From: Sasha Chislenko (sasha1@netcom.com)
Date: Thu Sep 02 1999 - 13:29:09 MDT
[ Not really extropian, but quite interesting...]
--------------------------------------------------------
STRATFOR.COM
Global Intelligence Update
September 2, 1999
The Russian Bank Scandal: A Purge Against Yeltsin's Allies
Summary:
An avalanche of allegations and investigations is rapidly burying
the allies and officials of the Yeltsin administration. The timing
and evidence suggests this is far more than just Luzhkov versus
Yeltsin in pre-election scandal-mongering. This is a full-scale
assault on Yeltsin's ruling political and economic cabal by
elements of Russia's security apparatus, which could quickly lead
to Yeltsin's replacement by Prime Minister Vladimir Putin. If the
purge gets out of hand, will Putin and his backers fall victim to a
still more reactionary force?
Analysis:
Russian President Boris Yeltsin's administration and his allies are
besieged by allegations and investigations. The most recent, which
broke on the front page of the New York Times August 19, involved
allegations that Yeltsin administration officials were involved in
laundering billions of dollars from criminal activities and
possibly from IMF loans through the Bank of New York and the
Republic National Bank. The IMF has denied that its funds have
been laundered through U.S. banks.
Concurrent with this are ongoing investigations into allegations
that close Yeltsin ally Boris Berezovsky diverted funds from the
state airline Aeroflot to a private Swiss bank account and that
Yeltsin, his family members and his administration accepted bribes
from the Swiss construction firm awarded the contract to renovate
the Kremlin. All these scandals come hot on the heels of confirmed
reports that the Russian central bank diverted IMF loans through an
offshore shell company, using them to speculate on the global
currency markets.
Some of these scandals have been simmering for months and date back
to events that occurred years ago. And yes, the Yeltsin cabal was
a kleptocracy just waiting for an indictment.
But we do not believe that these scandals are coming to a boil
almost simultaneously out of mere coincidence or bad timing. This
is not, as some in the Russian press have alleged, a fictional tale
generated in the U.S. by opponents of Vice President Al Gore - a
key figure in U.S. policy toward Russia - in an attempt to
embarrass him prior to the U.S. presidential elections. This is
not, as Berezovsky has asserted, a simple pre-Duma election plot
dreamed up by Yeltsin's political foe, Moscow Mayor Yuri Luzhkov.
That said, we believe that Luzhkov's new ally, former Prime
Minister Yevgeny Primakov, is playing a role in it, although not
the lead role.
According to Russian and U.S. intelligence sources and analysts
cited by UPI, the Bank of New York money laundering allegations
were leaked to Western law enforcement officials by disgruntled
elements in the Russian security services, eager to embarrass and
undermine Yeltsin. Analysts cited by UPI pointed to Primakov, who
headed the Foreign Intelligence Service (SVR), as the successor to
the KGB's foreign operations directorates before he was promoted to
foreign minister and then prime minister. The analysts insist that
current Prime Minister Vladimir Putin is helpless to stifle the
dissent within the security apparatus, despite the fact that he was
previously head of the Federal Security Service (FSB), the
successor to most of the KGB's domestic operations directorates and
a career KGB officer.
We disagree. We see a continuity between Primakov and Putin, with
Putin far more likely to be playing the lead role in manipulating
this crisis. If Primakov was in a position to reveal the full
scope of the economic crimes of the Yeltsin administration and its
supporting cast of oligarchs, why wait for months after he was
forced to step down to set the plan in motion? In fact, Primakov
launched an attack on corruption in the Yeltsin cabal, particularly
against Berezovsky, but was thwarted.
The chronology speaks for itself. Primakov took office as prime
minister on September 11, 1998. Five months later, in February,
news emerged of the investigation by Prosecutor General Yuri
Skuratov of the Russian central bank's misdirection of IMF funds
through the Jersey Island holding company FIMACO. By late March of
this year, Skuratov had launched an investigation into illegal
deals between Russian officials and Yeltsin's family and the Swiss
construction company Mabetex. On April 2, Yeltsin attempted to
sack Skuratov, though the Duma declared the move unconstitutional.
Days later, arrest warrants were issued for Berezovsky and Aeroflot
director Nikolai Glushkov, as well as for another oligarch,
Alexander Smolensky. Berezovsky was ousted as executive secretary
of the Commonwealth of Independent States (CIS). The arrest
warrant against Berezovsky was the straw that broke the camel's
back and Yeltsin struck back. By May 12, the arrest warrant had
been lifted and Primakov was sacked, replaced by Sergei Stepashin.
During Stepashin's short tenure as prime minister, the scandals
were effectively smothered, as the Kremlin sought one more infusion
of cash from the IMF. It got it by selling out Slobodan Milosevic
to NATO. The ousting of Primakov, the abandonment of Yugoslavia
and the failure of the Kremlin to take steps to prevent a guerrilla
uprising apparently brewing in the northern Caucasus was too much
for a faction in the security and defense apparatus. What they saw
was Russia spinning out of control. Moreover, the financial
scandals had not gone away. Price Waterhouse confirmed the details
of the FIMACO scandal and the Swiss opened an investigation of the
Mabetex allegations. The final insult may have been when Islamic
guerrillas finally did invade Dagestan and Stepashin, sent to the
area to evaluate the situation, declared his aversion to risking
the lives of Russian troops or civilians.
