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What were they thinking? When executives at the Bank of New York saw billions of dollars floating in from the home computer of a Russian businessman with ties to organized crime there, did they really believe that these were just ordinary profits?

The biggest money-laundering scandal in history has prompted calls for a fresh look at the role of American and IMF funds in Russia. To say this is long overdue would be an understatement.

The corruption is certainly mind- numbing in scale and scope, with some of the West's favorite "reformers"-- including Konstantin Kagalovsky, the former Russian representative at the IMF-- at the center of the investigation. But the tribute that the Russian mafia skims off the top is just one part of the looting of Russia.

The other part has been scripted by Washington and its most powerful financial institution: the International Monetary Fund. It is a different form of pillage, to be sure. The robber barons who have taken over the Russian economy since the fall of the Soviet Union have adopted the practice of the Medici family of fifteenth century Florence: money to get power, power to protect the money.

Washington's money mandarins, on the other hand, descended upon Russia with enormous wealth and power already in their possession. They have used both to colonize Russia, turning a once developed economy into a Third World country.

The results have been devastating. Over the last eight years, the economy has shrunk by more than half. Russian men can now expect to die in their fifties. The chief economist of the World Bank, Joseph Stiglitz, has noted that the number of Russians living in poverty climbed from two million to sixty million in just a few years.

Stiglitz, who is one of America's most accomplished and respected economists, has recently argued that these results "are not just due to sound policies being poorly implemented." Rather, they are based on "a misunderstanding of the very foundations of a market economy, as well as an excessive reliance on textbook models of economics."

The experience of the last year shows just how 180-degree wrong the foreign experts can be. August 17th marked the first anniversary of the collapse of the ruble, which fell from its fixed rate of about 6 to the dollar one year ago to 25 today. The IMF poured in billions of dollars to prop up the overvalued currency, and Washington predicted disaster for the Russians if they did not maintain the fixed exchange rate. There would be hyperinflation, they said, and sources of foreign capital would dry up. The economy would fall apart.

A year later, it is clear that the sky did not fall with the ruble. The threatened hyperinflation did not occur-- inflation is running at about 45% for the year. The currency's collapse made imports much more expensive, and gave Russian industry a chance to get back on its feet. Industrial production in July was up 12.8% over last year, and Russia's trade surplus has risen more than tenfold.

Even Russia's default on $40 billion of foreign debt, almost unthinkable until it happened, has not really hurt the economy. True, foreign capital inflows have fallen off sharply over the last year. But since these funds did little more than inflate a speculative bubble in the financial sector-- encouraged by the IMF's high interest rate, fixed exchange rate policy-- the productive sectors were not greatly affected when the bubble burst.

It has been one debacle after another since the IMF introduced its "shock therapy" program in 1992. Like a battered spouse who sees no alternative but to return to her abuser, Russia comes back to the IMF for more credits. But the hundreds of billions that have fled the country in the 1990's have cancelled out this "aid," as well as the meager foreign direct investment, many times over. At the same time Russia has accumulated more than $150 billion in foreign debt, with the burden of debt service now reaching a crushing 29% of export earnings.

At some point any rational, non-corrupt political leader in Russia has to question whether the country's friendly relations with Washington are worth the price of continued impoverishment. That time may be approaching, as Russia elects first a Parliament and then a President over the next 10 months. There will be calls from across the political spectrum to break, or at least loosen, the chains that bind Russia to its Western tormentors.

The American press will mostly dismiss these demands as nationalist finger- pointing, and attribute Russia's demise to its failure to hew more closely to the IMF's prescriptions. And Washington will pour in money, as it did in the 1996 elections, to support its friends.

But the Russians might well be better off cutting this toxic umbilical cord, which could give them at least a fighting chance against the powerful domestic criminal class that our own government-- and private sector-- has helped to create.

Mark Weisbrot is Research Director at the Preamble Center, in Washington, D.C.