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Top: JewishOccupied Governments: CIS: Jewish Financiers Owning 50% of Russian Businesses

MOSCOW, Aug. 27—Viktor Chernomyrdin walked down the longcarpeted corridor of the Russian White House. As he approachedthe doors leading into the office of the prime minister, to whichhe had just been reappointed, a short man with a wisp of blackhair awaited him.

Chernomyrdin paused. The short man crossed the threshold first.Then Chernomyrdin followed him.

The scene on Monday, described by a government official, wasa telling moment in the evolution of post-Soviet Russia. The shortman was Boris Berezovsky, a wealthy financier, relentless wheeler-dealerand vigorous exponent of the might of Russia's brash young capitalists.

More than anyone else, Berezovsky brought Chernomyrdin backto power, and his appearance at the door was further confirmationthat Russia remains a state dominated by a coterie of financialand industrial tycoons who wield as much influence, and sometimesmore, than the politicians.

Their latest coup, in effect recruiting Russia's prime minister,has nonetheless come at a moment of high crisis. The currencyand equity markets are in free-fall, the ruble is sliding, andthe banks are under siege. But the return of Chernomyrdin wasa sign that, despite all Russia's troubles, and perhaps becauseof them, the marriage of money and power endures.

The tycoons moved to install Chernomyrdin over the weekendbecause they feared the government was going to let their banksfail, and auction them off, perhaps to Western investors. Oustedprime minister Sergei Kiriyenko had a plan to push some weakerbanks into bankruptcy.

The financiers have been seriously strained by the devaluationof the ruble and the government's decision to repay only a fractionof their holdings in treasury bills. Their early hopes for Chernomyrdinwere immediately fulfilled: Instead of allowing bankruptcy, theCentral Bank pumped 4 billion rubles into the banking system tokeep some of them afloat.

But Chernomyrdin has not stemmed the currency crisis grippingthe country, and that spells more instability and worries forthe financiers. In the past, some of the moguls have profitedfrom chaos and uncertainty, through currency speculation or buyingup distressed industrial plants.

Those barons with oil and gas can still profit as exportersfor hard currency. But for many of them, the specter of popularunrest and financial market meltdown now unfolding here is a baddream that could dash their grand hopes for expansion and Westerncapital. It is even possible that Chernomyrdin's new governmentwill turn against them, adopting anti-market policies or imposingmore state controls.

As the financial crisis has steadily worsened in recent weeks,the moguls have plunged into the center of Kremlin politics, asthey have at several other critical moments in the last threeyears. Berezovsky has been the most active. He got Yeltsin tofire Kiriyenko and bring back Chernomyrdin by working throughtwo allies -- Yeltsin's daughter, Tatyana Dyachenko, and his chiefof staff, Valentin Yumashev, both of whom are close to the financier.

Although Berezovsky and the tycoons allied with him have notalways been able to move Yeltsin, they have wielded extraordinaryinfluence ever since they financed his come-from-behind campaignfor reelection as president two years ago. Russians have giventhe tycoons a nickname, the semibankirshchina, or rule of theseven bankers. It is a play on words from the rubric given toa group of seven boyars, or noblemen, who ran Russia in the 17thcentury during a brief period between the czars.

The Moscow tycoons use their banks as the financial core oftheir enterprises, but their interests have broadened beyond banking.Vladimir Gusinsky, 45, has aspired to be Russia's media and entertainmentking. Mikhail Khodorkovsky, 35, aimed to be one of the world'sbiggest oil magnates. Alexander Smolensky, 44, once wanted tobe Russia's leading retail banker but has run into difficulties.

All are men who made their fortunes in a nascent state withouta developed rule of law, without a real middle class, withouta mature civil society. Like the great European and American magnates,the Russians thrived under the wing of the state, and at its expense.They made fortunes because the government was weak -- and ripefor the picking.

"If we rank all the fields of man's activity by profitability,politics will be the most lucrative business," Khodorkovskytold an interviewer last year. "When we see a critical situationin the government, we draw lots in order to pick out a personfrom our milieu for work in power."

Some have roots in the old Soviet elite. Vladimir Potanin,37, was the son of a Soviet trade attache who lived abroad asa youth. He worked for seven years in the Soviet Foreign TradeMinistry; when the Soviet Union fell apart, he assembled manyof the enterprises under the ministry into Uneximbank, which becamethe cornerstone of his empire. Khodorkovsky was a leader of theYoung Communist Youth League, the Komsomol, which in the lateSoviet years became a kind of business school for the ambitious.

