RESTORATION WATCH #4: A RUSSIAN WEIMAR REPUBLIC IS AN UNWORTHY G-7 PARTNER, UNRELIABLE ALLY

(Washington, D.C.): While President
Clinton’s current European trip is
intended to demonstrate that U.S. foreign
policy is no longer Russo-centric, the
proof of whether such a long-overdue
course correction is more rhetorical than
real will be in Naples, rather than the
symbolic stops like Riga and Warsaw. For
it will be in the treatment accorded
Russian President Boris Yeltsin — and
the deals done with him — at the annual
G-7 Economic Summit that the clearest
indication will be obtained as to whether
Washington and its allies properly
understand what is happening in Russia
today, and are responding to it.

Unfortunately, the preliminary
indications are that Mr. Clinton and his
counterparts have yet to grasp that the
Yeltsin regime is now, more than ever
before, clearly a transitional one. If
the ultimate character of the Kremlin and
its policies cannot yet be determined
with certainty, one thing is clear: The
weak relatively pro-Western government of
recent years is inexorably giving way to
something far uglier — and far more
dangerous.

Shades of the Weimar
Republic?

In a very thoughtful two-part series
broadcast by National Public Radio on 23
and 24 June, reporter Mike Shuster drew
ominous parallels between the conditions
currently prevailing in Russia and those
that characterized interwar Germany’s
Weimar Republic and led to the
totalitarian nightmare of Adolf Hitler
and his National Socialists. It noted, in
part:

“The most obvious parallels
are in the realm of the economy.
Russia has been shocked by more than
two years of near-hyper-inflation. In
1923, hyper-inflation was so enormous
in Germany that money became
literally worthless. In the late
’20s, the Great Depression hit
Germany. The collapse in production
in Russia today means that this
country is living through its
depression, along with the pain of
inflation….

“Adolf Hitler rode to
power in Germany on a wave of intense
nationalism, fueled by the deep
resentments of the German people
toward the Weimar Republic’s
experiment with democracy, which many
believed had brought them nothing but
economic crisis, crime, political
instability and violence….
Now, many wonder whether [Vladimir]
Zhirinovsky is Russia’s Hitler….

“Like Weimar Germany, the
government of Boris Yeltsin is weak.
It governs ineffectively and seems
powerless to deal with the social
problems here. It cannot enforce the
law. The nation needs new laws, but
it cannot get them passed. It’s a
government that increasingly cannot
carry out its own decisions.”

As Shuster pointed out, Zhirinovsky
is only one of several nationalists
extremists waiting in the wings for the
right opportunity to exploit public
dissatisfaction and anger to permit a bid
for power — either through ballots or
bullets.

Partners in Crime

Preeminent among the social problems
with which the weak Yeltsin government
cannot effectively deal is the rampant
growth of organized crime in Russia.⁽¹⁾
This phenomenon has served to weaken
Russia’s economy at a critical moment
even as it has discredited the regime’s
authority. Perhaps most ominous of all,
however, is the fact that the
success of the Russian “mafia”
is seriously eroding public confidence in
the benefits of democratic and free
market reform. As Senator Sam
Nunn warned on 24 May 1994:
“[O]rganized crime has become one of
the most dangerous forces [to emerge]
from the collapse of the Soviet system.
It has cast a shadow over efforts to
achieve market reform and democracy in
Russia, as well as other independent
republics.”

On this score, Mikhail Yegorov, head
of Russia’s Organized Crime Control
Department with the Ministry of Internal
Affairs, provided portentous testimony to
the U.S. Senate Governmental Affairs
Permanent Investigations Subcommittee on
24 May 1994, including the following:

