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16 December 2014 Last updated at 17:43 ET

Viewpoint: Why the shadow of WW1 and 1989 hangs over world events
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Many of today's global problems are hangovers from bad, ungenerous decisions at the end of previous conflicts, writes
Jeffrey Sachs.
This has been a year of great geopolitical anniversaries. We are at the 100th anniversary of the start of World War One, an event
that more than any other shaped world history during the past century. We are at the 25th anniversary of the fall of the Berlin Wall,
the opening chapter of the demise of the Soviet empire and the end of the Cold War. Yet we know that painfully we observe
something far more than a mere remembrance.
As William Faulkner remarked, "The past is never dead. It's not even past." WW1 and the fall of the Wall continue to shape our
most urgent realities today. The wars in Syria and Iraq are the legacy of the closure of WW1, and dramatic events in Ukraine are
unfolding in the long shadow of 1989.
1914 and 1989 are "hinge moments", decisive points of history on which subsequent events turn. How nations both great and
small behave at such hinge moments determine the future course of war and peace.
I participated directly and personally in the events of 1989, and saw this lesson in play - positively in the case of Poland and
negatively in the case of Russia. And I can tell you that as I carried out my own tasks as an economic adviser during 1989-92, I
kept a constant and always worried gaze on 1914. I carry that same sense of worry today.
In 1919, at the end of WW1, the great British economist John Maynard Keynes taught us invaluable and lasting lessons about
such hinge moments, how decisions of victors impact the economies of the vanquished, and how missteps by the powerful can
set the course of future wars.
With uncanny insight, prescience, and literary flair, Keynes's 1919 The Economic Consequences of the Peace predicted that the
cynicism and shortsightedness at the core of the Versailles Treaty, especially the imposition of punitive war reparations on
Germany, and the lack of solutions to the roiling financial crises of the debtor countries, would condemn the European economies
to continuing crisis, and would in fact invite the rise of another vengeful tyrant in the coming generation.
Keynes's cri de coeur is one of those remarkable outpourings of genius that speaks across generations. That book and its lessons
proved to be a formative guide for me in my own career as policy adviser and analyst.
As a newly minted economist some 30 years ago, I suddenly found myself charged with helping a small and largely forgotten
country, Bolivia, to find a way out of its own unmitigated economic disaster. Keynes's writings helped me to understand that
Bolivia's financial crisis should be viewed in social and political terms, and that Bolivia's creditor, the US, had a shared
responsibility of resolving Bolivia's financial anguish.
My experience in Bolivia in 1985-86 soon brought me to Poland in the spring of 1989, at a dual invitation of Poland's final
communist government and the Solidarity trade union movement that strongly opposed it. Poland, like Bolivia, was financially
bankrupt. And Europe in 1989, like Europe in 1919, was at a great hinge-moment of history.
John Maynard Keynes (1883-1946)
Educated at Eton and Cambridge University, where he read mathematics - part of the cultural circle known as the Bloomsbury Group
Joined the Treasury during WW1, and in the wake of the 1919 Versailles peace treaty, published The Economic Consequences of the Peace, criticising exorbitant war reparations

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demanded from Germany, claiming they would harm the country's economy and foster a desire for revenge
Best-known work, The General Theory of Employment, Interest and Money (1936) made Keynes Britain's most influential economist
Led 1944 British delegation to Bretton Woods conference in US, playing an important role in planning of World Bank and International Monetary Fund

A Point of View: What would Keynes do?