Whether by his own volition or not, Yeltsin sacked Stepashin and
appointed Putin, not only his prime minister but also his chosen
successor, on August 9. Even before his confirmation in office,
Putin deployed a massive contingent of Russia's elite forces to
attack the guerrillas in Dagestan and ordered an increase in pay
for soldiers in Dagestan and for members of the FSB. Putin revived
Primakov's aggressive foreign policies toward Belarus and other CIS
countries, which had stagnated under Stepashin.
Two days after Putin's appointment was approved by the Duma, Swiss
officials froze what were reportedly Berezovsky's bank accounts.
The next day, the New York Times broke the Bank of New York money-
laundering story. On August 28, again perhaps not altogether
voluntarily, Yeltsin signed a decree merging the FSB department
responsible for protecting the constitution - and the
constitutionality of the upcoming elections - with the counter-
terrorism department. The FSB spokesman who announced the decision
cited the "close responsibilities" of the two departments, though
he did not explain why election monitors need to coordinate closely
with the FSB's armed commando units.
Now Yeltsin is drowning in scandal, and Putin, according to
analysts, is unable to save him from this Primakov-directed deluge.
More likely, Putin is pushing Yeltsin under. First of all, Putin
was Primakov's ally, even presenting him with a gift of a hunting
rifle as condolence when he was sacked. Primakov headed the SVR,
while Putin headed the FSB. In the FSB, Putin had the files on
Kremlin officials and earlier he even worked under Anatoly Chubais,
under investigation in the Mabetex and Bank of New York scandals,
and Pavel Borodin, under investigation in the Mabetex scandal.
Yet somehow, Putin has not been implicated in the scandals. As
business manager and then head of the main oversight office in the
Kremlin, Putin knew where much of the money was going even before
he took over the FSB. Primakov reportedly did not even have an
office in the Kremlin during his tenure as prime minister.
Currently, Putin has the levers of power in the Kremlin,
theoretically allowing him to block investigations, while Primakov
is working from the outside. So while Primakov was ousted for
launching a purge, Putin may be far more successful.
As we wrote on August 23, a silent coup has occurred in the Kremlin
[ http://www.stratfor.com/SERVICES/GIU/082399.ASP ]. Now the purge
is under way. Those reportedly under investigation in the Bank of
New York case include: Yeltsin's daughter and close advisor Tatyana
Dyachenko; former Deputy Prime Minister Anatoly Chubais; former
Deputy Prime Minister Oleg Soskovets; former Finance Minister and
now G-8 Relations Advisor Alexander Livshits; oligarch and former
Finance Minister Vladimir Potanin; oligarch Mikhail Khodorkovsky;
and reputed Russian mob boss Semyon Mogilevich, who reportedly had
business relations with senior Russian officials, including Chubais
and Viktor Chernomyrdin. Also under investigation are 33 Russian
companies that do business with the Bank of New York, including
Khodorkovsky's Yukos oil company, Avtovaz and Sibneft, both
connected to Berezovsky, and Lukoil, headed by oligarch Vagit
Alekperov. Berezovsky is joined by Yeltsin's son-in-law under
investigation in the Aeroflot scandal. And the Mabetex scandal
drags in Yeltsin himself, his two daughters and Borodin.
Great swaths of Yeltsin's family, administration and the oligarchs
who supported him, are poised for conviction for economic crimes.
They are even feeding on one another, with Berezovsky taking on
oligarchs Vladimir Gusinsky and Rhem Viakhirev, and Khodorkovsky
beginning to turn against the administration. The swirling scandal
not only holds the possibility of gutting the kleptocracy and
ousting Yeltsin, leaving Putin as president before next year's
elections, but also plays into a strong domestic anti-American and
anti-Western sentiment.
As has occurred throughout history, responsibility for Russia's
calamities are once again laid at the feet of the Westernizers and
their conspiratorial Western allies. It now emerges that Western
money served only to enrich and empower a small cabal in the
Kremlin before cycling back to Western banks. In exchange, the
Yeltsin cabal sacrificed Russian international prestige and
interests.
Yeltsin's tenure, and that of his self-serving supporters, is
nearly at an end. The question is, is Putin the end or the
interim? Is he Lenin or Kerensky? Putin and his backers do not
represent the farthest possible reaction of Russian politics. They
understand the need for continued economic and political engagement
with the West, albeit under significantly less self-debasing terms.
If the purge now under way gets out of hand, Putin and his backers
could fall victim to a still more reactionary force. If Putin
turns out to be Kerensky, who will be Lenin?
This archive was generated by hypermail 2.1.5 : Fri Nov 01 2002 - 15:05:00 MST