Editorial
September 1, 1999
U.S. taxpayers have bankrolled billions of dollars in loans to Russia in recent years, assured by the economists at the International Monetary Fund that the aid would get the ravaged nation of 147 million back on its feet. It's beginning to look as if the IMF, led by the Clinton administration, not only botched the repair job on Russia's economy but managed to get its -- our -- wallets stolen as well.
USA TODAY reported last week that Russian mobsters, directed by the highest offices of the Kremlin, may have laundered as much as half of the country's IMF loans -- $10 billion -- through accounts at the Bank of New York and Republic National Bank.
The sum is but the tip of the iceberg. Law enforcement officials told USA TODAY another $5 billion in non-IMF Russian money came through the two U.S. banks. In addition, the Swiss and British governments are investigating laundering through Swiss banks and a Channel Islands firm. Yet the $10 billion is already twice the average annual profits of Microsoft and 100 times the documented plundering of Haiti's Jean-Claude "Baby Doc" Duvalier. Among Russian political figures suspected to have had access to the IMF money are Boris Yeltsin's daughter and adviser Tatyana Dyachenko and Washington's favorite reformer, ex-finance minister Anatoly Chubais, British investigators told USA TODAY. What's worse, the massive robbery leaves the average, poor Russian thinking cynically not only about his thieving political overlords in Moscow, but about American capitalism as well.
This much of the sordid tale is known so far: Against a backdrop of economic decline and mounting allegations of official corruption, Russia's Central Bank allowed the ruble to fall, and Russia defaulted on foreign debt last August. The move shook global stock markets and cost millions in losses to those who didn't know the ruble's fall was coming. Before the Central Bank's move, money began pouring from Russia to the New York banks through accounts under the name of Benex Worldwide, founded by Semion Mogilevich, a leader of Solntsevo, Russia's largest organized crime group.
At the same time, the New York banks began cooperating with an FBI investigation of the five Russian accounts. A year later, investigators are telling USA TODAY that much of this money may have been IMF loans to Russia's Central Bank. The IMF has lent Russia $22 billion since the country joined the multinational lending organization in 1992. The fund has periodically scaled back lending to its biggest client -- to nudge Russia back on the wagon of reform. But then has followed up by promising more, as it did in July, offering Russia's central bankers $4.5 billion while simultaneously investigating whether those bankers had diverted earlier funds to the Channel Islands.
The IMF happy hour has been pushed by the U.S., which has taken a hear-no-evil, see-no-evil approach to backing President Yeltsin's government of Potemkin reforms. Treasury Secretary Lawrence Summers, for example, has supported IMF loans to Russia since their inception. Now the tune is changing slightly. Summers told USA TODAY on Tuesday that the Clinton administration will not support giving Russia its next, $640-million slice of the $4.5 billion promised by the IMF in July until the laundering is fully investigated.
That's a start. Clearly, when half of the IMF's assistance appears to have been stolen, Western aid cannot continue in its current form. First, a full investigation of the crimes is required so future scandals can be avoided. As importantly, Russia's current leaders, as well as presidential hopefuls with their own elaborate networks of financial support, must admit to and change their suspiciously criminal ways.
To be sure, blaming Washington and the IMF for the corruption of Russia's political leadership is a little like blaming a bartender for a patron's drunkenness: Russia's ex-communists, with decades of experience in raping their nation for personal gain, are responsible for their own abuses. But at some point, a reckless party becomes the host's responsibility. That deadline passed some time ago. If Russia is ever to become a well-governed, productive state, the White House and the IMF have to end their enabling.
More Information on the International Monetary Fund
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