Yeltsin Keeps It All in `the Family'

0 Comments | Insight on the News, Sept 6, 1999 | by J. Michael Waller

Boris Yeltsin has named the head of the secret police, Vladimir Putin, as his latest prime minister, raising fundamental concerns about the direction Russia is taking.

As a KGB officer he oversaw the Stasi secret police in Communist East Germany. He led a crooked financial empire, some believe, before becoming head of the Russian secret police. He's accused of quashing investigations of high-level corruption and took charge of the upcoming elections. Now Vladimir Putin is Russia's newest prime minister.

Russians refer to the gangster-tycoons that appear to surround President Boris Yeltsin -- including first daughter Tatyana -- as "the Family." And keeping the Family out of prison is what Russia's desperate president is trying to ensure before his term runs out next summer. Protecting his inner circle, Kremlin observers say, is what motivated Yeltsin to sack yet another prime minister Aug. 9 and replace him with the third KGB man in a row.

"His entourage is in absolute panic," Victor Yasmann, a former senior analyst at the Radio Liberty Research Institute in Munich, tells Insight.

Last October Yeltsin dismissed then-prime minister Sergei Kiriyenko and put former Soviet KGB espionage leader Yevgeny Primakov in his place. In May, he sacked Primakov in favor of former secret-police general Sergei Stepashin. Now he has fired Stepashin and replaced him with KGB veteran Vladimir Putin.

Seasoned Russia-watchers say Yeltsin's increased reliance on KGB leaders marks an ominous trend. "In what normal country does one go to the secret services to appoint a new prime minister?" asks Professor Uri Ra'anan, director of the Institute for the Study of Conflict, Ideology and Policy at Boston University.

Putin's rise gives renewed strength to the St. Petersburg clan of gangster-tycoons, personified by disgraced former privatization chief Anatoly Chubais to counter the Mafia machine of Moscow Mayor Yuri Luzhkov to take control of Russia, according to Yasmann. The new acting premier is described as close to Chubais, one of the Clinton administration's favorite Russian politicians who heads the state electrical monopoly and serves as his country's representative to the International Monetary Fund, the World Bank and other financial organizations.

Prior to his appointment as acting premier, the 46-year-old Putin was director of the Federal Security Service -- the renamed KGB internal-security organs known by their Russian initials FSB. He doubled as secretary of the presidential security council, an inter-agency body that advises the president on national-security, foreign-policy, military and law-enforcement matters. Yeltsin also placed him in charge of "safeguarding" the upcoming parliamentary and presidential elections. Putin reportedly speaks German and English and enjoys a friendly working relationship by telephone with President Clinton's national-security adviser, Samuel "Sandy" Berger. The Clinton administration says it looks forward to working with Putin.

Russia's new government leader represents some of the worst elements of the old KGB, Kremlin observers say. His main assignment abroad was a post as KGB commissioner in Dresden, East Germany, where he oversaw the city division of the Stasi secret police in the dark years of the 1980s. So notorious was the Stasi that Nazi hunter Simon Wiesenthal once termed it "worse than the Gestapo."

Dresden was the second city after Berlin where the East German Communist Party and the Stasi ran the "coordinating committee," or KOKO, after the German initials, to sell off state property to the West to raise cash for high-ranking officials and the Stasi. U.S. intelligence sources say that, if the Stasi was involved, "at minimum they were coordinated with the KGB." That would place Putin near the core of East Germany's illegal theft-for-hard-currency schemes as the communist regime collapsed.

When the Soviet empire began to unravel, Putin returned to Leningrad (since renamed St. Petersburg) and established the city's new hard-currency exchange. Matthew Baker of Straffor.com, a private global intelligence firm based in Texas, tells Insight that Putin put his intelligence contacts to work attracting German banks, including Dresdener Bank, to the city.

Other intelligence sources tell Insight that Putin's former professor at the local KGB academy, Mayor Anatoly Sobchak, appointed him as first deputy mayor responsible for foreign relations and trade -- the heart of corrupt hard-currency operations in the scandalplagued city council. There he met Stepashin, then a police lieutenant colonel elected to the Russian parliament whom Yeltsin named secret-police chief of St. Petersburg. Stepashin's wife happened to be a top executive in a large St. Petersburg bank. Fellow Leningrader Chubais, as presidential chief of staff in 1996, tapped Putin to become Kremlin business manager in charge of the multibillion-dollar empire under presidential control -- and to become part of the Family.

Putin ultimately succeeded Stepashin as FSB director. His immediate subordinate, Lt. Gen. Viktor Cherkesov, was a career dissident-hunter from the Leningrad KGB Fifth Chief Directorate, the notorious political police unit that persecuted dissidents and religious believers. Human-rights activists in St. Petersburg, including artist Georgy Mikhailov and Jewish refuseniks, tell Insight that Cherkesov personally interrogated and abused them under Soviet rule.