[Congressional Record Volume 144, Number 148 (Friday, October 16, 1998)]
[Extensions of Remarks]
[Pages E2228-E2229]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
A CRIMINAL STATE OF INTERNATIONAL AFFAIRS
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HON. PHILIP M. CRANE
of illinois
in the house of representatives
Friday, October 16, 1998
Mr. CRANE. Mr. Speaker, thanks to White House scandals and an
impeachment inquiry preoccupying the attention of Americans, the poor
performance of this administration on the affairs of state has been
overshadowed. This incompetence has proven costly--in terms of human
life in Bosnia and in terms of financial capital in places like Russia.
While the Clinton Administration and their allies at the
International Monetary Fund, the IMF, would have you believe that
Russia is merely experiencing the growing pains of a new market
economy, nothing could be further from the truth. Instead, Russia has
become a country run by thieves who respect none of the fundamental
principles necessary for the establishment of a market economy. So
money being poured into Russia by the IMF, courtesy of American
taxpayers, is being heisted by criminals who buy, for example, chic
real estate in France and a gambling casino in American Samoa.
To get the real story on Russia, I commend to the attention of my
colleagues an article by Arnaud de Borchgrave from the September 28,
1998 edition of the Washington Times, entitled ``Subsidizing the
Kleptocracy.'' Mr. de Borchgrave points out that, contrary to the
Clinton Administration and the IMF, Russia is not an emerging market
economy and we deserve to know where all that foreign aid and IMF money
is going.
Subsidizing the Kleptocracy
The handwriting has been on the Kremlin's walls for the
past seven years. The late great reporter Claire Sterling's
best seller ``Thieves World,'' published in 1994, documented
the emergency of a criminally controlled Russian state--from
top to bottom. But the U.S. national security establishment's
Russian experts--Pied Pippered by Vice President Al Gore and
Deputy Defense Secretary Strobe Talbott--not only walked by
the wall looking the other way, but derided as ``loose
cannons'' those who read the handwriting and took it
seriously.
Four years ago, President Boris Yeltsin, in what sounded
like a cry of despair, said Russia had become the world's
``biggest mafia state . . . the superpower of crime.'' He
felt overwhelmed by the lethal mix of oligarchs, former
intelligence and security officers, organized crime gangs,
and corrupt Soviet-era bureaucrats who had hijacked Russia's
transition from a communist command economy. Mr. Yeltsin has
launched seven major crackdowns against organized crime in
seven years--all to no avail. And a year ago, he told the
upper house of parliament that ``criminals have entered the
political arena and are dictating our laws with the help of
corrupt officials.''
[[Page E2229]]
Russia began its post-communist history as a kleptocracy,
which has consolidated its power ever since, but still the
Clinton administration's apologists and their IMF
counterparts, all frequent travelers to Moscow where they
chose to believe three sets of phony government books,
insisted that Russia's looters were the latter-day equivalent
of America's 19th century ``robber barons.'' A crucial
difference was overlooked. The J.P. Morgans, Goulds,
Vanderbilts and Villards made their fortunes by building
railroads and new industries and creating jobs. They also
reinvested their profits in the future of America, such as
Thomas Edison's quest for electric light. By contrast,
Russia's oligarchs and their corrupt allies in government
took over state-owned industries at giveaway prices, bled
them white by stripping their assets, and then stashed their
loot in tax havens abroad. The IMF's Inspector Javert took a
page out of Clouseau's notebook and failed to notice that
privatization was camouflage for piracy.
Garry Gasparov, the world chess champion, wrote in the Wall
Street Journal on Sept. 1 that ``the mentality of Al Capone
runs rampant among the highest circles in Russia today; Lucky
Luciano's clones are filling vacancies at state and municipal
levels.''
Yet what Western creditors were doing, in effect, was to
subsidize the plunder. So it is hardly surprising that
Russians who have not been paid in months are venting their
anger at the U.S. administration and the International
Monetary Fund. Anatoly Chubais, a tacit ally of the criminal
class in reformer's clothing, has now conceded that Russia's
negotiators had pulled thick wool over the not-too-
inquisitive eyes of IMF's Russian ``experts.''
Russians know their government is now the world's most
corrupt, forging ahead of Nigeria and Indonesia in those
sleazy sweepstakes, but they blame the United States and IMF
for not blowing the whistle on the scandal of the century. It
was a gigantic Ponzi racket. What was funneled into Russia by
the United States, Germany and international institutions was
siphoned out through global money laundering schemes.
