Russia's Proliferation Game

Financial Sense ^ | February 11, 2002 | J. R. Nyquist

[Tailgunner Joe]

Early in February Russia's electricity boss, Anatoly Chubias, was happy. The events of 9-11 had opened things up for Russia, he said, "The relationship [between the West and Russia] had changed." They had become, he added, "more tranquil." After all, the West had stopped asking about the character of Russian President Vladimir Putin. "The near-hysterical debate about whether the Communists will return to power in Russia, whether everything will go back to the way it was … has disappeared," explained Chubias.

As far as the electricity boss was concerned, there had been much too much talk of Putin's KGB background. But now, gratefully, the West had other things to worry about. Another set of villains had the limelight. Osama bin Laden, for example. What a relief for Anatoly Chubias, who was once described by Russia analyst Dimitri Simes as "one of the architects - if not the architect - of Russia's oligarchic system." (See Simes's book, After the Collapse, pp. 185 - 187). And what does Russia's oligarchic system presently amount to?

"[B]elow the level of the prosperous banks and energy giants," wrote Simes, "at the base of Russia's economic pyramid, little positive change had occurred since Russian independence [from the USSR]." In other words, Chubias' economic architecture was Soviet. Nonetheless, Chubias is one of the International Monetary Fund's favorite Russians. He has also wormed his way into the good graces of the World Bank, cultivating an image that has facilitated the movement of large sums from the West to Russia. A former Communist turned "liberal," Chubias doubtless had something to do with the rise of Vladimir Putin. Both men were from St. Petersburg, both knew each other in the "early days" of glasnost and perestroika; and in 1996 it was Chubias who summoned Putin from St. Petersburg to work in Moscow at a time when Chubias ran the former Communist Party Central Committee complex on Old Square, which had been transformed into the super-secretive and innocuously named "Presidential Administration" under then President Boris Yeltsin. According to Russian expert Paul Klebnikov, the Presidential Administration is "so secretive that it was known to most [Russian] citizens by rumor only."

In his book, Godfather of the Kremlin, Klebnikov explained that, "Just as Soviet leaders had been chosen inside the secretive Central Committee, so the succession to Yeltsin was determined by murky intrigues within the Presidential Administration." (See p. 295.)

Therefore, in 1996 KGB Lt. Col. Vladimir Putin was summoned to Moscow. He was called to work inside the bowels of what once was Moscow's Central Committee on Old Square. After his arrival Putin rose from a humble junior ranking to become deputy chief of staff, first deputy chief of staff and head of Russia's Control Commission. According to a September 1997 article in the Nezavisimaya Gazeta, Chubias was planning to fire FSB (formerly KGB) chief Nikolai Kovalev and replace him with Vladimir Putin. Within a year Putin was head of the FSB. Two years later Putin was prime minister. On Jan. 31, 1999, he became Yeltsin's successor as Russia's president.

Perhaps it could be said that Putin owes his office to Chubias, who now expresses deep satisfaction that Westerners have stopped gossiping about Putin's KGB background. "The West has stopped asking, 'Who is Mr. Putin?'" noted Chubias during a break at the World Economic Forum on Feb. 3. "Instead, the question is investment in the Russian economy."

One might characterize Chubias' sales pitch as follows: Step right up and invest in the fastest-growing economy in Europe. Come one, come all! Send your billions to Moscow! He who hesitates is lost! Invest in the 52-percent state-owned Russian power company, Unified Energy Systems - the largest power company on earth. Guaranteed high return on your investment. Plug Europe's grid into Russia's. Feel the jolt. Jump on board. Set aside your doubts about "former" communists and KGB lieutenant colonels.

If you have not put your hand on your wallet, you should. Chubias is no friend of the West, and his system of economics is the Soviet system with a false free market label glued over the old hammer and sickle. Like everything else that Russia does, there is appearance and there is the reality.

A week after Chubias' charm offensive at the World Economic Forum, President Putin publicly warned U.S. President George W. Bush against striking Iraq. According to Putin, Saddam Hussein should be dealt with by U.N. resolutions and arms control inspectors . Noting that cooperation between Russia and America is "the most important factor for stability in the world," Putin explained that Russia opposes any move against Iraq. As for the U.S. serving notice to the so-called "axis of evil," referred to by President Bush in his State of the Union Address of last month, Putin said, "We oppose the drawing up of blacklists." The Russian president said that America was permitted to operate against Afghanistan, but it will face opposition if it moves against other countries. Putin spoke of a "new level of trust" between Russia and the America. "This trust allows us," said Putin, "despite any differences on specific issues, to avoid confrontation."

Of course, everyone ought to know what a confrontation between American and Russia signifies. It signifies the possibility of global nuclear war. So the bottom line is very clear. America must not take the offensive against international terrorism lest one thing lead to another.

U.S. National Security Council spokesman Sean McCormack, taking no notice of Putin's subtle threat, said that Iraq was "on notice, and we will deal with Saddam Hussein in a manner and at the time of our choosing." With thousands of dead Americans plucked from the ruins of the World Trade Center and the Pentagon, America is not going to relent.

