Jeffrey Sachs on NATO’s proxy war in Ukraine and attaining peace

jeffrey sachs

The Ukraine War is today’s most important geostrategic issue. Along with capital flow/investment, trade and profit, it’s impacting the global dominance map. At the end of the war, significant changes in geopolitics will appear. Different parts of world capital are behaving/moving in different ways; and a few parts are interacting with, pushing/pulling each other, at times, in antithetical ways. This is significant, and also dangerous for the world comity.

Jeffrey Sachs, 68, director of The Earth Institute at Columbia University and a member of the Pontifical Academy for Social Sciences, played a leading role in advising the Kremlin’s economic policy in the early 1990s. In a recent interview (Sachs: “On Ukraine, Joe Biden doesn’t want to compromise”,, © RIPRODUZIONE RISERVATA), Jeffrey Sachs discussed the war in Ukraine, its background, the US approach to Russia and Ukraine, sanctions imposed on Russia, Russia’s position, and attaining peace in Ukraine. He said: “The big mistake of the Americans is to believe that the NATO alliance will defeat Russia.” Jeffrey Sachs finds US’ “tragic mistakes” regarding Russia.To him, the US forgot Keynes’s lesson on the long-term costs of humiliating a defeated enemy.

In response to a question (“Do you think imposing ever-tighter sanctions on Russia is the appropriate course of action for the US and the EU?”) Jeffrey Sachs said:

“We need to have a diplomatic track alongside the sanctions. It is possible to negotiate peace, based on Ukraine’s independence and no NATO membership. The big mistake of the Americans is to believe that the NATO alliance will defeat Russia. This is typical American hubris and shortsightedness. It’s even hard to know what ‘defeating Russia’ means since Putin has thousands of nuclear weapons. Do US politicians have a death wish? I know my country well. The leaders are prepared, as is sometimes quipped, to ‘fight to the last Ukrainian.’ It is vastly better to make peace than to destroy Ukraine in the name of ‘defeating’ Putin.”

The next question to him was:

But Putin doesn’t want to make peace. He has repeatedly shown he is not interested in negotiating in good faith and he is moving ahead with full-out war, making little difference between military and civilians in Ukraine. How can negotiations work in such a situation?

And, his response was:

“My guess is that the US is more resistant to a negotiated peace than is Russia. Russia wants Ukraine’s neutrality, and also access to Ukraine’s markets and resources too. Russia stated clear negotiating aims. To be sure, some of them are unacceptable, but they are negotiating aims nonetheless. The US and Ukraine have never stated clear negotiating terms. The US wants Ukraine firmly in the US-EU camp, militarily, politically, and economically. That’s what this war is mainly about. The US has never shown a single sign of compromise, not in the lead-up to the war, and not since the outbreak of the war.”

To substantiate his claim, he was asked: Can you provide examples?

He substantiated with the following statement:

“When Zelensky floated the idea of neutrality, the US leadership was dead-silent. Now, the US is talking the Ukrainians into the belief that they can actually defeat Putin. The entire concept of defeating Putin is madness. What does it mean to defeat a foe with thousands of nuclear warheads? A death-wish? I have scoured the news daily to find a single instance where a senior US official endorses the aim of negotiating a settlement. I don’t know of a single utterance.”

Since this interview, there’re further developments that include further pumping of arms and munitions to the Kiev regime, the Lend-Lease Act in the US, allocation of further money for the war; and utterances/suggestions by a number of leaders across the Atlantic that include “defeat Russia”, “weaken Russia”, and the “battlefield will decide the outcome”.

On the question –Should the EU and the US engage with Putin to broker a peace or should they just declare him a war criminal and wait out the demise of his regime? – Jeffrey Sachs said:

“They should engage, definitely. If they want to try Putin for war crimes, they need to add George W. Bush and Richard Cheney for Iraq, Barack Obama for Syria and Libya, Biden for confiscating Afghanistan’s own foreign exchange reserves and thereby stoking hunger in Afghanistan, and the list goes no. I am not meaning to exonerate Putin. I am meaning to emphasize the need to make peace, recognizing that we are in the midst of a proxy war between two expansionist powers, Russia and the US. Take note that few countries outside of the US and Europe, just US allies such as Japan and South Korea, are siding with the West on this. The others are staying neutral. They see big-power geopolitics at work.”