Others took a different route. Berezovsky, at 52 the oldestof the group, was once an obscure mathematics expert who deviseda management system for the huge state-owned auto company. Hebecame a car distributor, making millions selling the Zhiguli,the Soviet car for everyman, a homely copy of a Fiat. Gusinskyhad tried his hand as a theater director but began to realizethe possibilities of a market economy selling office supplies,and later reconstructing office space in Moscow, the expandingcapital. Smolensky, was a true outsider who made his first moneybuilding sawed-log dachas in the Moscow countryside.

For all of them, the Gorbachev period of liberalization, startingin the late 1980s, paved the way for riches later on. In particular,in 1987, the Soviet financial system was liberalized, and mostof the would-be tycoons started up their own banks.

When the new Russian economy was born in early 1992, the youngtycoons profited handsomely by speculating against the ruble-dollarexchange rate -- often using the government's money. Since Russiahad no formal treasury, its deposits were made with "authorized"banks, including those owned by the oligarchs.

The link between power and finance grew tighter in 1995, whenYeltsin approved a project called "loans for shares,"which involved a swap: The bankers loaned money to the cash-strappedgovernment in exchange for shares in some of Russia's lucrativeenterprises. If the government failed to pay back the loans, thebankers could sell off the companies, and they did -- to themselves.Many of the auctions were rigged from the inside.

Potanin was one of the biggest winners. His bank, Uneximbank,got Norilsk Nickel, one of the world's largest producers of nickel,cobalt and platinum group metals. He also won an oil company,Sidanko, and the Novolipetsky Metallurgical Co. Khodorkovsky snaredYukos, Russia's second-biggest oil company. Berezovsky got Sibneft,another large oil company. Separately, over the next two years,the moguls also gained control over most of Russia's mass media.

In the run-up to the 1996 election, the tycoons contributedmillions of dollars to Yeltsin's reelection campaign, spurredon by Berezovsky, who later boasted that the seven members ofthe club controlled half of Russia's economy. It was an overstatementbut reflected their hubris.

After the election, according to several sources, the tycoonsmet and decided to insert one of their own into government. Theydebated who -- and choose Potanin, who became deputy prime minister.One reason they choose Potanin was thathe is not Jewish, and most of the rest of them are, and feareda backlash against the Jewish bankers.

Not all Russia's oligarchs were part of this cozy club. Gazprom,the natural gas monopoly, has become a state within a state, andChernomyrdin, once boss of Gazprom, unabashedly represented itsinterests as prime minister. Lukoil, the oil company, was anotherpowerhouse. In the regions, mini-oligarchies also thrived.

At a news conference last January, there was one shining momentwhen everything seemed to be going well for the tycoons. WithChernomyrdin's blessing, they announced the merger of Khodorkovsky'sYukos and Berezovsky's Sibneft into what would be a new oil major.

But declining world oil prices latercontributed to the undoing of the deal, and world markets beganto lose faith in Russia. Many of the bankers needed Western capital,but, despite their repeated trips to New York and London, Russia'sdeteriorating financial condition made it impossible to borrow.

Berezovsky had from the outset argued that government shouldheed the call of the barons. But Yeltsin got so tired of Berezovsky'smaneuvering that he threatened to banish him from the country.Yeltsin's choice of Kiriyenko, a progressive young banker, toreplace Chernomyrdin as prime minister last March -- a move thatdisregarded Berezovsky's choices -- did little to salve the wounds.Kiriyenko distanced himself from the tycoons, and, at the outset,would not even meet them.

After the Russian markets were severely jolted in May, theRussian business magnates grew more restive. They met with Yeltsinand appealed for quick action to stem the country's worseningeconomic problems. Later, they announced their willingness toform a special advisory council to Kiriyenko, but the idea fellflat.

As Russia's finances worsened, theoligarchs also sunk into trouble. Several of them had pledgedRussian stocks and bonds as collateral for hard-currency loansfrom Western creditors. When the value of the Russian assets fell,they could not meet the payments. In mid-August, two major banksreportedly defaulted. Moreover, according to MFK Renaissance,an investment house here, a number of large commercial loans toWestern creditors fall due this autumn, including Yukos, witha $100 million obligation, and Smolensky's bank, SBS-Agro, witha $113 million debt.

Still other banks had taken out so-called "forward"contracts on the ruble-dollar exchange rate, based on the assumptionthe ruble would hold at 6.2 to the dollar. It did not, and theystood to lose millions of dollars.

Moreover, the credit ratings of all the tycoons were blackenedby the Russian financial meltdown. They were shut off from Westerncapital.

To save themselves from bankruptcy,the bankers pressed the government to include a 90-day moratoriumon payment of their debts in the decision on Aug. 17 to devaluethe ruble. Still, a week after the devaluation, the governmentand Central Bank were planning to force some banks to go under.According to a highly placed source, Kiriyenko wanted to auctionoff some of the bankrupt banks to new Western partners.