• There are now close to 5,700
  organized crime groups operating
  in Russia.
• “[Organized crime elements]
  are stealing incredibly large
  amounts of money with the
  assistance of
  officials.”
• “Every sixth
  organized crime group uses
  officials as part of their
  cohorts. Up to 50
  percent, in some cases, of the
  profits that these criminal
  organizations get they use to
  bribe official persons in the
  government and in the
  administrative organs.”
• “These crime groups in
  recent years are demonstrating
  more and more interest towards
  the defense facilities of the
  former Soviet Union. According to
  our investigations, the reason
  for this occurrence is the
  following: It is conditionalized
  by the existence of this myth
  that there is a lot of demand for
  radioactive materials abroad and
  the high costs involved ….
  [O]ver the past year and a half,
  47 criminal cases are being
  investigated connected with
  radioactive materials.”
• “We stopped the illegal
  export of materials to the total
  of 100 billion rubles. The loss
  of materials is still occurring.
  These criminals are using the
  opportunities provided by joint
  ventures….”
• “The capability of
  the Russian law enforcement
  groups and its activities is tied
  directly with
  the reform process. I think that
  up until 1989, it was impossible
  to have any kind
  of organized crime in
  Russia….”

Yegorov’s testimony is but one of
many indications of the ominous
implications of the growing power of the
Russian mafia. For example, Russia’s
Ministry of Interior estimates that 30
percent of businesses privatized under
market reform efforts over the past two
years are under the control of organized
crime. Moscow police claim that almost
one-fourth of that city’s banks are
controlled by organized criminal groups.
In April, President Yeltsin’s anti-crime
council reported that:

“In recent years, the crime
problem in the Russian federation has
sharply deteriorated. The
scale of crime and its tendency to
increase are dangerously deforming
the course of reform
and are posing a threat to the basic
foundations of Russian statehood,
constitutional legality and
citizens’ security.”

‘Yeltsin’s Choice’:
Destroying Liberty in the Name of Saving
It?

In June, President Yeltsin responded
to the mounting crisis created by the
growing rapaciousness and audacity of
Russian organized criminals by issuing a
decree. It gave his government sweeping
powers to fight crime, including: the
right to detain suspects for up to 30
days without bail, to check bank accounts
of any persons suspected of belonging to
a criminal network and to search property
without a warrant. The measure calls for
the number of interior ministry troops to
be increased by 52,000 men.

Yeltsin’s decree has been severely
criticized by Russian reformers for its
assault on the rights of individuals. For
their part, the ultra-nationalists —
sensing an opportunity to capitalize on
the public’s fear of disorder and crime
— have not only latched onto the
law-and-order issue, but attempted to up
the ante. Zhirinovsky, for one, has
criticized the decree as not going far
enough and has proposed his own program
which among other things, would give
military field courts the power to
arrest, try and execute members of
criminal gangs on the spot.

The degree of official corruption and
complicity in such criminal activity
dooms any effort to restore a sense of
order and public safety that is remotely
consistent with a democratic, free
market-oriented society. According to the
24 June edition of the International
Herald Tribune, a major crime
crackdown operation dubbed “Moscow
Hurricane” launched in June was
wholly undermined by leaks from police
and government officials.

One Beneficiary of Russia’s
Crime Wave: the KGB

It is, as the communists were wont to
say, no accident that one of the Russian
institutions most deeply enmeshed in
corrupt organized criminal activity —
the former Soviet KGB — stands to
benefit greatly from the present chaos
and Yeltsin government’s inability to
deal with it. For example, on 10 June,
Yeltsin was obliged to announce the
resurrection of the former KGB’s squad of
700-800 special investigators under a new
“Directorate of Active
Operations” under the Federal
Counterintelligence Service run by Sergei
V. Stepashin.

This move parallels other efforts
made recently by President Yeltsin to
reinvigorate the dreaded KGB — despite
his public declaration last December to
disband the organization.⁽²⁾
Particularly instructive were his
comments two months ago to the Federal
Counterintelligence Service’s top cadre
to the effect that their services were
once again in demand. In a 26 May speech
behind closed doors at Lubyanka
headquarters, Yeltsin declared that:
“Whatever changes take place in
Russia and the world, it will be a very
long time before intelligence officers
find themselves out of work.”

