Russia Watch: Reform Follows Function

...The bank gives the administrator one billion rubles in veksels, and adds that it can give him cash in a week, before the veksels' maturity date, but at a discount: loo million rubles in exchange for all one billion veksels...

...Twelve parliamentary aides have been murdered over the last two years...

...This makes "lobbying" easier...

...If a potential traitor is found, the agents should collect kompromat— compromising information—on him...

...But if the new broom sweeps clean, many longtime Russia-watchers believe, it isn't likely to do so for long...

...The Accounting Chamber found that during privatization, several banks used state funds to purchase shares in state enterprises...

...What you get for your money is a pass allowing access to not only the parliamentary buildings, but other government offices, including the White House—where Chemomyrdin and his ministers work...

...A look at the situation inside these structures, however, does not give grounds for hope...

...It says, for example, that Ivan Rybkin, the former State Duma speaker who now heads Yeltsin's advisory Security Council, set up a "Charitable Fund for the Support of Victims of Armed Conflicts" back in 1994...

...63 to the minister...

...On the other hand, the magazine added, merchants find it much more difficult to hide their turnover and profits from the cops, who are "harsher and more ruthless" with anyone who tries to lowball the protection payments...

...The memo begins: "The anarchy of the federal center, its extremely well-developed corrupted appetites, the primitivism of the regional authorities, the criminalization of the economy, have put the administrative process in Russia on the border of total chaos...

...and Boris Nemtsov, the reformist governor of the Nizhny Novgorod region...

...How much help can the new government team expect from Russia's lawmakers in the campaign to impose order...

...The first is being realized on a grand scale in Russia...

...What is more, he has vowed to drain the swamp in which crime and official looting breeds by radically reducing state interference in the economy...

...The second is democratic capitalism...

...It should also provide "image-making" services for the minister and his ministry...

...The bank then takes the veksels to the Finance Ministry, which has received new budget funds, and redeems them for the full one billion rubles, plus a commission for having provided the local administrator with cash...

...It is no longer even clear whether the government calls the shots in the New Russia, or the banks—or even if there is any longer a meaningful distinction between the two...

...The shooting, most likely carried out by a rival grupirovka, took place directly across the street from the main Moscow police headquarters...

...Naum," leader of Moscow's Koptevo mafia group...

...To this end, it should penetrate the deputies' inner circles...

...The weekly Obshchaya Gazeta recently described how major "private" banks like Uneximbank, one of the most powerful institutions in the new Russia, use their close ties to the state to enrich themselves...

...An "extra-staff" position can be bought from a parliamentary faction for $4,000-$5,000, the newspaper reported...

...Both Yeltsin and Nemtsov have vowed to end the practice of letting certain commercial banks hold state funds and work as the state's agents in carrying out other financial operations...

...Then there is the problem of tax evasion—one of the main reasons the government cannot find the money it owes to pensioners, teachers, miners, soldiers, and other public-sector workers in back payments and wages...

...Uniformed kryshas, themagazine reported, are similar to their criminal counterparts, but businessmen consider them "more reliable, organized, and prestigious...

...While regional tax offices were left without funds to pay their rent or phone bills, their bosses in Moscow used budget money to pay—yes—their income taxes, and to buy and renovate apartments for themselves...

...Norilsk's workers are owed 1.3 trillion rubles (around $230 million) in back pay...

...Funds earmarked for rebuilding Chechnya, for example, were used for "other purposes...

...Assuming Boris Nemtsov survives the jungle within the government, he will then face the jungle outside...

...It is an open question whether Nemtsov, or even Yeltsin, can end this kind of insider dealing...

...While the parliament includes uncorrupted liberals (the phrase is by no means redundant), it is dominated by Communists and hard-line nationalists, many of whom, despite their populist rhetoric, have turned public service into a profit-making enterprise...

...The American Spectator May 1997 have taken root there...

...Wages have not been paid in more than three months and, according to Obshchaya Gazeta, the sight of people fainting from hunger in the Arctic Circle town where the enterprise is located "no longer surprises anyone...

...It was the natural response given the breakdown of the state apparatus—and another reminder of how tough a struggle reformers like Boris Nemtsov will have to face...

...Even though we've heard this tune before, it still sounds promising...

...In other words, special operations, or, to use the KGB lexicon, "wet affairs...

...After being named to his new post, he told the weekly Kapital that Russian reform had thus far gone down a blind alley...

...Among the most "effective" personal secret services, the document states, are those of Interior Minister Anatoly Kulikov, Russia's top cop, and ultra-nationalist Vladimir Zhirinovsky...

...Moskovskiye Novosti not long ago published a memo—leaked from the apparat of Chernomvrdin's chief of staff, Vladimir Babichev— that offers a rareglimpse into what the paper called with remarkable understatement "the customs which prevail in the Russian corridors of power...

...Rodionov, the newspaper reported, urged the creation of a "Defense Fund...

...While many privatization cheerleaders predicted that New Russian banks like Unexim would turn Soviet-era industrial dinosaurs like Norilsk into competitive enterprises, it hasn't worked out that way...

...The administrator, given that he has angry citizens back home waiting for their back salaries and pensions, agrees...

...The head of a local administration in one of the cash-strapped regions, for example, comes to the Finance Ministry to get the budget money his administration is owed for salaries and other payments — say, one billion rubles...

...In Nemtsov Yeltsin has found a clean regional leader with no apparent ties to NIOSCOW'S financial-bureaucratic clans...

...Boris Yeltsin claims to think so—and has once again declared war on the mafia and bureaucratic corruption...

...Prime Minister Viktor Chernomyrdin...