This brought a furious reaction fromthe tycoons, headed by Berezovsky.

Within days, Kiriyenko was fired andBerezovsky was escorting Chernomyrdin back into his office.

Since the collapse of the Soviet Union in 1991-1992, and theend of the centrally controlled "command economy," anew class of wealthy private capitalists with close governmentconnections has emerged in Russia. The new ruling clique thathas replaced the Soviet-era "nomenklatura" is widelyreferred to by the American-origin term "istablishment."

At the same time, life for most Russians has not improved.The great majority still struggles to survive, sometimes belowthe subsistence level. Industrial and agricultural productionhave fallen 50 percent in recent years, and millions are not paidtheir paltry salaries on time. Because most people lack hard currencyto buy anything but essentials, consumer goods are generally accessibleonly to successful speculators, the mafia, and higher governmentofficials. For the average Russian, and especially the elderly,life is not just impoverished, it is becoming desperate. [See:"Nationalist Sentiment Widespread, Growing in Former SovietUnion," Sept.-Oct. 1995 Journal, pp. 8-10.]

Russians pin much of the blame for this catastrophe on theineffectual government of President Boris Yeltsin and his PrimeMinister, Viktor Chernomyrdin. In a public statement issued lastDecember, a group of prominent Russian intellectuals spoke outon the crisis in their homeland:

The catastrophe has run its course. The economic policy ofYeltsin's and Chernomyrdin's aides has made a small section ofthe former communist nomenklatura and of the "new Russians"unbelievably rich, plunged most of the nation's industry intoparalysis, and reduced the majority of the population to poverty.As far as property ownership is concerned, the gap between therich and poor is much deeper now than that which led to the [1917]October [Bolshevik] Revolution.

Corrupt Businessmen Flourish

During the Soviet era, centralized Communist Party rule ensuredthat economic activity, however inefficient, was at least fairlypredictable, with a more or less reliable work force. Althoughliving standards were low, this "banana republic with rockets"was stable in the way that a prison is.

Now lawlessness prevails in Russia, with business life functioningat a level similar to that of Al Capone's Chicago. There is noeffective system of laws to ensure the fair and orderly operationof business, banking, finance, insurance, stock trading, and soforth, and existing laws are neither consistently nor impartiallyenforced. Lawlessness and excess are more often rewarded thanpunished, and people have little protection against fraud by thenew criminal class.

Russia specialist Richard F. Staar, a Senior Fellow at theHoover Institution, reports in The Washington Times (Nov. 27,1996):

In his book, Comrade Criminal, Stephen Handelman discussedconnections between the already then well-established mafia underworldand corrupt bureaucrats, a relationship that apparently now hasreached into the Kremlin itself. According to former Russian SocialSecurity Minister Ella A. Pamfilova, a cynical redistributionof property currently is taking place. In her words, "Thenature of the ruling class has not changed ... It is the sameold corrupt, elitist, nomenklatura-bureaucratic swamp."

What is changing involves the national economy, half of whichalready has fallen under mob control, according to Security CouncilSecretary Ivan Rybkin. Former Director of the CIA, Robert M. Gatesestimated earlier this year that two-thirds of all commercialinstitutions, some 400 banks (those in Moscow already control80 percent of the country's finances), several dozen stock exchanges,and 150 large government enterprises are controlled by the mob.

A recent Russian periodical revealed that about 40 percentof the Gross Domestic Product is in the hands of organized crime,mow merged with corrupt official and businessmen.

One prominent scandal involves a businessman named AnatolyAronov, who is under indictment for establishing some 500 fraudulentpaper corporations. By cleverly manipulating the slipshod Russianbanking system, and taking full advantage of the uncontrolledmarket economy, the vulnerability of inexperienced Russians, andthe general climate, Aronov created a phantom business empire.After establishing the paper companies as "legal entities,"Aronov then sold them at great profit to unwary Russians.

The disorder of Russia's banking system has been describedin a November 12 , 1996, article by Rafail Kashlinksy in Vestnik,a Russian-language magazine published in the US. Of the more than2,700 banks in Russia at the beginning of 1995, it reports, bythe end of that year the Central Bank of Russia was obliged torevoke licenses of 225 of these, while more than 800 banks finishedthe year with large losses. Another 500 banks, including someof the largest (such as the Moscow Interregional Commercial Bank),were near bankruptcy by mid-1996.

Woodrow Wilson Center analyst J. Johnson, dispatched to Russiato evaluate the situation, found four main reasons for the country'sbanking crisis: a lack of professionally trained personnel; creditpolicy shortcomings; the monopolistic right of the quasi-governmentSberbank to intervene in many instances as a government agent,giving it an unfair advantage in attracting clients and gainingaccess to useful information; and, the role of organized crime,which forces some bankers to divert time and resources to protectingthemselves.