These facts including many countries with overwhelming majority of the world population staying neutral are not told by the mainstream media. Rather, these are kept hidden.

There came the question on Russia’s role: Don’t you think Russia carries responsibility for being the unprovoked aggressor here?

His response was:

“Russia launched the war, of course, but in no small part because it saw the US making irreversible inroads into Ukraine. In 2021, as Putin was calling on the US to negotiate over NATO enlargement, Biden doubled down diplomatically and militarily with Ukraine. Not only did Biden reject outright any discussion about NATO enlargement, but he actually had NATO recommit to enlargement at the 2021 NATO Summit, and then twice signed high-level US agreements with Ukraine to commit to the process. The US also continued large-scale arms shipments and military exercises. It’s interesting to see how the US and Australia are making somersaults over a security pact between China and the tiny Solomon Islands, 3,000 kilometers away from Australia. This new agreement is viewed as a dire security threat by the West. How then does Russia feel about NATO enlarging to Ukraine? Of course, this all plays into crazy election politics. The opposition Labor Party in Australia recently called the Solomon Islands pact the “worst failure of Australian foreign policy in the Pacific” in 80 years! Practically speaking, to save Ukraine we need to end the war, and to end the war, we need a compromise, in which Russia goes home and NATO does not enlarge. It’s really not that hard, but the US doesn’t broach the idea – because it is against it. The US wants Ukraine to fight to protect NATO prerogatives. What a disaster already, and much greater risks ahead until there is a reasonable and rational settlement.”

Expansion of the military alliance NATO also came in the interview: I am not convinced by the NATO enlargement argument. Ukraine didn’t even have a Membership Action Plan (roadmap) for accession. And chancellor Olaf Scholz of Germany declared in Moscow, in front of Putin, that Ukraine would certainly not enter NATO “while we are in office” (meaning, at least until 2036). Not really a reason to invade now, is it?

Jeffrey Sachs presented the following argument: “Actually, the idea that ‘Ukraine won’t join’ looks like a US ruse. In fact, the US was making major efforts at Ukraine’s military interoperability with NATO so that NATO enlargement would be a fait accompli. As Lavrov himself recently said in an interview, Ukraine’s Defense Ministry was swarming with NATO advisors. The idea that it wouldn’t happen is actually more public relations than truth. It was the chosen path of the US, as exemplified in every actual policy. What is key is that the US refuses to discuss the issue! That’s the hint.”

For years, Ukraine was involved with military activities including training by the camp opposite to Russia. These facts are kept hidden. Sometimes, with certain incidents, a few of these facts get exposed.

Sanctions, the very crucial measure, actually a weapon, is being used in an unprecedented way in the on-going Ukraine War. The issue was raised with the following question:

Would you say sanctions should be open-ended or should they be tied to tangible results – with maybe some restrictions to be lifted if, say, Russia accepts a ceasefire or withdraws from Ukraine?

The answer was:

“Sanctions should be lifted as part of a peace agreement. The war in Ukraine is terrible, cruel, and illegal, but it is not the first such war. The US has also been involved in countless reckless adventures – Vietnam, Laos, Cambodia, Afghanistan, Iran (1953 coup and dictatorship), Chile, Iraq, Syria, Libya, Yemen – just to name a few, as there are many more. The US was not permanently banished from the community of nations. Russia should not be permanently banished either. The US talks about permanently isolating Russia. This, again, is typical US hubris.”

Another question followed the answer: How about the oil-and-gas sanctions on Russia under discussion in the EU, in order to break Putin’s military machine financially?

The answer was:

“The EU should move much more aggressively to push a peace agreement. A full oil-and-gas embargo would probably throw Europe into an economic contraction. I don’t recommend it. It would not decisively change the outcome of the war and a peace agreement, but it would hurt the EU massively.”

Reasonably, the interview turned to domestic politics in countries imposing sanctions: Are you also concerned cost-of-living issues may fuel populism in the West as voters blame sanctions, not Putin’s war, for inflation?

He answered:

“Yes, the war and sanctions regime are already causing political difficulties in many countries, and a sharp rise in outright hunger in the poorest countries, notably in Africa, which depend heavily on imported grains. Biden too will pay a political price in the November elections for the inflation. Note that these supply shocks are occurring after a long period of monetary expansion, therefore there is ample headroom for inflation. We are in for a difficult macroeconomic period.”