...Soon afterward, the heads of a number of the country's large banks and companies—among them, Unexim, Menatep, and Lukoil— showed up at the Defense Ministry building on Arbat Square for a meeting with the general...

...Nemtsov, 37, is an intelligent politician with a reputation as a genuine reformer...

...he will be working with is Interior Minister Kulikov, who was recently put in overall charge of the fight against economic and organized crime...

...While policemen are allowed to moonlight as security guards at businesses, nightclubs, etc., this case was a bit different: the unit's commander had signed a contract with the mafia boss to provide him with bodyguards, and assigned nineteen of his men to the task...

...Nemtsov, however, may find it difficult to figure out who is on which side...

...Given such conditions, it continues, any minister worth his salt must set up his own "shadow, closed security structure," its primary tasks being to ensure the minister's physical security and to prevent criminal organizations from buying off his deputies...

...RUSSIA WATCH by Jonas Bernstein Reform Follows Function Can a totally corrupt system reform itself...

...Image-making, the document notes, "most resembles that of a disinformation service...

...Defense Minister Igor Rodionov not long ago earned a public presidential rebuke for his constant complaints about the armed forces' underfunding...

...The new government team will have to work with the various state tax agencies to improve collection...

...But the ministry has no money at that time, so it tells him to go to an authorized bank, like Uneximbank, and get short-term vekselspromissory notes...

...He provides a counterweight to Chubais (who represents the big New Russian banks) and Chemonmdin (who fronts for the energy monopolies)—and will make the clean-up campaign more credible with the public...

...There are two models of the market economy," he said...

...Surely Nemtsov is facing an uphill battle...

...At the time of his assassination, Naum was being guarded by off-duty Saturn unit members...

...04 The American Spectator • May 1997 65...

...In February the weekly magazine Itogi ran an investigative report on how the police have gone into competition with the mafia in offering services as a krysha, or roof—slang for a protection racket...

...I absolutely don't know the rules which JONAS BERNSTEIN is a journalist in Moscow...

...64 May 1997 • The American Spectator The pass is also a useful shield against nosy law-enforcers, so it is no surprise that many of these "extra-staff" positions have been bought up by, quite literally, suspect people—members of the Solntsevo organized crime group, for instance...

...An efficient ministerial secret service, the memo continues, must also deal with questions "the ministry is not authorized to decide" and "problems that cannot be solved openly, without the use of special forces and means, given the conditions of extreme governmental corruption and the criminalization of the whole state organism...

...Vladimir Zhirinovsky's LDPR has the biggest staffers' corps—estimated at 5,000—and has chalked the largest death toll...

...has a controlling stake in the giant Norilsk Nickel metals producer...

...According to Izvestia, the parliament's 450 deputies have, between them, more than 15,000 aides-13,000 of them designated as "not on permanent staff...

...One recent killing involved a LDPR aide tied to the mafia...

...Chernomyrdin, it adds, has five "funds," and can also count on the private armies of the giant oil corporations Lukoil and Yukos, as well as that of Gazprom, the natural gas monopoly he once headed...

...What sparked their demarche was the January 23 murder of Vasily Naumov, a.k.a...

...The institution of "authorized banks," as it is called here, has led to certain abuses...

...While the meeting was closed, Kommersant Daily found out that they discussed "forms of possible cooperation," with the aim of "attracting private capital"into the defense sector...

...This means spin-control and preventing leaks, but also includes "informal" contacts with journalists—buying them off...

...Forty members of the Interior Ministry's elite Saturn spetsnaz unit, all of them veterans of the Chechen war, recently wrote a letter of protest to Kulikov, which was leaked to the press...

...Gazprom's force reportedly numbers 15,000...

...In their letter, the commandos claimed they did not know exactly who Naum was (this is doubtful) and complained they weren't paid all of the "measly kopecks" they were owed for the work, while their boss and his deputies made millions of rubles off the deal...

...The first is the government-monopolistic, mafiacorrupt model...

...Workers' representatives recently asked for shares in Norilsk in lieu of pay, but their request was categorically turned down...

...Meanwhile, Uneximbank, thanks to a fixed privatization auction in late 1995,44 It's unclear whether the government calls the shots, or the banks—or if there's a difference...

...I don't know how to participate in Kremlin intrigues," he told one newspaper...

...In addition to these basic tasks, the minister's secret service should lobby the interests of "the branch" in other governmental structures and among the major political parties, which requires infiltrating them...

...Not only do the cops occasionally guard the bad guys: in many cases they are the bad guys...

...This fund "worked in the capacity of a security service and was involved in raising money...

...perhaps most shocking of all is that, according to the memo, every major state official and politician has set up such secret services, using the institution of "the fund" as a cover...

...Yet Norilsk earns, according to a Western metals industry expert, $2 billion a year from exports of nickel, platinum, and other metals...

...How long do you think it will take them," one journalist asked me, "to chew him up and spit out the pieces...

...In an effort to show he really means it this time, Yeltsin has handpicked a new team to "establish order" in the government and the economy: privatization architect Anatoly Chubais, who was also named a first deputy premier...

...One of those44 Not only do the cops occasionally guard the bad guys: in many cases they are the bad guys...

...Grupirovki is usually used when referring to mafia groups...

...According to the Accounting Chamber, the government's quixotically persistent-but-toothless watchdog agency, half of the budget money earmarked last year for improving work conditions in regional tax offices was "lost somewhere between the Finance Ministry and the State Tax Service...

...The minister's spies should also be on the lookout for deputies, or directors at enterprises within the ministry's "branch" of the economy, who may be planning to "join with those grupirovki of federal authority which are hostile Ministerial intrigue and unbridled corruption come first...