14 August 2000, Volume 1, Number 4FSB BLAMES CHECHENS--EVEN WHEN PUTIN DOESN'T. Despite efforts by President Vladimir Putin and Southern Super-District head Viktor Kazantsev to calm the situation after the 8 August bombing in Moscow by indicating that they did not know who was responsible, FSB Public Relations Center chief Aleksandr Zdanovich told Ekho Moskvy radio on 9 August that his organization "cannot guarantee that there will not be another terrorist explosion in Moscow until the pocket of banditry in Chechnya is destroyed." Meanwhile, Gennadii Raikov, the leader of the People's Deputy Duma faction, said that as a result of the bombing, the Russian parliament will consider lifting the moratorium on the use of the death penalty--even though the banning of such punishment was a Council of Europe condition for Russian membership in that body.
FSB SAYS UK HUMANITARIAN GROUP TRAINING CHECHEN REBELS. Spokesman for the FSB told Interfax on 10 August that the British Halo Trust--a leading NGO involved in mine-clearing activities around the world--was involved in training Chechen fighters and conducting espionage under the cover of helping people in that region remove mines. In its statement, the FSB said that Halo Trust had used its offices in Abkhazia in this fashion as well.
RUSSIAN PREMIER SAID INVOLVED IN MISUSE OF IMF FUNDS. Viktor Gitin, a member of the Yabloko faction and former head of the Duma Finance Committee, told the "Times" of London, "Segodnya" and pravda.ru on 8 and 9 August that Russian Prime Minister Mikhail Kasyanov may have been involved in the 1998 decision to transfer portions of a $4.8 billion tranche of IMF loans into favored banks. Gitin added that he has collected an enormous number of documents showing that Kasyanov, then deputy finance minister, had worked with other officials to alert friendly banks about the upcoming default and thus allow them to take defensive measures. He said that Kasyanov's aides had tried to buy his silence by offering him $500,000. When he refused, he was imprisoned on corruption charges involving a fraudulent savings account. Gitin was released on 30 July after suffering two heart attacks in prison. Gitin's charges about Kasyanov are supported by the findings of the provisional commission for the investigation of circumstances and consequences of the financial crisis in 1998, which was set up by the Federation Council and former Prosecutor-General Yurii Skuratov (see "RFE/RL Security Watch," Vol. 1 no. 3, 7 August 2000).
RUSSIA, U.S. DISCUSS FIGHTING TERRORISM. Senior Russian and U.S. intelligence officials met in early August to discuss the development of a common strategy against international terrorism and illegal drug trafficking, "Izvestiya" reported on 4 August. Vyacheslav Trubnikov, the former chief of the Foreign Intelligence Service and presently first deputy of the Minister of Foreign Affairs, led the Russian delegation. According to Trubnikov, Afghanistan drug lords are now responsible for almost half of the world's illegal production of opium, and 65 percent of its output goes through Central Asia. Future closed-door meetings are planned.
RUSSIAN FLEET TO RETURN TO BLUE WATERS? Following up on President Vladimir Putin's recent comments in Kaliningrad, "Krasnaya zvezda" on 5 August said that the Russian navy should again patrol the world's blue water oceans rather than remain largely confined to coastal defense. Russia is not a continental power, as most believe--it is an oceanic one, the paper said. The area of its continental shelf is almost equal to the entire territory of the United States, it pointed out, and Russia remains surrounded by disputed and unregulated water regions including the Arctic, Barents, Baltic, Black, Caspian, and Azov seas as well as around the Kurile Islands.
MVD REPORT IDENTIFIES CRIMINALIZED REGIONS. A recent Interior Ministry analysis of the criminalization of the Russian economy concluded that in several regions, including Primorskii and Krasnoyarskii krais and Tyumen, Sverdlovsk, Nizhnii Novgorod, Astrakhan, Smolensk, Kaliningrad, and Saint Petersburg oblasts, the local economy is almost completely controlled by criminal syndicates, "Kontinent," no. 31, reported. Typically, these syndicates create fictitious companies and then launder money through them. According to the study, there are now approximately 500,000 criminal front companies in the credit and financial sector alone, and they are responsible for the most widespread economic crimes such as misuse of credit, money laundering, and massive overvaluation of goods and services.
RESHAPING THE JUDICIAL SYSTEM IN THE REGIONS. Russian Supreme Court Chairman Vyacheslav Lebedev told "Segodnya" on 2 August that Moscow is planning to create 21 regional administrative courts in response to pleas from regional, local, and city governments. The new courts will not coincide with the country's 89 regions, but because 21 is divisible by seven, they may further support President Vladimir Putin's seven super districts.