In remarks more reminiscent of a Cold
War-era Soviet leader than an man
ostensibly committed to a
“partnership for peace” with
the West, President Yeltsin reportedly
made, among others, the following ominous
remarks to his intelligence officers:

• Western Aims Toward
  Russia. “There are
  forces in the world whose aim is
  to weaken Russia, turn her into a
  weak competitor with a cheap work
  force and low intellectual
  potential. Counter-intelligence
  services must take clear actions
  to counter this….There are
  people who desire to appropriate
  Russian natural resources, to get
  a hold of our advanced
  technologies in space, military
  and other spheres….”
• Need for New Methods of
  Intervention. “The
  conflicts in Chechnia, North
  Ossetia, and Ingushetia are
  assuming a protracted nature, and
  are throwing the country into a
  ferment….The intervention of
  the armed forces, law-enforcement
  bodies and other departments is
  needed…. The whole arsenal of
  forces and resources of the
  Federal Counterintelligence
  Services must be brought into
  play and new,
  non-stereotyped methods
  of work must be actively
  sought.”
• International Contacts: “The
  iron curtain has collapsed! Not
  just between states but also
  between people. International
  contacts will develop in the
  ascendant. You must accumulate
  experience of work in conditions
  of an open society and a market
  economy. The further we get from
  total bans, the more
  professionally and delicately
  counterintelligence must
  operate.”
• Acquiring State-of the
  Art Technology. “The
  time has come for the Government
  to work out a strategy of
  Russia’s economic security.
  Counterintelligence must act
  selectively in the economic
  sphere…. It is necessary to
  preserve progressive economic,
  scientific and technical
  potential and to ensure our
  export potential. This is a task
  not only for science, industry
  and foreign economic departments;
  for this the special services
  must also make an effort.”

The G-7’s Dangerous
Delusion

Against this backdrop, it is
bizarre and strategically reckless for
Russia to be accorded as
one U.S. official put it, the status of
“a full fledged and equal
participant” in the
discussions at the Naples Economic
Summit, only technically falling short of
full membership in the Group of Seven.
Affording such a privileged role to a
government that is, at best, unable to
control what is happening in its own
country and, at worst, embarked upon a
course that will put it ever more at
cross purposes with Western interests, is
unlikely to facilitate the G-7’s
important economic coordinating function.
Neither is it likely to provide Russia
with roots in the Western democratic and
free market tradition that Moscow cannot
foster at home.

What is predictable, however, is that
President Yeltsin will once again come
away from the G-7 meeting with hundreds
of millions more in Western pledges of
assistance and misplaced kudos over the
progress of reform in Russia. A foretaste
of the latter was served up by an unnamed
senior U.S. government official on 23
June. According to International
Business & Finance Daily, this
official claimed that, “The Russian
economy is stronger today than it was six
months ago… There’s been a vastly
improved economic performance.” The Journal
of Commerce, however, reported on 20
June that Russia’s industrial
output had declined by
over 26 percent in the first half of this
year!

The Bottom Line

As long as the Western powers persist
in willfully deluding themselves about
the true nature and direction of Russia,
they will not only persist in squandering
large amounts of taxpayer funds on Moscow
and continue to ignore the fact that the
undisciplined transfers of billions in
financial aid to that country,
particularly since the early 1990s, has
contributed to its present crisis. Worse
yet, Western leaders may compound the
already considerable risks associated
with the incipient end of the democratic
and free market experiment in Moscow by
further integrating Russia into the
military and economic institutions upon
whom the West’s security has
traditionally relied.

– 30 –

1. See also the
Center’s Decision Brief
entitled Restoration Watch
#2: Russia’s Organized Crime
(No. 94-D 39,
21 April 1994).

2. President
Yeltsin announced the dissolution of the
KGB after it failed to support him
sufficiently during the attempted coup by
parliamentary hardliners in October 1993
led by Parliamentary Chairman Ruslan
Khasbulatov and Vice President Alexander
Rutskoi. At the time, Yeltsin
characterized the organization as
“non-reformable” and pronounced
that: “The Ministry of Security
[KGB], the body which conducted political
surveillance of people for nearly 75
years, has been abolished as a
whole.”