Putin's defense of Saddam Hussein is supposedly tied to economic considerations. Iraq owes Russia billions of dollars. But let us not be fooled. Last Saturday the Kremlin's senior military advisor, former Defense Minister Igor Sergeyev, warned of a new Cold War. Even as Putin was assuring everyone that Russia was not America's enemy, the Russian president had been cracking down on Russia's media, arresting businessmen and shoring up state control of basic industries. "This is the right way to act," said Putin unapologetically. "A new Cold War is upon us," echoed Sergeyev.

Perhaps the previous Cold War never ended. Last week CIA director George Tenet [see bio] told Congress that Russia was a leading supplier of nuclear technology and missiles to hostile countries. Tenet gave Congress a report, covering the first half of 2001, which cast doubt on Putin's "commitment, willingness, and ability to curb proliferation-related transfers" to U.S. enemies. [See the CIA report.]

Russia reacted angrily to Tenet's testimony and the CIA's allegations. On Feb. 7 the Russian Foreign Ministry demanded an explanation from the U.S. Referring specifically to the CIA's report, the Foreign Ministry noted, "This is the first time in recent years that an official American document makes an attempt to question the devotion, willingness and ability of the Russian government to prevent the leakage of sensitive products and technology abroad."

The CIA report is quite specific. Russia is named as a major supplier of missile and nuclear technology to Iran, a country that supports global terrorism. The CIA also explained that Russia was preparing a major initiative in support of North Korea. Here the chain of supply that feeds America's enemies is laid bare. Of the three rogue states named by President Bush as the "axis of evil" (North Korea, Iraq and Iran), two are backed by Russia and the third (Saddam Hussein's Iraq) is receiving diplomatic support from the Russian president.

How serious are Russia's efforts on behalf of the "axis of evil"?

According to the CIA, Iran has "sought nuclear-related equipment, material, and technical expertise from a variety of sources, especially in Russia." The CIA also claims that, "Russian entities [have] continued to interact with Iranian research centers on various other nuclear fuel cycle activities. These projects will help Iran augment its nuclear technology infrastructure, which in turn would be useful in supporting nuclear weapons-related research and development."

With regard to the Communist regime in North Korea, the CIA states: "In April 2001, P'yongyang signed a Defense Industry Cooperation Agreement with Russia, laying the groundwork for potential arms sales and transfers to North Korea."

Other rogue states are also supported by Russia in a frightening way. Among one of the most dangerous Russian client states is Syria, an avowed enemy of Israel and a longtime terrorist sanctuary. According to the CIA, "In January 2000, Russia approved a draft cooperative program with Damascus that included cooperation on civil nuclear power. Broader access to Russian expertise could provide opportunities for Syria to expand its indigenous capabilities, should it decide to pursue nuclear weapons."

The CIA makes a critical mistake in its report, however, when it attributes the selling of deadly technology to Russian industries "strapped for funds." There are easier and safer ways to make a buck. It has to be admitted, in this regard, that Russia remains governed by the same old Soviet bureaucracy. What we are seeing today, and what the CIA has reported, is Soviet persons following Soviet strategies under the false flag of democracy. If Russia had actually joined the democratic world its policies and practices would have changed. But now we find that its policies remain thoroughly and effectively Soviet, supporting the same old list of rogue states - including North Korea and the People's Republic of China.

As the CIA report of last week points out, "Russia continues to be a major supplier of conventional arms. Following Moscow's abrogation of the Gore-Chernomyrdin agreement in November 2000, Russian officials stated that they see Iran to be a significant source of potential revenue from arms sales, and believe Tehran can become Russia's third largest conventional arms customer after China and India."

Needless to say, the building of Iran into a regional military power with modern weapons and nuclear missiles is problematic for the West's oil supply sources in the Gulf region. Is Russia aiming to weaken the West's position in the Middle East?

Col. Stanislav Lunev, a high-ranking military defector from Russia recently wrote of Russia's actual intentions. According to Lunev, Russia and China are both attempting to undermine world stability. "Such alleged friends as Russia and China," wrote Lunev in a Jan. 13 essay, "continue to challenge America's influence and goals."

In December Russia's State Duma ratified a treaty with China that amounts to a military alliance against the United States. In Lunev's words, this treaty "dramatically reinforces Beijing's claims on Taiwan and strongly supports Chinese military preparations, which are directly mostly toward the U.S."

It is more than likely that last week's CIA report does not go far enough in describing Russia's support for America's enemies. It can be argued, in this context, that the real nature of Vladimir Putin and his regime has not been fully grasped. Too much benefit-of-the-doubt has been given, and now the danger grows as Anatoly Chubias chortles happily about Russia's new opportunities.

In a closing note there was a particularly disturbing bit of testimony that recently emerged from the U.S. intelligence community [See testimony.] Robert Baer, a former CIA case officer, has written a memoir that describes the Central Intelligence Agency as paper-pushing, risk averse, plagued by political timidity and a "see-no-evil" worldview. Baer's book, in fact, is titled, See No Evil.

Those who claim the CIA report of last week exaggerates Russia's transgressions should read Baer's book (as a corrective). Far from exaggerating Russia's badness, Baer tells us the CIA routinely hides the truth about those countries that intend to do us harm. Basically, according to Baer, the CIA has degenerated due to bureaucratic inertia and political correctness. Careerists and other climbers, telling their superiors what they want to hear, now determine what gets passed up to Congress and the White House.

Therefore, the bad news we heard last week about Russia is only the tip of the proverbial iceberg.

[Tailgunner Joe]