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U.S. Financing Corrupt and Unstable Moscow

by Eric Margolis

The U.S. and the West keep financing Russia's mafia- ridden kleptocracy
ZURICH -- The Swiss, never a cheery lot, are glummer than usual these days. Tourism is down. The sky-high Swiss Franc has even scared away many of the Japanese tourists who used to flock here searching for Heidi.

The country and its banks has been under siege by world Jewish groups and the US government over dealings in Nazi gold during World War II. But there is one bright spot: the Russians are back, in force.

Russia's long interest in Switzerland dates back to Czarist days when Russian aristocrats used to come here to take the waters. A great plaque inscribed in Cyrillic adorns the Gothard Pass, commemorating the epic feat of Marshall Suvaroff, who took his Russian army, with all its guns, across the pass in the dead of winter during the French Revolutionary Wars. A Geneva cafe I frequented as a university student proudly displays a table onto which Lenin carved his name.

Today, Russians are everywhere in Switzerland, buying gaudy jewellery and flashy clothes at expensive boutiques, and meeting with their Swiss bankers. These are the 'new Russians,' grown immensely wealthy under post-communist robber capitalism. Burly men, describing themselves as 'business consultants,' with tarty girlfriends, flashing wads of crisp $100 bills.

Over recent weeks, Russia has plunged into a grave financial crisis. One of the main reasons is because virtually every Russian businessman, bureaucrat, and gangster has stashed their hot money in Switzerland and other financial havens.

Last week, the International Monetary Fund, under heavy pressure from the Clinton Administration, granted $675 million in new loans to Moscow to defend the imperiled ruble. The IMF has already allocated $1.1 billion in loans to Russia. To finance its huge government deficit, Russia must keep borrowing from abroad. To keep President Boris Yeltsin in power, the U.S. consistently backs these highly dubious 'loans.'

Some of this money will go to paying off foreign investors. The rest will be stolen, and secreted abroad. Gangsters, who control at least 60 percent of Russian business, have become adept at money laundering. All Russian businessmen and bankers routinely set up front companies in Switzerland, or in shady foreign tax havens like the Bahamas, Cayman, Monaco, and Cyprus.

These shell firms are used as conduits for Russian imports and exports, skimming off profits from business deals, and minimizing both import duties and taxes. Russia's government consequently collects barely any taxes from business or mobsters. Little wonder the Kremlin is broke.

It's hard to blame Russians for hiding their money abroad. During my recent trip to Russia, I found everywhere a sense the nation was in a perilous transitional stage. Robber capitalism that enriched a few, while pauperizing the masses, cannot long continue. But no one knows what will replace it -- fascism, dictatorship, even a return to communism.

The great Russian moralist, Alexander Solzhenitsyn has just published a new book in which he perfectly captures his nation's agony: 'criminal is the government that throws the national property up for grabs and its citizens into the teeth of beasts of prey in the absence of laws.'

While the 'beasts of prey' shop on Zurich's elegant Bahnhofstrasse, Russia sinks deeper into misery. Wages go unpaid. Devaluation has wiped out the savings of tens of millions of Russians -- the very people who were to have formed a middle class, the essential foundation of a stable democracy.

Unable to come up with a better alternative, the U.S. and the West keep financing this rotten, mafia-ridden kleptocracy. In a terrible blot on America's honor, the Clinton Administration even funded Russia's brutal war against tiny Chechnya, that killed 100,000 civilians and left that country in ruins.

The West simply does not have enough money to stave off the inevitable explosion that is coming in Russia.


© Eric Margolis
Eric Margolis is a syndicated columnist and broadcaster whose "Foreign Correspondent" column appears twice weekly.
An archive of recent columns may be found at http://www.bigeye.com/foreignc.htm

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Albion Monitor June 16, 1998 (http://www.monitor.net/monitor)

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