Russian Roulette | Page 3

a return to state
ownership, central planning, and subsidies, if implemented, is likely to

prove to be the coup de grace rather than a graceful coup.
B. The FSB (the main successor to the KGB)
Note:
The KGB was succeeded by a host of agencies. The FSB inherited its
internal security directorates. The SVR inherited the KGB's foreign
intelligence directorates.
With the ascendance of the Vladimir Putin and his coterie (all former
KGB or FSB officers), the security services revealed their hand - they
are in control of Russia and always have been. They number now twice
as many as the KGB at its apex. Only a few days ago, the FSB had
indirectly made known its enduring objections to a long mooted (and
government approved) railway reform (a purely economic matter).
President Putin made December 20 (the day the murderous Checka, the
KGB's ancestor, was established in 1917) a national holiday.
But the most significant tectonic shift has been the implosion of the
unholy alliance between Russian organized crime and its security
forces. The Russian mob served as the KGB's long arm until 1998. The
KGB often recruited and trained criminals (a task it took over from the
Interior Ministry, the MVD). "Former" (reserve) and active agents
joined international or domestic racketeering gangs, sometimes as their
leaders.
After 1986 (and more so after 1991), many KGB members were moved
from its bloated First (SVR) and Third Directorates to its Economic
Department. They were instructed to dabble in business and banking
(sometimes in joint ventures with foreigners). Inevitably, they crossed
paths - and then collaborated - with the Russian mafia which, like the
FSB, owns shares in privatized firms, residential property, banks, and
money laundering facilities.
The co-operation with crime lords against corrupt (read: unco-operative)
bureaucrats became institutional and all-pervasive under Yeltsin. The
KGB is alleged to have spun off a series of "ghost" departments to deal
with global drug dealing, weapons smuggling and sales, white slavery,
money counterfeiting, and nuclear material.
In a desperate effort at self-preservation, other KGB departments are
said to have conducted the illicit sales of raw materials (including tons
of precious metals) for hard currency, and the laundering of the
proceeds through financial institutions in the West (in Cyprus, Israel,

Greece, the USA, Switzerland, and Austria). Specially established
corporate shells and "banks" were used to launder money, mainly on
behalf of the party nomenklatura. All said, the emerging KGB-crime
cartel has been estimated to own or control c. 40% of Russian GDP as
early as 1994, having absconded with c. $100 billion of state assets.
Under the dual pretexts of "crime busting" and "fighting terrorism", the
Interior Ministry and FSB used this period to construct massive,
parallel, armies - better equipped and better trained than the official
one.
Many genuinely retired KGB personnel found work as programmers,
entrepreneurs, and computer engineers in the Russian private sector
(and, later, in the West) - often financed by the KGB itself. The KGB
thus came to spawn and dominate the nascent Information Technology
and telecommunications industries in Russia. Add to this former (but
on reserve duty) KGB personnel in banks, hi-tech corporations, security
firms, consultancies, and media in the West as well as in joint ventures
with foreign firms in Russia - and the security services' latter day role
(and next big fount of revenue) becomes clear: industrial and economic
espionage. Russian scholars are already ordered (as of last May) to
submit written reports about all their encounters with foreign
colleagues.
This is where the FSB began to part ways with crime, albeit hitherto
only haltingly.
The FSB has established itself both within Russian power structures
and in business. What it needs now more than money and clout - are
respectability and the access it brings to Western capital markets,
intellectual property (proprietary technology), and management.
Having co-opted criminal organizations for its own purposes (and
having acted criminally themselves) - the alphabet soup of security
agencies now wish to consolidate their gains and transform themselves
into legitimate, globe-spanning, business concerns.
The robbers' most fervent wish is to become barons. Their erstwhile,
less exalted, criminal friends are on the way. Expect a bloodbath, a
genuine mafia gangland war over territory and spoils. The result is by
no means guaranteed.
The Energy Sector
The pension fund of the Russian oil giant, Lukoil, a minority

shareholder in TV-6 (owned by a discredited and self-exiled Yeltsin-era
oligarch, Boris Berezovsky), this week forced the closure of this
television station on legal grounds. Gazprom (Russia's natural gas
monopoly) has done the same to another television station, NTV, last
year (and then proceeded to expropriate it from its owner, Vladimir
Gusinsky).
Gazprom is forced to sell natural gas to Russian consumers at 10% the
world price and to turn a blind eye to debts owed it by Kremlin