Keynes v Hayek: Giants of economics
Mikhail Gorbachev was in power in the Soviet Union, and was prepared to see Europe reunited in peace and democracy. This
great man desired similarly to move his own country to a new democratic order. Poland was the first country in the region to move
towards democracy in that momentous year. I quickly became the main outside economic adviser to the new Polish government.
Once again, drawing from Keynes, I championed the kind of international assistance that I felt to be vital for Poland to make a
peaceful and successful transition to post-communist democratic rule.
Specifically, I appealed to the White House, 10 Downing Street, the Elysee and the German Chancellery, for enlightened aid to
Poland as a key step in building a new united and democratic Europe.
These were heady days for me as an economic adviser. My wish, it seemed on some days, was the White House's command.
One morning, in September 1989, I appealed to the US Government for $1bn for Poland's currency stabilisation. By evening, the
White House confirmed the money. No kidding, an eight-hour turnaround time from request to result. Convincing the White House
to support a sharp cancellation of Poland's debts took a bit longer, with high-level negotiations stretching out for about a year, but
those too proved to be successful.
The rest, as they say, is history. Poland undertook very strong reform measures, based in part on recommendations that I had
helped to design. The US and Europe supported those measures with timely and generous aid. Poland's economy began to
restructure and grow, and 15 years later it became a full-fledged member of the European Union.
I wish that I could stop my reminiscing here, with this happy story. But alas, the story of the end of the Cold War is not only one of
Western successes, as in Poland, but also one of great Western failure vis-a-vis Russia. While American and European
generosity and the long view prevailed in Poland, American and European actions vis-a-vis post-Soviet Russia looks were much
more like the horrendous blunders of Versailles. And we are paying the consequences to this day.
In 1990 and 1991, Gorbachev's government, seeing the emerging positive results in Poland, asked me to help advise it on
economic reforms. Russia at the time was facing the same kind of financial calamity that had engulfed Bolivia in the mid-1980s
and Poland by 1989.
In the spring of 1991, I worked with colleagues at Harvard and MIT to assist Gorbachev to obtain financial support from the West
as part of his efforts at political reform and economic overhaul. Yet our efforts fell flat - indeed they failed entirely.
Gorbachev left the G7 summit that summer of 1991 and returned to Moscow empty-handed. When he returned to Moscow with no
results, a conspiracy attempted to oust him in the notorious August Putsch, from which he never recovered politically. With Boris
Yeltsin ascendant, and the dissolution of the Soviet Union now on the table, Yeltsin's economic team again asked me for
assistance, both in the technical challenges of stabilisation, and in the quest to obtain vital financial assistance from the US and
Europe.
I predicted to President Yeltsin and his team that help would soon be on the way. After all, emergency help for Poland was
arranged in hours or weeks. Surely the same would happen for the newly independent and democratic Russia. Yet I watched in
puzzlement and growing horror that the needed aid was not on the way.
Where Poland had been granted debt relief, Russia instead faced harsh demands by the US and Europe to keep paying its debts
in full. Where Poland had been granted rapid and generous financial aid, Russia received study groups from the IMF but no
money. I begged and beseeched the US to do more. I pleaded the lessons of Poland, but all to no avail. The US government
would not budge.
In the end, Russia's malignant financial crisis overwhelmed the efforts at reform and normality. The reform government of Yegor
Gaidar fell from grace and from power. I resigned after two hard years of trying to help, and of accomplishing very little indeed. A
few years later, Vladimir Putin replaced Yeltsin at the helm.
Throughout this debacle, the US pundits blamed the reformers rather than the cruel neglect by the US and Europe. Victors write