Crucial to the transition to a market economy is transferringbusiness enterprises from state to private ownership. But thisprocess has been ridden with abuse and corruption. Most of theoligarchs of Russia's new business elite are not self-made men.On the contrary, they were simply given control of (state-owned)oil, gas, automobile, banking and other enterprises -- essentiallyas gifts of the Yeltsin government to whom, of course, the newly-wealthy(and often youthful) businessmen are indebted.

Through the office of 35-year-old Deputy Prime Minister AlfredKokh, the government assigns most of the enterprises to friendsor supporters of Yeltsin and his administration, who, as new corporateCEOs, show their appreciation by supporting the government withmoney and favorable media coverage.

In an illustrative case, the Yeltsin government transferred80 percent ownership shares in Russia's second largest oil company(formerly the state-owned Yukos company) to Mikhail Khodorosvsky,33-year-old former head of the Communist Youth League and founderof the Menatep Bank. In return, Khodorosvsky turned over $168million to the Yeltsin administration. (Newsweek, March 17, 1997).

The Russian word for privatization, "privatizatsiya,"is routinely and cynically rendered by Russians as "prikhvatizatsiya,"meaning "grabbing," or "piratizatsiya," meaning"pirating."

Russia's most successful new businessmen, the so-called "BigSeven" (and their main business holdings), are: Rem Vyakhirev(Gazprom), Boris Berezovsky (Logovaz), Vladimir Gusinsky (MostBank), Vaghit Alekperov (Lukoil), Alexander Smolensky (StolichnyyBank), Mikhail Khodorkovsky (Rosprom), and Andrey Kazmin (Sberbank).

These seven men alone, experts believe, control virtually halfof the companies whose shares are rated the highest at the nationalstock market. Other prominent members of the new business eliteinclude Vladimir Potanin (Oneksim Bank), Vladimir Vinogradov (Inkombank),Anatoly Dyakov (RAO EES Rossii), Yakov Dubenetsky (Promstroybank),and Petr Aven (Alpha Bank). (Izvestia [Moscow], Jan. 5, 1997).

It is estimated that more than $60 billion has already foundits way from Russia into Swiss banks, reports the London FinancialTimes. Of this amount, $10 billion is believed to be mafia money.This same paper also reports (Feb. 14) that criminal groups controlsome 41,000 companies in Russia, half the banks and 80 percentof the joint ventures.

Conscious of the precarious foundation of the Russian economy,foreign businessmen are understandably apprehensive about investingin this treacherous environment.

To deal with the situation, some steps have been taken. Russia'sFederation (national) government is attempting to introduce aCivil Code based on that of The Netherlands, while American advisorshave written statutes to govern operations of joint stock companies.But because Russia's historical experience has little in commonwith either the Dutch or the American, it is doubtful that theseadministrative imports will prove very effective.

Previous Russian experience with capitalism -- from the mid19th-century to the 1917 revolution, and during the short-lived"New Economic Policy" (NEP) period (1921-1928) -- isscant help in establishing a modern free market economy. Whileit is true that industrial development advanced rapidly in Russiain the decades immediately preceding the outbreak of the FirstWorld War (1914), it is also true that the plight of the emergingworking class was often miserable -- a source of unrest that contributedto the revolutionary upheavals of 1905 and 1917. And the NEP experiencewas too brief and limited in scope to serve as a useful model.(The corruption of "Nepmen" incidentally provided abundantsource material for Soviet satirists.)

Unless and until drastic changes are made, a healthy marketeconomy cannot develop. These changes must include: a comprehensivecode of business and banking law to protect investments, a crediblejudicial system to rigorously and impartially enforce the laws,a sweeping purge of corrupt police personnel, a country-wide crackdownon crime and corruption, and a stable monetary policy.

What is particularly tragic about Russia's economic calamityis that this vast land has such potential. In addition to a generallycapable and well-trained managerial and working population, Russiais rich in natural resources, including oil, iron ore, gold andtimber. Properly administered, this could be a very prosperouscountry.

Political Corruption

Without honest and effective political leadership, though,prosperity for the great majority will remain an elusive hope.Given its record so far, the government of President Boris Yeltsincan hardly be expected to provide the needed guidance and direction.

During last year's election Russian banks directed substantialresources to favored political candidates. While some backed thenational-patriotic and Communist candidates, those who supportedYeltsin were rewarded. Thus, when Yeltsin formed his new post-electionadministration he appointed Vladimir Potanin, the 35-year-oldpresident and co-founder of the country's biggest private bank,Oneksim Bank, as first vice premier for economics.

