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The Ugly American is back

"One recent evening, a string quartet was performing in the marble-floored (hotel) lobby as a crowd of American business people _ many of them aid consultants _ dined and drank in pampered splendor. In the freezing darkness nearby, a hundred or so elderly men and women milled about in dirty slush, each trying to sell passers-by a prized belonging _ a bottle of vodka or perhaps a favorite pair of shoes."

This Moscow scene was described in a recent Wall Street Journal report that helps explain why Russians and Eastern Europeans, whose economies are struggling to make free markets work, sometimes seem less than grateful for the billions of dollars the United States purports to send in aid. Most of it isn't reaching them. It's being gobbled up by Western consultants, who rushed into the breach after the Iron Curtain rusted out in 1989, to teach the people of formerly communist nations how to build democracies.

Thus, according to the Journal, people who lived entire lives in state-run factories are getting advisory reports on "restructuring sectoral component systems with market-oriented financing mechanisms in horizontal institutional frameworks of competitive structural solutions."

Worse than the jargon, which renders reports useless since no one who needs them can understand them, are the fees consultants bleed from aid packages. The Journal estimates between 50 and 90 percent of the money in Russian contracts goes into the pockets of American consultants. The situation is comparable in Poland.

From the $5.8-billion the United States pledged to help the former Soviet Union, most of it targeted for Russia, one advertising firm got $7-million to put together a television ad campaign promoting privatization of state-run industries.

An American public relations firm got $15-million to promote private enterprise. An American consultant manages five clusters of consultants who put together $98-million in contracts to help privatized businesses. Another American consultant got $20-million by combining the efforts of 34 subcontractors, including four law firms.

Much of the $25-billion pledged to Poland hasn't been touched because of the conditions attached to the aid: at least half of it must be spent on Western exports of goods and services. Such "tied aid" has long been shunned in the Third World.

To be sure, some Western funds have gotten to the right people and furthered the ends for which they were appropriated. But much of the Western aid is tied up in Polish banks by overly conservative bureaucrats reluctant to entrust any of the wealth to first-time entrepreneurs whose plans for small, private businesses would benefit the Polish economy but who have no collateral except their promises to work hard.

Some who support the aid program argue that domestic expertise is limited among Eastern Europeans, and somebody has to teach them. But so much of the teaching has missed the mark, it's legitimate to ask why the aid wasn't simply channeled to locals who needed it or knew how to put it to good economic use? Some of it would have been squandered, to be sure, but it probably would have resulted in more progress than the current system produced.

So disgusted are the Poles that they've elected many of the old communists they once threw out of office and are urging the West to forget more aid and encourage more trade. A first step? Stop sending in cherry consultants to dispense advice on improving Polish cherries and drop the tariffs that kill Polish cherry exports.

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