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the history, as they say, and the US felt very much the victor of the Cold War. The US would therefore remain blameless in any
accounts of Russia's mishaps after 1991, and that remains true today.
It took me 20 years to gain a proper understanding of what had happened after 1991. Why had the US, which had behaved with
such wisdom and foresight in Poland, acted with such cruel neglect in the case of Russia? Step by step, and memoir by memoir,
the true story came to light. The West had helped Poland financially and diplomatically because Poland would become the
Eastern ramparts of an expanding Nato. Poland was the West, and was therefore worthy of help. Russia, by contrast, was viewed
by US leaders roughly the same way that Lloyd George and Clemenceau had viewed Germany at Versailles - as a defeated
enemy worthy to be crushed, not helped.
A recent book by a former Nato commander, General Wesley Clark, recounts a 1991 conversation he had with Paul Wolfowitz,
who was then the Pentagon's policy director. Wolfowitz told Clark that the US had learned that it could now act with impunity in the
Middle East, and ostensibly in other regions as well, without any threat of Russian interference.
In short, the US would behave like a victor and a bully, claiming the fruits of Cold War victory through wars of choice if necessary.
The US would be on top, and Russia would be unable to stop it.
In a recent speech in Moscow, Putin has described US behaviour in almost the same terms as Wolfowitz. "The Cold War ended,"
said Putin, "but it did not end with the signing of a peace treaty with clear and transparent agreements on respecting existing rules
or creating new rules and standards. This created the impression that the so-called 'victors' in the Cold War had decided to
pressure events and reshape the world to suit their own needs and interests."
By making these observations I do not mean to exonerate Putin of responsibility for Russia's recent illegal, cynical, and dangerous
acts of violence in Ukraine. But I do mean to help explain them. The shadow of 1989 looms large. And Nato's continued desire,
expressed again just recently, to add Ukraine to its membership, thereby putting Nato right up on the Russian border, must be
regarded as profoundly unwise and provocative.
1914, 1989, 2014. We live in history. In Ukraine, we face a Russia embittered over the spread of Nato and by US bullying since
1991. In the Middle East, we face the ruins of the Ottoman Empire, destroyed by WW1, and replaced by the cynicism of European
colonial rule and US imperial pretentions.
We face, most importantly, choices for our time. Will we use power cynically and to dominate, believing that territory, Nato's long
reach, oil reserves, and other booty are the rewards of power? Or will we exercise power responsibly, knowing that generosity and
beneficence builds trust, prosperity, and the groundwork for peace? In each generation, the choice must be made anew.
You can listen to The Shadow of the Cold War on BBC Radio 4's Four Thought on 17 November at 20:45 GMT, or via the
iPlayer.
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555. Truthteller
6 MINUTES AGO

-2

@505. Phil Dawson

Don't make me laugh. Yes, Britain declared war on Germany but provided
little military support to Poland. That was Phoney War. Warsaw Uprising yes, maybe Churchill tried to do something but clearly that wasn't enough
and could have done more. US sent 1 - ONE - airdrop. Yalta - don't even
get me started. Poland was sold. Still don't see how Russia became
superpower? Look again.

554. GreenGoddess
9 MINUTES AGO

+3

It's all very well blaming the West for the state of Russia but Putin has had
enough time and enough money to transform Russia into a thriving
democracy. Instead he chose to line his and his cronies' pockets, rig
national elections and jail/kill any opposition.
Even if the West HAD given Russia aid in the 90's there's no reason why
Putin still wouldn't have been elected and destroyed the country.

553. Phil Dawson

10 MINUTES AGO

-1

539.Rather_Be_Cycling "...Twaddle. I am merely stating the obvious.

British policy March-Sep 1939 was hugely flawed, it did start a global war
and it delayed the inevitable Nazi Germany-USSR conflict. What did Britain
get out of WW2 in the end? Debt and loss of the Empire. It was a poor
victory."
So we should have stood aside & let them get on with it? Perhaps do
another deal with Hitler?

552. The Bigger Picture

13 MINUTES AGO

+2

@216. Enoch for a Pound

'the US...saw the UK as just as much as a threat as Germany...'

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FDR had no love for Germany, scarcely more for Russia and only a
modicum of respect for Churchill's opinion, but he still knew the US would
have to enter the war ON Britain's side eventually and did all he could to
give the UK lend-lease in the meantime.
Go back to school and re-do your GCSE History mate!

551. LUFCAT
+3

14 MINUTES AGO

Hmm, so Russia has been bullied and that is why it bullies its smaller
neighbours. Or just maybe Russia is a mafia state where it is normal for
the strong to take what they want from the weak.

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