The interview looked back to the days of Yeltsin: To what extent the failures of Yeltsin era’s reforms are to blame for paving the way to Putin’s aggressive dictatorship? Is this a failure akin to the one described by Keynes in 1919 about Germany?

Sachs presented a few interesting facts and arguments:

“I served as an economic advisor to Gorbachev in 1991 and to Yeltsin in 1992-3. In that capacity my main goal was to help the Soviet Union, and then Russia, as an independent country after December 1991, to end an intense financial crisis so as to stabilize society and improve the chances for peace and long-term reform. Remember that the Soviet economy had crashed and entered into an intense downward spiral in the late 1980s. In those years, I referred often to John Maynard Keynes’ remarkable 1919 book The Economic Consequences of the Peace. That book was probably the most important book for my professional career, as it made one essential point in my view: in order to end an intense and destabilizing financial crisis in a country, the rest of the world should pitch in, before the situation gets out of hand. That was true in the aftermath of World War I. Instead of putting harsh reparations payments on the German people, Europe and the US should have engaged in cooperation for a recovery for all of Europe, which would have helped to prevent the rise of Nazism.”

The next question went back further:

Do you mean to say that the way the West managed Russia in the early 1990s contributed to making it a sort of Weimar Republic 2.0?

More information was presented with the following answer:

“When I argued the case for international financial assistance for Poland in 1989, including emergency loans, a currency stabilization fund, and debt relief, my arguments were accepted by the White House and European countries. When I made the very same arguments vis-à-vis the Soviet Union, under Gorbachev in 1991, and Russia under Yeltsin in 1992-3, the White House rejected them. The problem was geopolitics. The US viewed Poland as an ally, while it mistakenly viewed the Soviet Union and the newly independent Russia as a foe. This was a huge mistake. If you treat another country badly or humiliate that country, you will create a self-fulfilling reality. That country will indeed become a foe. Having said all of this, there is no simple determinism in history, and certainly not over a long period of 30 years. The harsh Versailles Treaty of 1919 did not guarantee by itself the rise of Hitler in 1933. Indeed, Hitler or his ilk would never have come to power but for the Great Depression in 1929, and even then, but for Hindenburg’s and von Papen’s dreadful miscalculations in January 1933. Similarly, the financial mistakes of the US and Europe vis-à-vis Gorbachev and Yeltsin certainly did not dictate events thirty years later. Even to suggest so is absurd. But the harsh financial situation in the Soviet Union and Russia in the early 1990s left a bad taste. It contributed to the fall of the reformers, the rise of corruption, and ultimately the rise of Putin to power. Even then, the situation could easily have been salvaged. Putin might well have cooperated with Europe. A big problem came with US hubris that adopted NATO‘s eastward enlargement after promising in 1990 not to enlarge NATO eastward, and then to the absolutely dangerous and provocative idea of George W. Bush Jr. to promise that NATO would expand to Georgia and Ukraine. That promise, made in 2008, dramatically worsened US-Russian relations. The US support for the ouster of Ukraine’s pro-Russian president Viktor Yanukovych in 2014 and the subsequent arming of Ukraine on a large scale by the US dramatically worsened the relations between Russia and the US.”

More background issues were raised: You were involved in advising the Russian government in 1992-1993, through your role in the then Harvard Institute for International Development. During the 1990s, big-bang market liberalization trumped institutions’ building and democratic reform. Do you think that proved to be a mistake?

He said:

“Such complaints are academic chatter, not the real world. My expertise in 1990-1992 was to help Poland, Estonia, Slovenia, and other countries to avoid a financial catastrophe, and that was my aim to help the Soviet Union and Russia too. I recommended measures that proved their success in many countries – currency stabilization, a debt standstill, longer-term debt relief, emergency funding, emergency social support measures. The US accepted such arguments for some countries, such as Poland, US turned them all down in the case of Gorbachev and Yeltsin. Politics and geopolitics dominated the White House, not good economics. Of course, institution building and democratic reforms would take years, indeed decades. After all, Russia had never had a true democracy in a thousand years. Civil society had been destroyed by Stalin. But in the meantime, there was an intense financial crisis. People needed to eat, live, survive, have shelter, have healthcare, while the long-term changes would gradually be introduced. That’s why I recommended large-scale financial support for Russia for many years. That’s why I referred repeatedly to Keynes’s lessons.”

