___________________________________________ What's going on in your world? Find Out. Visit Stratfor's Global Intelligence Center http://www.stratfor.com/world/default.htm ___________________________________________ OTHER FEATURES ON STRATFOR.COM PKK Withdrawal Portends Split and Change of Tactics http://www.stratfor.com/MEAF/commentary/m9909092104.htm The IMF and the World Bank Bow Toward Malaysia http://www.stratfor.com/asia/specialreports/special71.htm Renewed Fighting in Dagestan Begs Chechen Response http://www.stratfor.com/CIS/commentary/c9909100015.htm __________________________________ STRATFOR.COM Global Intelligence Update September 10, 1999 Checkmate Nears for Yeltsin Summary: Russian President Boris Yeltsin has now been directly implicated in one of several corruption scandals currently engulfing the Kremlin. Despite rumors, Yeltsin is unlikely to resign from office over the scandals, retaining presidential immunity. This immunity will soon evaporate, however, with presidential elections scheduled for next May, leaving him three choices - flee the country, choose a sympathetic successor, or declare a state of emergency, canceling the elections. The latter would provide the ultimate justification - in Russia and abroad - for his removal and the purge of his allies. Analysis: Amid a storm of scandals engulfing his administration, Russian President Boris Yeltsin has long been suspected of being personally involved in illegal activity. His presumably biased Russian political foes have accused Yeltsin of wrongdoing, leaving rumors to float freely in international circles. But now, according to the September 8 edition of the Washington Post, Swiss investigators have directly linked Yeltsin to one of the burgeoning number of Russian corruption scandals - to the tune of $1 million. The Post cited law enforcement authorities investigating the Mabetex scandal as alleging the Swiss construction firm provided credit cards for Yeltsin and his two daughters, backed up by $1 million deposited in a Hungarian bank account. Yeltsin himself reportedly denied the allegations during a September 8 telephone conversation with U.S. President Bill Clinton. For the time being, the alleged bribe is less important than the fact that Yeltsin has been unambiguously linked to the scandal. Already most of the group of close Yeltsin advisors, senior administration members and supporters collectively known as the "Family" are under investigation for alleged involvement in one or more of the major scandals now facing the Kremlin [ http://www.stratfor.com/SERVICES/GIU/090299.ASP ]. These include allegedly laundering billions of dollars - some possibly from IMF loans - through New York banks, using IMF funds for international currency market speculations, skimming profits from the state airline Aeroflot, and accepting bribes from Mabetex. The Russian officials, their family members and friends under investigation now number nearly 800. Moreover, investigators are reportedly uncovering links between the scandals, effectively painting the whole Yeltsin administration as one boundless kleptocracy. With Yeltsin himself under investigation, the question immediately rises, will he remain in office for the duration of his term and if so, what then? Yeltsin has a few options - none of them good. He is unlikely to step down before the end of his term. Under the Russian constitution Yeltsin is immune from prosecution as long as he remains in office. In addition, retaining the presidency keeps levers at his disposal with which he can interfere in the investigations. He has already apparently used those levers, attempting to dismiss Prosecutor General Yuri Skuratov and "reassigning" investigator Georgy Chuglazov just before he was to travel to Switzerland to review evidence in the Mabetex case. The Duma could attempt to impeach Yeltsin, but the Duma's previous failed attempt took 10 months from initial discussion to final vote. With Duma elections slated for December and presidential elections scheduled for next May, there is little time for formal proceedings. Assuming Yeltsin has no desire or intention to submit himself for prosecution, he has three options before next year's presidential election. He can flee the country - a risk with no guarantees, considering the Russian security services. The security apparatus is apparently fueling these scandals and would no doubt be watching for such a move. Alternately, he could attempt to affect the election of a sympathetic successor who might theoretically protect him once his immunity ends. Yeltsin's ability to pick his successor, however, has been eroded by Russia's dismal economic situation and the snowballing scandals. Public support from Yeltsin is generally considered to be a political kiss of death. Moreover, he will be tempted to try to cast the blame on others in order to shake off the scandals and regain the ability to influence the vote in his favor. He will most likely point to the Family itself. Kremlin property manager Pavel Borodin is a leading suspect in the Mabetex scandal, and thus a possible target for redirected recrimination. Presidential Chief of Staff Alexander Voloshin is another potential scapegoat, with rumors already floating in Russia that he is due to lose his job. The problem with this strategy is the possibility of Family members striking back, especially if they feel taking the blame is more than a mere formality. When oligarch Mikhail Khodorkovsky began to take heat for the Bank of New York money laundering allegations, he quickly suggested that the money transfers could have been an attempt by Russian leaders to save their personal fortunes in advance of economic collapse. This allegation fed a new investigation of some 780 Russian officials - including Anatoly Chubais - for possible illegal insider trading of government securities. Unable to flee or to ensure his security through a loyal successor, Yeltsin is left only with "extra-constitutional" measures with which to attempt to save himself. His political foes have already warned that Yeltsin could attempt to use the conflict in Dagestan or bombings in Moscow as justification for declaring a state of emergency and indefinitely postponing the December Duma and/or the May presidential elections. This may be just what those in the security apparatus have in mind. Rather than take extra-constitutional steps of their own against Yeltsin, they may simply let him bring himself and his allies down. In the short term, Yeltsin and the Family are consumed with the allegations, unable to do much beyond look to their own survival. This hands control of domestic issues to those in the administration outside Yeltsin's inner circle and untainted by the scandals, notably Prime Minister Vladimir Putin, Defense Minister Igor Sergeyev and Interior Minister Vladimir Rushailo. Additionally, Yeltsin's foes can only benefit by letting the Family publicly feed on itself. Not only are the scandals fully discrediting Yeltsin and the Family, but also Yeltsin's allies in the West, who for their own reasons are downplaying the allegations. The West is being accused of contributing to and benefiting from the Yeltsin regime's corruption, while simultaneously abandoning him and attempting to demean Russia by spreading allegations of corruption. What has emerged is a picture of a duplicitous West and its thieving cronies in the Kremlin. Yeltsin is unable to protect himself constitutionally past the presidential elections next May. His few interim options are self destructive, further discrediting the Family and his Western allies. All that remains, short of fleeing in the night or surrendering to prosecution, is to cancel the elections. This attempt to circumvent the constitution would provide the final justification - in Russia and abroad - for whatever steps are subsequently taken to remove Yeltsin from office. Checkmate. __________________________________________________ SUBSCRIBE to FREE, DAILY GLOBAL INTELLIGENCE UPDATES (GIU) http://www.stratfor.com/services/giu/subscribe.asp or send your name, organization, position, mailing address, phone number, and e-mail address to [EMAIL PROTECTED] UNSUBSCRIBE FROM THE GLOBAL INTELLIGENCE UPDATES (GIU) http://wwwstratfor.com/services/giu/subscribe.asp ___________________________________________________ STRATFOR.COM 504 Lavaca, Suite 1100 Austin, TX 78701 Phone: 512-583-5000 Fax: 512-583-5025 Internet: http://www.stratfor.com/ Email: [EMAIL PROTECTED] ___________________________________________________ (c) 1999, Stratfor, Inc.
