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.