The following is from Paul D'Anieri, “Ukraine and Russia: From Civilized Divorce to Uncivil War”. The chapters before this are also quite important, but I omitted them, because this got long enough as it is:
The end of communism prompted talk of a new “Marshall Plan,” in which massive western aid would support rapid and far-reaching economic reform in Russia. The investment bank Morgan Stanley estimated in January 1992 that reforming the post-Soviet economies collectively would require at least $76 billion per year for at least three years to transform sectors such as energy, infrastructure, agriculture, and food.
However, several factors conspired to undermine that hope. First was uncertainty over Yeltsin’s staying power in Russia. While he had defeated the coup, many in Russia strongly opposed the “shock therapy” being advocated. In August of 1992, when the IMF committed $1 billion to help stabilize the ruble, the reform plan of Yegor Gaidar was already faltering, and conservatives in the Congress of People’s Deputies were already seeking this ouster. Second, there was a significant perception in the United States that with the end of the Cold War, the United States would be able to focus less of its attention overseas. American citizens and politicians hoped for a “peace dividend,” through which money freed up from defense spending could be redirected to domestic spending to combat recession. Third, 1992 was a presidential election year. With the economy struggling, and Bush under attack by a Clinton campaign whose mantra was “it’s the economy, stupid,” it was impossible to muster the support needed to take a really bold and expensive policy.
In March 1992, former president Richard Nixon, who had promoted détente with the Soviet Union, produced a “secret” memo to US leaders, the contents of which were soon leaked to journalists. He warned that the consequences of failure would be that “war could break out in the former Soviet Union as the new despots use force to restore the ‘historical borders’ of Russia.” Bush did not disagree. “Where we might have a difference, is we’re living in a time of constrained resources. There isn’t a lot of money around. We are spending too much as it already is. So to do the things I would really like to do, I don’t have a blank check for all that. In April, he proposed what became the Freedom Support Act, which largely repackaged existing commitments and presumed contributions by allies that had not yet been consulted. One important component of that proposal, a $6 billion stabilization fund, never materialized. Moreover, the Freedom Support Act aid was divided among the fifteen successor states.
In late April, just after Bush announced the Freedom Support Act, Los Angeles exploded into riots, contributing powerfully to the belief that US leaders needed to focus aid efforts domestically, not at Russia. In the New York Times, Thomas Friedman wrote: “The Russian aid bill’s limbo reflects the ambivalent moment in which American foreign policy finds itself after the cold war. One day officials and lawmakers say the United States is the world’s only superpower, and therefore it must lead on issues, such as Russian aid or peacekeeping in Yugoslavia. The next day, though, the same officials and lawmakers say that domestic problems should take precedence, foreign initiatives are too expensive, and therefore Washington cannot afford to lead. In the wake of the Los Angeles riots in particular, the latter mood seems to be dominating“