POLITICS-RUSSIA: Another Setback for Yeltsin

By IPS Correspondents Reprint | | Print |

Analysis - Sergei Blagov

MOSCOW, Mar 18 1999 (IPS) - President Boris Yeltsin left hospital Thursday after more than two weeks treatment for a stomach ulcer to try and restore his authority in Russia, beset by political and economic difficulties.

The latest blow to Yeltsin came 24 hours earlier when the Federation Council – the upper chamber of parliament – voted overwhelmingly to keep Prosecutor General Yury Skuratov on the job and thwarted Yeltsin’s attempt to dump him.

The 142-6 vote delighted the weakened president’s opponents, particularly the Communists and Moscow Mayor Yury Luzhkov.

The deputies overwhelmingly voted against the prosecutor’s resignation – though some anonymous source had distributed videotapes documenting Skuratov’s marital infidelity but deputies supported the prosecutor’s fight against corruption within Russia’s elite.

The upper chamber’s vote to support Skuratov is obviously connected with prosecutor’s investigation of Central bank’s murky dealings, Alexander Surikov, the chairman of the Federation Council’s banking committee, told IPS. He implied Skuratov had the right to withdraw his resignation, because his post is “very dangerous” in Russia these days.

Skuratov had claimed heart problems when he offered his resignation to Yeltsin in early February. But on March 17, Skuratov told legislators he was ready to continue his work and asked for support, claiming he was being blackmailed.

Yeltsin – supported by Prime Minister Yevgeny Primakov – retorted by a joint statement saying that “moral degradation and political manoeuvring” were incompatible with the post of prosecutor- general.

The statement gave no details on Skuratov’s alleged moral degradation. But Russian state-run RTR television channel soon solved the enigma and played a grainy, black-and-white video – allegedly dated 1997 – showing somebody looking like Skuratov in bed with two naked girls.

However, the audience was far from shocked – in 1997 Russian ex- justice minister Valentin Kovalyov was dismissed in the wake of a similar sex scandal. Russian and then international TV channels repeatedly played an unclear video of Kovalyov cavorting with naked women in a sauna frequented by the well-known Solntsevo crime gang. Paradoxically, last month Kovalyov was unexpectedly arrested on charges of embezzlement – apparently on orders by Skuratov.

The campaign of blackmail against Skuratov began when he started looking for illegal overseas bank accounts held by the Kremlin elite in Switzerland and Germany – according to Nikolai Ryzhak, Federation Council’s deputy chief of staff on security issues.

Last month Skuratov, 47, made sweeping corruption allegations, but then abruptly submitted his resignation claiming heart problems, and Yeltsin, 68 accepted the resignation from his sick- bed.

Skuratov earlioer was instrumental in starting criminal proceedings against a number of Central Bank officials. They included former chairman Sergei Dubinin – one of the key economic policy-makers involved in making radical financial decisions on devaluing the ruble, defaulting on domestic debt and declaring a three-month moratorium on the payment of the banks’ foreign debts in August 1998.

Skuratov revealed that Russia’s Central Bank, instead of managing Russia’s foreign currency reserves itself, had placed almost 50 billion dollars over five years with an obscure offshore asset management company FIMACO.

The bank still has not defended itself against the charge.

Furthermore, the whole system of Russian Treasury bills and bonds, known as GKOs and OFZs – frozen in August 1998 – was designed by so-called “reformers” to plunder state-coffers, alleges Surikov.

A privileged few – including Central Bank officials themselves – had profited from bills and bonds due to insider dealings, and Russia now faced sovereign debt default as a result, he said.

Political sources also say that Skuratov came too close to influential tycoon Boris Berezovsky and his business dealings. The police raids on Russia’s major carrier, and the country’s seventh largest oil producer in February, were seen as a part of a continuing offensive by the government against Berezovsky.

The law enforcement agencies said they were looking into allegations of embezzlement at Aeroflot – controlled by Berezovsky.

Police also searched headquarters of Russian oil major, Sibneft – controlled by Berezovsky – and Federal prosecutors followed up their dramatic raid by saying they found evidence linking the company to a security firm suspected of spying on President Boris Yeltsin’s family.

I trying to get rid of Skuratov, Yeltsin has found himself increasingly under fire. The Communist opposition called on Yeltsin to withdraw the money from his personal foreign bank accounts and deposit it in Russian banks as an example to perpetrators of capital flight.

The anti-Yeltsin vote on Wednesday was the same day that the Federation Council approved a political truce between the President, the government, and both chambers of parliament and called for a strengthening of political stability in the country before parliamentary elections due in December.

But the fact that Russian parliament’s upper house – typically loyal to the Kremlin – defended Skuratov to voice its emerging opposition to Yeltsin is an ominous sign of political crisis going from bad to worse.

“Over the past eight years the country has never been out of political crisis,’ Surikov argues, but now “the question is whether Russia will remain a criminalized state or whether the government will actually start fighting endemic graft.”