Moments in U.S. Diplomatic History

When a Newly-Elected President Putin Welcomed USAID’s Advice


President Putin once welcomed USAID’s assistance (at least for a time). Carol Peasley served as USAID’s mission director in Moscow from 1999-2003. This tumultuous period witnessed the fall of Boris Yeltsin and the emergence of Vladimir Putin as a tough-minded leader frequently at odds with the United States. But it was not always that way. Peasley recalls how a key Putin aide asked USAID to assemble a broad-ranging team of international experts to advise Putin’s new government. Putin met with the experts for several hours, on topics ranging from privatization to pension reform. They were impressed with the new Russian leader and his technocratic expertise. Peaseley also recalls USAID’s productive relationship with Mikhail Khodorkovsky, owner of the Yukos Oil Company — initially a powerful figure in the Putin government, who fell out with the new president and was later famously jailed for fraud. Peasley’s distinguished USAID career lasted from 1970 to 2003, with stops in Nepal, Costa Rica, Thailand and Malawi. Russia was her last foreign post. She also served in multiple senior positions in Washington. This interview was conducted by Kenneth Brown on January 29, 2015.

Read Carol Peasley’s full oral history HERE.

Excerpts:
“From the outset, our purpose was to support Russia’s transition to a free market democracy.”

USAID program in Russia: “The program in Russia was different. From the outset, our purpose was to support Russia’s transition to a free market democracy. The early days of the program were very much focused on economic restructuring and privatization . . . Another purpose, of course, was to develop relationships and partnerships between our two countries, whether between technical experts or communities.”

“All of the experts [were] very impressed by President Putin’s knowledge of the issues – they said that it had been a very technocratic meeting.”

Assembling a team of experts who advised the new Russian government, and met with President Putin: “[Shortly after Putin’s March 2000 election] one of his primary economic advisors, Andrey Illarionov, contacted USAID to ask if we could bring in some specialized economic experts to consult with the new Putin Administration. Mr. Illarionov had worked in one of the

think tanks supported by USAID, so the head of our Economic Reform Office knew him well. So, in the spring of 2000, at the request of Russian leadership, we brought in experts from the U.S., Chile, and New Zealand to consult on privatization, social security, pension reform, and other issues . . . Over several days they met with Illarionov and his team of reformers, and also had a several hour meeting with President Putin. Ambassador [James Franklin] Collins was very pleased that USAID was able to do this, and he hosted a reception for the team and many of the key Russian economic reformers.”

“I might add that no one from USAID or the embassy accompanied the team to the meeting with President Putin. We respected their request for privacy, although we obviously asked a lot of questions after that meeting (laughs). All of the experts had been very impressed by President Putin’s knowledge of the issues – they said that it had been a very technocratic meeting. More generally, I should add that the USAID staff working on economic policy issues had developed excellent working relationships with technocrats throughout the economic ministries and the think tanks. Many young Russian economists were in think tanks supported by USAID and our staff met with them frequently. Many of these ‘young’ Russian economists eventually became leaders within the government.”

“He was the oligarch who had done the most to turn his company into a transparent, legitimate global company.”

Mikhail Khodorkovsky: “We had more contact with Mikhail Khodorkovsky, the owner of Yukos Oil Company. He clearly was an oligarch who gained his assets through less than ideal means, but he was also turning Yukos into a true multinational company that would meet global standards and be able to be listed on global stock exchanges. He brought in a European chief financial officer and was well on the way to turning his company into a global actor like Chevron or an Exxon Mobil. He also was becoming more political and created a foundation, the Open Russia Society, modeled after George Soros’s Open Society Foundation that was supporting various democratic initiatives in Russia and throughout the former Soviet Union . . . It is very ironic. He was the oligarch who had done the most to turn his company into a transparent, legitimate global company. But, he was supporting political causes and the Kremlin felt they had to get him out of the way.”

Drafted by Neil Nabar

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