Because Yeltsin owes his July 1996 reelection victory in largemeasure to the financial and media support of Russia's new plutocrats,his government is widely disdained as an instrument of alien interests.Although many former Communist Party officials (including Yeltsinhimself), as well as former KGB functionaries, continue to occupyhigh-level positions in Russia, the Yeltsin administration iswidely regarded as an American-controlled and -directed "internationalist"regime. Yeltsin's chief of staff and primary economic advisor,Anatoly Chubais (age 41), is viewed as a US stooge at best, anda CIA agent at worst.

Opposing Yeltsin and his adherents is a diverse array of nationalists:national communists, national socialists, and national capitalists.In general, they call for a healthy, nationally-conscious Russianfolk capable of defending and restoring the nation's dangerouslydissipated ethnic and cultural character. [See: E. Zündel,"My Impressions of the New Russia," Sept.-Oct. 1995Journal, pp. 2-8.]

Easily the most popular political figure in Russia today isGeneral Aleksandr Lebed, a decorated Afghan war hero and the brokerof peace in Chechnya. Even his critics concede his basic honesty."Ordinary Russians are as far from the real levers of powertoday as they were during Soviet Communist Party rule," saysLebed. Half the nation's economy, he adds, is controlled by "asmall group of banks and financial-industrial groups, while theother half is controlled by criminal clans."

To protect their own corrupt business empires, the new plutocratsaround Yeltsin will predictably do everything in their power tokeep Lebed, or any authentically Russian figure, regardless ofpopularity, from taking power.

Not surprisingly, Lebed complains that he now has become invisiblein the pages and programs controlled by the major media barons.In addition, no major bank will help finance him for fear of Kremlinretribution. (Newsweek, March 17, 1997.)

Prime Minister Chernomyrdin and Communist Party leader GennadyZyuganov reportedly (Washington Times, Feb. 8) have discussedforming a political alliance to keep Lebed out of power if Yeltsindies in office. Chernomyrdin and some of his backers, among themMoscow's major bankers, are said to fear possible arrest as partof a nationwide campaign against corruption demanded by Lebed.(Chernomyrdin and Zyuganov have been personal friends since theyserved together six years ago on the Central Committee of theformer Soviet Communist Party.)

To deal with the growing nationalist sentiment, authoritiesin Moscow are considering steps to crack down on its most extrememanifestations. Moscow's Municipal Duma is considering a measurethat prohibits the display or political use of symbols associatedwith Third Reich on the grounds that they disrupt the generalorder, incite to violence in a multinational society, and fosterpolitical extremism. Also forbidden would be the wearing of uniforms,displaying swastikas, and the use of the Roman (Hitler) saluteas a greeting.

Zionist Kingmaker Berezovsky

Personifying Russia's new ruling class is Boris AbramovichBerezovsky, a Jewish business magnate, media mogul, and high-rankinggovernment official whom US News & World Report calls (Jan.13, 1997) "the most influential new capitalist tycoon inRussia." His business empire includes a bank, one of thefew national television channels, oil concerns and automobiledealerships. (Forward [New York], Nov. 22, 1996.) After takingadvantage of high-level political connections to quickly amassenormous wealth, Berezovsky provided large sums and favorablemedia coverage to insure the re-election of President Yeltsin,who then appointed him to the country's national Security Council.

An important step in Berezovsky's ambitious upward climb washis acquisition of Sibneft, Russia's sixth-largest oil company.He gained this immensely important asset not through honest businesspractices or competitive bidding, but as a gift of the State Committeefor the Management of State Property. Committee head Kokh simplyappointed Berezovsky to take over Sibneft, and President Yeltsinsigned the papers to approve the transfer. (Komsomolskaya Pravda[Moscow], Jan. 25).

Contributing to his image as the stereotypical internationalcapitalist, Berezovsky ostentatiously roars around Moscow in adark-blue bulletproof Mercedes 600, protected by a BMW in front,and bodyguards in Mitsubishi jeeps on either side. His privatesecurity staff numbers 150, including 20 former KGB technicalsurveillance specialists.

In the view of the country's "democratic reformers,"the US News & World article continues, "Berezovsky andhis ilk" have "exploited for personal gain wrongheadedeconomic reforms that were impoverishing the average man."Berezovsky

has proved that building wealth in the new Russia has muchto do with government cronies smoothing the way and little todo with free competition ... Most disturbing of all to Russianreformers is the impunity with which Berezovsky has operated.His road to capitalism would have landed him in jail in most civilizedcountries, but brought no criminal charges in the new Russia.