``Liability'' was not in a Russian banker's lexicon. All
Western credits were treated as free money to be moved around
as the oligarchs saw fit. For a two-year study for the Center
for Strategic and International Studies on ``Russian
Organized Crime,'' this journalist discovered the same
spending pattern from Buenos Aires to Berlin, from Hamburg to
Hong Kong, and from Tunisia to Thailand, and including
London, Paris, Rome, New York and Los Angeles. Choice
properties in the $5 million to $15 million range were
purchased by Russia's oligarchs and their executives, and
assorted crooks, the world over, even a gambling casino in
American Samoa, always paid cash--in $100 bills carried in
large suitcases.
The record for private property is still held by Boris
Berezovsky, who parlayed a car dealership into a $3 billion
empire in five years and served as Mr. Yeltsin's deputy
national security adviser. He bought the Chateau de la
Garoupe and an adjoining property, and 50 well-manicured
acres at Cap d'Antibes, France's most expensive real estate,
for $70 million.
For several years, Russians were laundering about $1
billion a month through Cyprus (where some 4,000 Russian
shell companies hang their shingles) and another $1 billion
through Israel. Before he was ousted last March as Interior
Minister, Gen. Anatoly Kulikov estimated that some $200
billion had been spirited abroad since the implosion of the
Soviet Union--perhaps not coincidentally the same amount of
foreign debt Russia may default on in the next few years.
When Gen. Kulikov visited Washington last June, he said he
now believed the amount was at least $300 billion in six
years.
It was the age of greed run amok. But apologists in the
United States, from left to right, continued to insist the
hemorrhaging was no more than a nosebleed--at most $50
billion--and that it was a healthy manifestation of the
growing pains of democracy and market economics. That
powerful Russian opposition voices called what was happening
a parody of democracy and an economic kleptocracy didn't seem
to faze them. Even after Grigory Yavlinsky wrote in July 1997
that the longer ``the path which Russia is traveling is
concealed, the higher the price will be for everyone,'' the
conspiracy of silence continued in Washington. Russia's
oligarchs had hired top-flight legal talent in Washington and
New York soon established themselves as the opposite numbers
of America's captains of industry. With a straight face, one
shady Russian tycoon told a foreign policy group. ``There is
much more crime in America than in Russia.''
Hearing after congressional hearing was held on Russian
organized crime, only to be ignored by top U.S. policy-
makers. The CIA was even discouraged by the White House from
reporting on Russia's covert financial shenanigans around the
world. And until recently, George Soros, the international
financier who once broke the Bank of England, taking home a
cool $1 billion, sided with the apologists. Now Mr. Soros
says, belatedly, the Russia situation is ``cataclysmic'' and
that ``we should have done more to prevent the crisis.'' This
was the same Mr. Soros who concealed the truth about the
great Russian robbery throughout the 1990s and even assured
us that democracy was flourishing.
Vice President Al Gore went out of his way not to embarrass
his good friend Viktor Chernomyrdin, the godfather of the
oligarchs who was finally ousted as prime minister last March
after five years in office--only to be resuscitated by his
friend Mr. Berezovsky and foisted on Mr. Yeltsin for a few
days before the Duma sent him packing again. Messrs.
Yeltsin and Chernomyrdin convinced Messrs. Clinton, Gore
and Talbott and anyone else they spoke to that American
aid and IMF loans had to continue because Russia still
possessed 24,000 nuclear weapons and warheads and hundreds
of tons of weapons-grade nuclear materials that could all
become vulnerable to theft if Russia were cut adrift. But
they were just as vulnerable while Western assistance was
being ripped off and scores of millions were pushed below
the poverty line.
It was this kind of nuclear blackmail that prodded the
apologists to silence FBI Director Louis Freeh. He had
testified before Congress in 1996 and 97, explaining that
from one year to the next Russia's organized crime syndicates
had increased the number of countries where they had
established relations with criminal counterparts from 29 to
50.
When CSIS' report on Russian Organized Crime was released a
year ago, Mr. Freeh was quick to endorse it. But as he left
for Moscow a month later, senior U.S. officials persuaded Mr.
Freeh to backtrack and at a joint news conference with Mr.
Kulikov he said his congressional testimony had been
misunderstood.
The CSIS report found that ``Russian organized crime had
extended its tentacles throughout Russia's economy,'' which
confers an aura of legitimacy to myriad illicit activities,
including the manipulation of Russia's banking system and
financial markets.'' It concluded that ``if the forces of
organized crime are not stymied Russia will complete its
devolution into a criminal-syndicalist state. The U.S. would
then be faced with an agonizing reappraisal of its diplomatic
and commercial relations with Russia.''
The reappraisal is now at hand. In the debate about ``Who
lost Russia,'' congressional hearings should focus on the big
coverup. And as a condition for further aid, why shouldn't
Congress insist on a full accounting of every dollar of U.S.
aid and IMF bailouts?
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