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Laundering Yeltsin | The Nation

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Laundering Yeltsin

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Moscow

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Matt Bivens
Matt Bivens has covered energy, environmental and nuclear issues for www.thenation.com and a range of other...

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There's been scant notice of refugees being brutally driven out of Chechnya.

American nuclear power plants are in serious danger from an easily fixable problem.

The Russian Foreign Minister says it's an American plot to keep Russia weak. The head of the KGB-successor agency offers that same conviction in a formal briefing to President Boris Yeltsin. The Kremlin press office compares it to the Spanish Inquisition. And the nation's most liberal, pro-Western newspapers splash articles across their front pages about US plans to provoke a new cold war--to isolate Russia, destroy its economy and perhaps even drag Yeltsin himself to the United States for trial as a common thief.

Why is Moscow so aroused? Well, Americans woke up a few weeks ago, picked up the New York Times and had an epiphany. It turns out that Russia is corrupt! Now we are scolding the Russians: How did you get so corrupt?

Russians, amazed, respond that this is outrageous hypocrisy. They have been suffering under an openly rapacious and corrupt regime for eight years. Throughout, as Russians well know, both the US government and news media have been apologists for that regime. They have winked at massive theft and wrongdoing, misreported it [see Matt Taibbi and Mark Ames, "The Journal's Russia Scandal," in this issue] and, in the case of the government, even subsidized it.

Why? Because the ends justify the means: It seems that there are good people called "reformers" who are forcing enlightenment upon Russia. They speak English, and they are eloquent about their desire to build democracy and capitalism. All thinking people ought to support these reformers even if that support has to be manufactured.

The American headlines about corruption and Russia are revolving around two separate and so far unrelated allegations. One is that Yeltsin and his daughters, among others, were given cash payments from Mabetex, a Swiss company that has won sweet contracts to refurbish the Kremlin; the other is that billions of dollars have churned through a few accounts at the Bank of New York in what may have involved the laundering of money whisked out of Russia. (There are other scandals, but those are the ones that have interested Americans.)

So exactly whose billions were these in the Bank of New York? The explanation du jour is that they were the collective insider-trading winnings of the Russian political elite, who racked up fortunes on Russia's capital markets and then converted them into dollars and shifted them abroad before last year's financial crash. Among those pushing this explanation is Yuri Skuratov, Russia's suspended prosecutor general, who said recently that 780 top Russian officials are being investigated for insider trading. (The Kremlin suspended Skuratov earlier this year when, after three years of good work, he suddenly started prosecuting. Skuratov has assisted Swiss officials on the Mabetex case.)

But hypothesizing about the precise origins of the Bank of New York money is an exasperatingly academic exercise. It misses the point. We already know--we've known for years--that Russia has been bled dry by corruption. The Kremlin's own study of corruption, released in the summer of 1998 and ignored by the Western press, estimated that it was costing the country somewhere between $15 billion and $20 billion every year. For comparison, the IMF has loaned a total of just $16 billion to Russia since 1992.

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