The Journal's Russia Scandal
Just before Christmas in 1997, as a tumultuous stock-market crisis ravaged emerging markets in every corner of the globe, readers of the Wall Street Journal were treated to some good news: Russia was going to emerge from the mess unscathed. While conceding that "few debt markets outside Southeast Asia were hit harder by recent financial turmoil than Russia's," the Journal's Moscow bureau chief, Steve Liesman, added quickly that "many analysts believe an equally strong rebound may be in the offing." Moreover, Liesman wrote, investors were rapidly coming to the realization that "Russia's problems are far different and, for the moment, less dire than those that undermined Asian economies." The December 16 piece was headlined, "Russian Debt Markets Due for Rebound."
A few weeks later, Liesman and the Journal used even stronger language to trumpet Russia's economic merits. They chided investors who were too busy "fretting over Asia's financial crisis" to notice what they called "one of the decade's major economic events: the end of Russia's seven-year recession."
The Journal's prediction was more than a little precipitate. Instead of getting better, things in Russia got worse. A lot worse. Nine months after Liesman declared that Russia's debt market was due for a rebound, and just over seven months after proclaiming the end of the Russian recession, the Journal--like most US newspapers--found itself having to explain the near-total collapse of Russia's economy and capital markets.
What is most astonishing is not how badly Liesman and the Journal misreported one of the most tragic economic stories of the decade as it was happening. The amazing thing is that they won a Pulitzer Prize for their reporting of the Russian crisis after the country had gone down in flames. Liesman, who left the Moscow bureau in April of 1998 to return to New York, was called back to Moscow after the crisis to help write a series of Journal pieces on how the Russian financial collapse happened. These articles completely contradicted the body of work he had left behind, leaving the impression that the collapse had been inevitable all along.
While it's true that throughout the mid-nineties nearly the entire Western press corps had painted a similar picture of allegedly successful, if bumpy, market reform in Russia, the Wall Street Journal's version was even more deluded, and more inappropriately enthusiastic, than the competition's. Furthermore, few if any of those other outlets, with the possible exception of the New York Times, have as much influence internationally as the Journal. And none of those other reporters won the Pulitzer Prize. To win that, the Journal ought to have been ahead of the pack throughout; as it was, the paper's coverage only stood out as the most spectacular wreck in a huge pileup.
Liesman's Russia coverage was a case study in the kind of narrow colonialism and provincialism that is increasingly pervasive in American foreign news reportage. Until the crisis struck, Western reporters based in Moscow focused almost exclusively on the Russia story in terms of its relevance to Western businessmen--and as long as the stock market was doing well, and companies like British Petroleum were still proudly announcing mergers with Russian partners, much of the corruption that eventually sank the Russian economy was ignored. As a result, an event like the recent Bank of New York debacle actually came as something of a surprise to Americans. But for ordinary working Russians, a great many of whom have been watching their bosses send company money offshore for years while their own salaries go unpaid, the only surprise in the New York money-laundering story was that it didn't come out sooner. And one reason it didn't is that the Western press, particularly pro-"reform" cheerleaders like the Journal, was plainly uninterested, until it was far too late, in making an effort to see the corruption that was a daily reality for the majority of Russians.
In fact, until the crisis forced them to change their tune, Western reporters like Liesman seemed to distrust reports of widespread public despair over the Yeltsin regime's criminal policies, preferring instead to rely upon the stock market, the pronouncements of the IMF and the results of Russian state-produced macroeconomic reports to tell them how the Russian economy was doing. As journalists Matt Bivens and Jonas Bernstein wrote in an article in the academic journal Demokratizatsia, which criticized Western press performance (including that of the Wall Street Journal) in post-Communist Russia: "Sadly, there is another dynamic at work here, an element of disdain for the Russians as a people.... [Many] Westerners have sympathy for the idea that following centuries of oppression, the Russians 'aren't ready' to be trusted with complete democracy. Perhaps, then, it is better to let former Vice Premier Anatoly Chubais and his Harvard-trained whiz kids manipulate matters--always, of course, 'in the larger interest.'"