Berezovsky, reports the New York Jewish weekly Forward (April4, 1997), is "among those fabulously wealthy and hugely resentednew Russian industrialists -- robber barons accused of milkingRussia dry -- who bankrolled Mr. Yeltsin's presidential campaign,buying the keys to the state." Berezovsky has publicly boastedthat he and six other top businessmen -- some of them Jewish --control 50 percent of the Russian economy.

Not long ago Berezovsky bragged to the London Financial Times:"We hired [First Deputy Prime Minister] Chubais. We investedhuge sums of money. We guaranteed Yeltsin's election. Now we havethe right to occupy government posts and use the fruits of ourvictory." (Quoted in Forward, April 4, 1997)

An article in a December issue of the American business magazineForbes accuses Berezovsky of running a criminally corrupt businessorganization. Headlined "Godfather of the Kremlin?,"the article concludes "It sure looks that way."

A major scandal erupted in late 1996, following Yeltsin's appointmentof Berezovsky as deputy chief of Russia's national Security Council(akin to the US National Security Council), when it was revealedthat he had acquired Israeli citizenship three years earlier.

Responding to those who questioned the propriety of a wealthybusinessman with foreign citizenship holding a highly sensitivesecurity post, "Berezovsky and a number of television andnewspapers journalists in his employ responded with racial demagoguery,accusing his critics of anti-Semitism." Berezovsky "metwith the editors of Izvestia for a series of interviews in whichhe mixed charges of anti-Semitism with thinly veiled threats ofviolence." (Forward, Nov. 22, 1996) He has even brazenlyinsisted that Yeltsin has a moral and material obligation to Jewishbusiness in Russia. (Komsomolskaya Pravda, Nov. 5, 1996).

"Every Jew, regardless of where he is born or lives, isde facto a citizen of Israel," Berezovsky declared in a candidresponse to his critics. "The fact that I have annulled myIsraeli citizenship today in no way changes the fact that I ama Jew and can again become a citizen of Israel whenever I choose.Let there be no illusions about it, 'every Jew in Russia is adual citizen'." (Segodnya ["Today"], Nov. 14, 1996).

The Security Committee of Russia's parliament (the Duma) hasappealed to Yeltsin to remove Berezovsky from his sensitive SecurityCouncil position on the grounds that his dual Israeli-Russiancitizenship legally disqualifies him from occupying the post.According to the Russian Federation's Citizenship Law, he couldlegally occupy this post only on the basis of a specific agreementbetween Russia and Israel. No such agreement exists. Moreover,the Duma committee contends, Berezovsky is further disqualifiedbecause he has failed to sever his business connections afteraccepting the position. Finally, before he could be given legalaccess to classified information, the Federal Security Servicewould have to investigate and clear him. (Segodnya [Moscow], Feb.19)

With good reason, the well-informed Jewish weekly Forward (Nov.22) has expressed concern that Berezovsky's illicit business activitiesand his arrogant public statements, as well as President Yeltsin'sindulgence of him, may aggravate anti-Jewish sentiment and therebyjeopardize the future of all of Russia's Jews:

Given that many of the moguls who backed Mr. Yeltsin's [reelection]campaign, including Mr. Berezovsky, are Jews, it seemed he wastempting, if not openly inviting, anti-Semitic conspiracy theories... Yeltsin's failure to fire Berezovsky really puts the futureof democracy in Russia, and the bizarre situation of the Jewsthere, in even sharper focus.

Vladimir Gusinsky

Nearly as rich and as influential as Berezovsky is VladimirGusinsky, another immensely wealthy Jewish banker and media magnatewho played a key role in reelecting Yeltsin. (Forward, April 4,1997) An outspoken advocate of Jewish interests, Gusinsky is aclose ally of presidential chief of staff, Chubais. Accordingto a Wall Street Journal report, he has ties to organized crime.

After a meteoric career building Most Bank, Gusinsky now devoteshis energies to Media-Most, a new media holding company that includesthe important NTV television network; a slick television weekly,"7 Days"; a popular radio station, "Echo of Moscow";and a weekly news magazine, Itogi, which is published in partnershipwith Newsweek (owned by the Washington Post company); NTV-Plussatellite television network; and a 100,000-circulation dailynewspaper, Sevodnya. (The Washington Post, March 31, 1997). Healso has close connections with international media tycoon RupertMurdoch.

When Prime Minister Chernomyrdin arrived in Washington, DC,in early February for a meeting with President Clinton, the 44-year-oldGusinsky accompanied him. On the day of their arrival, author/journalist Georgie Anne Geyer wrote (Washington Times, Feb. 6):

On the surface Gusinsky is chairman of the powerful Most Bankand the "independent" Moscow TV ... His bank was onthe CIA's recent list of banks with Russian mafia connections.In 1994, Most Bank was the scene of a bitter shootout with Mr.Yeltsin's then-favorite KGB General Aleksander Korzhakov afterwhich Mr. Gusinsky and his family temporarily exiled themselvesto London. Most Bank is also known as a veritable den of formerKGB men, and not KGB men from the professional intelligence sections,but from the notorious "Fifth Chief Directorate."

