Many Lessons From Asia Don't Apply In Russia

Moscow Bureau Chief Patricia Kranz's commentary on the lessons of Asia's crises for Russian leaders ("How Russia can avoid the Asian abyss," European Business, Jan. 19) ignores recent and past history. It distorts the nature of the problems that face Asia as well.

Kranz fastens on the popular charges of crony capitalism, as well as the more fundamental economic choices of free market vs. state-directed capitalism facing [President Boris] Yeltsin. But in fact, since the end of the Soviet era, Russia has already gone far down the path toward privatization and market reforms. Moreover, Russia's disintegrating economy is the result of the mismanaged transition to market decentralization and not any attempt to emulate Asian-style capitalism.

Kranz fails to mention that Asia's economic problems center on its financial institutions and the failure to regulate their enthusiasm for foreign loans more than any weakness in industrial competitiveness. What's more, Asia's corruption varies in its nature from country to country. Much of Southeast Asia's crony practices are related to the tight-knit Chinese family business structure that dominates the region, while Japan's yakuza are a relic of its feudal past.

The deepening penetration of Russia's organized crime is of recent vintage, stemming from the chaotic manner in which Yeltsin's government mishandled the transition from Soviet bureaucracy to privatized enterprises. It is too soon to assess what the lasting lessons of the recent Asian economic turmoil will be.

Ralph I. Sato

San Jose, Calif.

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