Russia’s January 2006 law limiting the operation of NGOs, especially those with foreign funding, has earned her pariah status.  What Western audiences rarely hear is that Russia has good reasons to crack down on some NGOs.

A network of high-profile, internationally funded NGOs (specifically, the Russian Privatization Center and its offshoots) were instrumental in the privatization fraud that precipitated Russia’s 1992-96 economic crash, in which the GDP loss to Russia (40 percent) was the economic equivalent of California, Texas, Florida, New Jersey, and New York seceding from the Union within a five-year period.  International donors, including the United States Agency for International Development, used this network to contribute to First Deputy Prime Minister Anatoly Chubais’ political activities in the 1990’s.

Last year’s legislation “Amending Some Legislative Acts of the Russian Federation” requires public associations to register with the Russian government.  NGOs must report their activities and allow yearly financial audits.  The standards for registration and reporting are higher for foreign NGOs—and they are not permitted in “closed” territories, such as Chechnya.  The bill protects the right of foreign citizens to join NGOs and forbids discrimination based on membership.  It also bars the state from meddling in public groups, as long as they do not help terrorists, arouse ethnic hatred, or offend public decency.

In some ways, the text of the Russian NGO law is less strict than U.S. laws governing NGO registration.  (Russia does not bar exclusively religious or scientific research-based groups.)  But to understand how the law will be implemented, it is necessary to understand what motivated it.

After the collapse of the Soviet Union in 1989, some Westerners and Russians saw the chance to form a “civil society” in Russia—but they needed to act quickly, while domestic government institutions were malleable.  Hundreds of millions of dollars in aid for this was managed by the Harvard Institute for International Development.  HIID worked closely with Chubais, who, along with a few cronies, effectively controlled how most of this money was spent in Russia.

Through their flagship NGO, the Russia Privatization Center, Chubais and Harvard team members set up a network of NGOs throughout Russia that would bankroll local politicians who supported Chubais.  Aid money was siphoned off for private business interests.  This type of pseudo-NGO was used by many rich Russians to launder money or evade taxes.  (Yuri Mamchur, a Seattle-based Russia analyst, estimates that less than one percent of the nearly 500,000 Russian NGOs do not serve a criminal purpose.)

Chubais used his aid-fueled political clout to promote the “shock therapy” privatization program advanced by Harvard professor Jeffrey Sachs.  This program was never popular; it was pushed through by presidential decrees—which only Chubais had the power to approve, barring direct interference from then-President Boris Yeltsin.  The Duma and other legal institutions were completely sidelined.  Politicized aid spending reinforced a system of clannish patronism, to the point where functioning government institutions were being circumvented and undermined.

Russia is now on her way to economic recovery and is beginning to deal with the corruption problems that were exacerbated by foreign aid.  But the fiasco raised serious concerns in Russia about what, exactly, foreign governments and private institutions were trying to accomplish.  Russian-government officials saw foreign intervention as a deliberate attempt to weaken their power and Russian national integrity.

High-level officials in China have always been skeptical of the “shock therapy” method of reforming the Russian economy: They thought the sudden devolution of economic power from the central government was foolish.  The events of the 1990’s confirmed their suspicions.  Beijing thinks that low-level NGO staff members have a genuine desire to help the Chinese people but distrusts some of the higher-ups’ intentions.  And China’s fears have only been heightened by American involvement in regime change in Eastern Europe and Central Asia.

U.S. involvement in the “color revolutions” of Central Asia and Eastern Europe is interpreted by Russia and China as a direct threat to their sovereignty.  These “revolutions” undermine governments that have traditional ties to Russia and China, and the resulting power vacuum is often filled by organized crime.  The fallout has meant chaos along Russian and Chinese borders.

The Chinese government claims that American NGOs, such as the International Republican Institute (affiliated with the Republican Party), the National Democratic Institute (affiliated with the Democratic Party), Freedom House, and the Open Society Institute (George Soros), gave media and material support to the “color revolutions.”  Given that the boards of these NGOs comprise former U.S. secretaries of state, current U.S. politicians, and venture capitalists, the Chinese view their activities with suspicion.

Western involvement in color revolutions has distinctive hallmarks.  A small group of young, English-speaking “reformers” with free-market sympathies organize meetings for adolescents.  The youngsters are provided with flashy advertising and a “manifesto” that promotes nonviolent revolution.  Media reports of discrimination exacerbate ethnic divisions within these countries.  The reformers have a cadre of consultants and academics in the West that can explain their cause effectively.  Usually, the crisis is precipitated by an unfavorable result in rigged elections, where Western-funded exit polls provide the key evidence for fraud.  After the leader of the reformers is instated, Western governments hail the success of “the people” or a “democratic dream.”

The three color revolutions in the Ukraine, Kyrgyzstan, and Georgia have not produced governments that are significantly more “democratic” or less corrupt than the preceding ones.  Still, activists associated with a U.S.-based website are pushing for a “denim” revolution in Belarus.  The U.S. government and its European allies are giving the activists their support.

What makes the Russians and the Chinese nervous is that the color revolutions always seem to produce the same result: increased Western influence in government, lucrative investment deals for Western-aligned elites, and strained ties with Russia and China.

It will be easier for the Chinese government to deal with “subversive” NGOs than it was for the Russians, because elites in China do not yet rely on NGOs as part of their power structure, and the Chinese people still see Beijing as their main source of support.  Beijing’s offensive will squeeze foreign funding and talent out of the Chinese NGO community through targeted registration, auditing, and reporting requirements.  Organizations with foreign-government funding will eventually be ruled out altogether.

Right now, Beijing’s NGO laws have many legal loopholes.  In the future, it will be clearer what NGOs need to do to register, and these laws will be enforced.  The new registration process will be arduous, and NGOs will still require sponsorship from a government agency.  The difficulty in finding government sponsors will provide an advantage to home-grown NGOs.  Beijing will use the lag time to establish government-friendly institutions to meet the needs it deems worthy.  In fact, this is already happening as government-organized NGOs (GONGOs) are becoming more prominent throughout China.

The Beijing government will not be rash; it will ensure that foreign businesses, and its tax base, will not suffer under any new NGO laws.  However, NGOs that have exploited loopholes to register as corporations, as well as U.S. businesses that have interfered in politics, may be affected.  Beijing will present a comprehensive legal framework for “fairly and efficiently” dealing with NGOs that will be superficially convincing.

Beijing will use the Chinese media to encourage the public to be skeptical about NGOs.  The ground for this has already been laid with the embezzlement scandals surrounding the China Youth Development Foundation and its foreign-/private-funded offshoot Project Hope.  The government will use the excuse of fighting fraud to implement restrictive measures on foreign funding.

Beijing will impose limitations on well-known subversion techniques.  For instance, there will be a tightening of public-decency regulations (no sexually explicit Rolling Stones songs, à la Howard Perlmutter and social-destabilization techniques).  “Hate-speech” legislation will be passed, with the aim of silencing people who foment ethnic tensions in the border provinces.  “Minority-rights” promoters will lose media platforms.

The Russians and, in the future, the Chinese will act to protect their personal power and national integrity in the face of what they see as American aggression.  The American public should consider the fallout from courting the hostility of Russia and China.  We are already spread very thin in the “War on Terror”; can we afford to alienate everyone?