Mr. Gusinsky now has a new role to play. He has had himselfnamed head of the Russian Jewish Congress, and the suspicion iswidespread that he will use his growing contacts with the AmericanJewish community to cry "Discrimination!" whenever anyonedares to criticize his business methods ... We need to recognizewhat a delicate and dangerous moment this is in Russia when PresidentYeltsin's life hangs in the balance, and men like Mr. Berezovskyand Mr. Gusinsky are readying to fill the vacuum that will surelyopen soon. They have talked publicly about using "constitutionalmeans" when the time comes to insure an appointed presidentrather than new elections (in particular to avoid a victory ofthe honest General Aleksandr Lebed).

Crucial Jewish Role

No one can really understand Russia's tumultuous social, politicaland economic situation, with its complex contending forces, withoutan awareness of the role of Jews, both in the past and today,and the popular attitude toward them.

During the Soviet era, Jews played a prominent, perhaps dominant,role in the ruling Communist Party and in economic, cultural andacademic life. [See: M. Weber, "The Jewish Role in the BolshevikRevolution and the Early Soviet Regime," Jan.-Feb. 1994 Journal,pp. 4-14.] Today Jews hold conspicuous positions of great wealthand authority. Although they make up perhaps three percent ofthe total population, Jews wield power vastly disproportionateto their numbers. As the London Times noted recently (Jan. 27,1997):

Prominent Jewish figures today enjoy unprecedented positionsof power in politics, the media and the private sector, and haveemerged as some of Russia's most creative and talented minds.Boris Berezovsky, the most influential Russian Jew, who holdsthe post of deputy head of the Security Council as well as controllinga small business empire, even boasted recently that the countrywas run by seven key bankers, most of them Jewish.

Although anti-Semitism is still a powerful undercurrent inRussian society, and could resurface in the event of a nationalistleader coming to power, for the moment anti-Jewish sentiment israrely voiced openly.

Besides such business figures as Berezovsky and Gusinsky, arecent Forward article (April 4, 1997) cites such high-rankingJewish government officials as: Boris Nemstov, first deputy primeminister in charge of social welfare, housing reform and restructuringof government monopolies; Yakov Urinson, deputy prime ministerfor economic affairs; and, Aleksandr Livshits, deputy head ofYeltsin's administration.

Anti-Semitism was strictly illegal during the Soviet era. Todayanti-Jewish sentiment is not only widespread, it is openly andsometimes forcefully expressed, in spite of Yeltsin governmentdisapproval. Russian newspapers frequently and often emotionallydiscuss their country's national-ethnic questions, the re-awakeningRussian nationalism, and the role of Jews in society, in termsof an ongoing struggle between nationalism and internationalism."Isn't it a pity that anti-Semitism is flourishing in Russiatoday like 'chrysanthemums in a garden'," the frankly nationalistpaper Zavtra ("Tomorrow") sarcastically comments (No.47, Nov 1996).

Even Gennady Zyuganov, leader of the reconstituted CommunistParty (currently the main opposition political force), has writtenin his book, I Believe in Russia:

The ideology, culture and world outlook of the Western worldbecame more and more influenced by the Jews scattered around theworld. Jewish influence grew not by the day, but by the hour.

Reflecting the widespread bitterness of many Russians is afront-page article in Zavtra (Nov. 1996, No. 48), which chargesthat a group of "13 banker apostles" has gained controlof the country. It went on to warn readers: " ... The Constitutionhas been one-third torn to pieces right under your nose in thelast five years, and from this day on you will live under thejurisdiction of the Jewish bankers whose wallets protect the thugsof [television stations] ORT and NTV."

Informed Russians are quite aware of America's special relationshipwith Israel, with the Jewish lobby's mighty influence in the UnitedStates, with the preferential treatment given by the US immigrationagency (INS) to Jewish immigrants, and with the zealous US concernfor Jewish welfare in general. Accordingly, Russian nationaliststend to view Jewish capitalists in their country as quasi-agentsof the United States.