PUTIN INSTALLS KGB MAN AT JUSTICE MINISTRY. Russian President Vladimir Putin on 7 August named a career KGB officer, Yurii Demin, as first deputy minister of justice. He joined the KGB in the 1970s. Between 1992 and 1997 he was the chief of the FSB's legal service and since then, served as chief military prosecutor for the Russian Federation. Although functionally a deputy of former Prosecutor-General Yurii Skuratov, Demin took the Kremlin's side in the government's clash with Skuratov.
MORE GENERALS SEEK GOVERNORSHIPS. The Kremlin is now backing several generals who hope to win elections in regional races, "Segodnya" reported on 8 August. Moscow's favorite in Voronezh is FSB General Vladimir Kulakov; in Kaliningrad, it is Admiral Yegorov; in Kursk, FSB General Viktor Surzhikov; and in Ulyanovsk, General Vladimir Shamanov, the commander of the 58th division in Chechnya.
SELECTIVE PROSECUTIONS FOR CORRUPTION. Interior Ministry officials have handed over materials on 30 criminal cases investigators have opened against officials in the Moscow city government, RIA-Novosti reported on 9 August. Mayor Yurii Luzhkov said he would cooperate with the investigations. This exchange has prompted some Moscow observers to note that under President Vladimir Putin the law enforcement agencies appear to be pursuing corruption accusations almost exclusively when they involve Kremlin opponents. On 10 August, for example, "Kommersant-Daily" called attention to Luzhkov's opposition to the government's new tax policies, which may leave the city without enough money to pay its debts. The paper said that Finance Ministry officials had told Luzhkov that they would write off this debt if he supported the tax plan. But Luzhkov continued to oppose it and is now being punished, the paper suggested.
OLD KGB BUSINESS BRINGS CURRENT TROUBLES. "Moskovskiye novosti," no. 30, said that the FSB's use of old KGB contacts sometimes damages Russia's current economic interests. The paper cited the case of contacts with Hannover's Marvol Project Consulting, which is owned by Mark Voloshin, a former Soviet citizen. Through that firm, Russian defense enterprises sold missiles and other aviation equipment to South Africa. But by using this channel, some $70 million in payments were not returned to Russia. The paper also described the activities of Liechtenstein Landesbank, which it said is a financial partner of the FAPSI, the electronic-intelligence gathering arm. Many now-controversial payments passed through that bank. The paper noted that the KGB was often involved in "selecting" institutions like Mabetex and Banko del Gottordo as partners long before they became involved with Yeltsin's administration.
END NOTEA STATE COUNCIL FOR RUSSIA: INNOVATION OR RESTORATION?
By Victor Yasmann
Russian President Vladimir Putin's acceptance of the idea of creating a State Council for Russia has raised almost as many questions as it answers. Will the new State Council become a constitutional body or will it be used to remove certain forces from politics? And even more, does it represent a significant innovation in Russian political life or is it likely to become the latest restoration in modern dress of older, pre-Soviet political institutions?
Putin's supporters now present the State Council as a narrow body that will help the president restore the power of Moscow. In their view, the council should consist of 20 to 30 members, including governors from economically important regions and other politicians and public figures chosen by the president. And at least some of the advocates of a State Council want it to assume at least part of the prerogatives of the Federation Council on such things as approving the budget, confirming senior officials, settling territorial disputes, and questions of peace and war.
In sum, they view the State Council as a means to reform the post-Yeltsin political system and argue that its establishment should be accompanied by a change in the election law to allow it to promote majoritarian rule, radical revision of the law on parties, and eventually the adoption of a new constitution.
But by choosing to use the name "State Council" to clothe their ideas, its proponents inevitably invite comparisons between what they are advocating and the body that existed in Tsarist Russia between 1810 and 1917.
That body was composed of officials appointed by the tsar and "public" representatives selected and approved by the monarch. Its main function was to draft legislation and budgets for the tsar's approval. And, after the institutionalization of the Duma in 1906, the State Council reviewed Duma-approved legislation. Because of its top-down arrangement, many historians have argued that if the State Duma was an institution of proto-democracy and parliamentarism, the State Council was the tool of autocracy and unitarian imperial power. And for that reason, if for none other, many advocates of greater democracy in Russia are concerned about the symbolism of its revival.
In fact, former Russian President Boris Yeltsin also experimented with a State Council between 1991 and 1993. But after the adoption of the 1993 constitution he decided that this body was not compatible with the principles of parliamentary democracy or federalism. Critics of Putin's proposal are now making the same points, but they appear to lack the power to block the restoration of this old idea.