivers to local bureaucrats, would begin to lose faith in the West and the system it represented, even if only temporarily. This loss of faith encouraged some groups and individuals to take matters into their own hands.
As hopes diminished, people became more suspicious of, and ambivalent toward, Western aid. Latent images of the West as “demon” that had lain dormant during the Triumphalist period began to resurface, as the phase of Disillusionment—frustration and resentment—came into its own. Just as the West as saint had written the script for Triumphalism, so the West as demon was to help set the scene for Disillusionment.