Concerned about a possible backlash, many Russian Jews, reportsthe Moscow correspondent of the Forward (April 4, 1997), now saythat "there are too many Jews in government. There are toomany Jewish bankers running the country." Jews fear thatwith such a conspicuous profile they will be viewed as a groupthat has grown wealthy through dishonest practices at the expenseof the productive working people, and that Russians will blamethem for humiliating and ruining the nation. Anyway, a prominentJewish community leader notes, "people here have quite bittermemories of the participation of Jews in the [Bolshevik] revolution."(Forward, April 4, 1997)

Writing in Zavtra (No. 43, Oct. 1996), analyst Aleksandr Sevastyanovdescribes the contrasting attitudes of Russians and Jews withregard to Russia's future:

There are many Jews in the country who preach the idea of anew Russian empire for the simple reason that for them Russianimperialism is a synonym for internationalism under new circumstances.Not having succeeded in its time with the Comintern [the Soviet-controlled Communist International], they now say "let'stry an empire." Their ideal is a flourishing multinationalRussia, where the Russians themselves are not really the rulers.

For us nationalists, this kind of Russia is pure nonsense --not worth our time or our support. Every normal Russian believesin his heart, and rightly so: "We have created this stateand we shall rule it." On the other hand, every typical Jewthinks to himself: "Yes, you Russians created the state,but we Jews shall rule it because we are the elite of the Russiannation, the natural claimants to the role of an imperial people.And we shall do so because we are the richest, the most united,the best educated, and the most cultured. If we do not rule Russia,then who?"

And, alas, today we Russians are not yet in a position evento pretend to an imperial role. The Soviet empire collapsed becausethe Russian people lost the ability to preserve or prevent thecollapse of the great nation they had been built up over the centuries.To attempt to recapture its former ruling role, without firstrecapturing the ethnic strength that made it possible, would besuicidal. Solzhenitsyn is again right when he says: "Anyattempt to restore the empire today would be tantamount to buryingthe Russian people." We must first concentrate on solvingthe problems that have weakened us as a people. They are, firstand foremost, demographic, and only secondarily economic, social,military, cultural, and the rest. We most reject all other activitiesthat do not focus on the revitalization of our people. We cannotpermit ourselves to be diverted from our absolutely essentialgoal, which is ethno-egocentric -- not even by the ephemeral lureof empire building.

A Time of Ominous Transition

Still emerging from seven decades of Soviet rule, Russiansare groping toward a new sense of national identity. Not yet havingcome to grips with its past, this is a land of historical paradox.Thus, Lenin's embalmed corpse is still enshrined in a monumentalsarcophagus on Moscow's Red Square, and not a single former Communistofficial has been brought to trial for Soviet-era crimes.

As Aleksandr Solzhenitsyn has observed, Russia today is neitheran authentic political democracy nor a genuine free market economy.While an ambitious few amass vast fortunes and great power throughillicit deals, the country's productive workers, children andelderly suffer. A small oligarchy rules over a population thatlives in near destitution. "Democracy in the true sense ofthe word does not exist in Russia," writes Solzhenitsyn.He continues:

There exists no legal framework or financial means for thecreation of local self-government. People will have no choicebut to achieve it through social struggle ... This system of centralizedpower cannot be called a democracy ... The fate of the countryis now decided by a stable oligarchy of 150-200 people, whichincludes the nimbler members of the old Communist system's topand middle ranks, plus the nouveaux riches ... Our present rulingcircles have not shown themselves in the least morally superiorto the Communists who preceded them ... Russia is being exhaustedby crime, not a single serious crime has been exposed, nor hasthere been a single public trial ... This destructive course ofevents over the last decade has come about because the government,while ineptly imitating foreign models, has completely disregardedthe country's innate creativity and singular character as wellas Russia's centuries-old spiritual and social traditions.

For the historically minded observer, the parallels betweenRussia today and Germany during the pre-Hitler Weimar republicyears are striking and portentous. In each case, there has beensevere economic, political and social upheaval, monetary chaos,substantial loss of territory, and humiliating subordination toforeign powers following the abrupt collapse of an seemingly entrenchedpolitical regime. Unscrupulous individuals, many of them membersof an alien ethnic minority, have exploited their foreign connectionsand the prevailing disorder to quickly enrich themselves at theexpense of the common people. Major media and financial institutionsare largely in the hands of people with no national loyalty. Ineach case, the social dislocation has come with a drastic fallin cultural and moral standards.

Much of the talk in the United States about democracy in Russiais as ridiculous today as it has always been. Plus ça change,plus c'est la meme chose. Throughout its history, Russia has beenruled by an elite, entrenched in Moscow and St. Petersburg, oftenof non-Russian origin and fascinated by Western philosophies.

As a potentially wealthy country with a proud and illustriouspast, it is difficult to imagine that Russians will permit thecurrent miserable and humiliating situation to continue indefinitely.At the same time, it's hard to see how Russia's problems can bemastered without very drastic change.

Daniel W. Michaels is a retired DefenseDepartment analyst who lives in Washington, DC. After graduatingin 1954 from Columbia University (Phi Beta Kappa), he studiedin Tübingen, Germany (1957), with a Fulbright scholarship.

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