There was further question related to background:

With the benefit of hindsight, should the approach to reforms have been more democratic and gradual, but less focused on “shock therapy”? 
Jeffrey Sachssaid:

“Again, my role was to address the financial crisis. I knew full well – from Poland, Czechoslovakia, and elsewhere – that many reforms would take a long time. My goal was to prevent a hyperinflation and financial collapse. I never argued for quick privatization for example. I knew that such policies require years, even decades to complete.”

The interview moved to Poland and other countries in the region, and currency stabilization and other related issues:

It’s true that Poland and other central-eastern European countries were far more successful by applying the same script as Russia. But then Poland got currency stabilization help from the US and institution-building and law reform from the EU, don’t you think?

Sachs replied: “Of course, that’s the point! The ability to make reforms depends on the international context! Everything was going to be much harder with Russia than in Central and Eastern Europe for countless reasons of history, politics, economic geography, transport costs, the existence of civil society, and geopolitics. The dissolution of the Soviet Union, as with the dissolution of Yugoslavia, also dramatically complicated the situation, and added to instability and economic contraction. Yet for all of those reasons, the West should have been much more prepared to help Russia financially, rather than to declare ‘victory’ and ignore the harsh conditions in Russia.”

The following question was:

Was the problem shock therapy as such or in the refusal by Germany to forgive Russia’s foreign debt and by the US to provide aid like for Poland? Was shock therapy with little external financial support the wrong mix?

Sach’s answer was:

“The so-called shock therapy meant ending price controls at the start of 1992, as Poland had done in 1990. The reason was that with the collapse of the command economy, and with the massive financial instability and price controls, all transactions were essentially in the black market. Even food grains were not reaching the cities. The point is that the step of price deregulation should certainly have been combined with large-scale financial support from the US and Europe and social policy measures, as was the case in Poland. And that is precisely as I advised every day. But the US and Europe did not follow through. That failure of the Western governments was shameful and awful. If stabilization had been actively supported by the West, that would have set the groundwork for the next stages of reform, which in turn would have led onward to other reforms, all over a period of years and decades.”

The last question in the published interview was: Andrei Shleifer, then at Harvard Institute of International Development, was in charge of advising the Russia on a bing bang of privatizations. How was your interaction with him?
The answer was with more facts:

“My role for Gorbachev and Yeltsin was as a macro-financial advisor. I was advising on how to stabilize an unstable economy. I was not an advisor on privatization. Shleifer was an advisor of privatization, as you said. I did not advise on voucher privatization and did not advise on abuses such as ‘loans for shares’ (a scheme designed in 1995 that allowed oligarchs to finance Yeltsin’s reelection in exchange for large shares in State-owned companies at distressed prices). I advised Gorbachev in 1991, and then Yeltsin in 1992 and 1993 on financial issues. Interestingly, after the first year of trying to help Russia, I quit, saying that I was not able to help since the US was not at all agreeing to what I was advising. My stay would have been a single year, 1992. But then, a new finance minister was appointed, Boris Fyodorov. He was a wonderful person who died young. He strenuously asked me to remain as an adviser to help him. I agreed, reluctantly, and stayed one more year, and then resigned at the end of 1993. It was a short, frustrating period, because I deeply regretted the neglect and incompetence of both the Bush White House in 1991-1992, and the incoming Clinton White House in 1993. When I learned that Shleifer was making personal investments in Russia, I dismissed him from his position in the Harvard Institute of International Development. Of course, I had nothing to do with his investment activities or his advice on Russian privatization. Moreover, just in case there is any question, I did not receive a single kopek for my work, nor a single dollar. All of my advising for governments from the start 37 years ago in Bolivia has been without compensation beyond my academic salary. I do not advise governments for personal gain.”

The opinion, and facts and examples presented in the interview reflect a part of condition of the dominating imperialist order in relation to the Ukraine War, which has not yet fully unfolded, while peoples in many European countries havebegun feeling the brunt of the war. In countries including Italy, opposition to the fueling the war by sending arms, etc. to Ukraine is increasing.

Farooque Chowdhury, writing from Dhaka, Bangladesh, thanks Fred Magdoff for editing, etc. of the interview-based article.


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