What sums were involved? Some in the U.S. intelligence community
estimated about $20 billion. But there was a wide range of
uncertainty: one private analysis I learned about later estimated
$4-6 billion; Russian press speculations ran to $100 billion. By all
reckonings the amounts were very substantial.

Could U.S. intelligence help find the money? Specialists in
collection disciplines informed me that we could indeed help,
although at some risk to our sources, should, for example, court
cases expose them. It would be rather similar to tracking money in
pursuit of drug traffickers.

But should the U.S. government render such help to Russia? For a
policy decision, the late Ed Hewitt, then running Soviet affairs on
the National Security Council, assembled officials from State,
Treasury, Defense and the intelligence community. The answer was no.
Some worried about risk to intelligence sources. But the main
rationale was the following: capital flight is capital flight. We can
no more help Russia retrieve such money than we can help Brazil or
Argentina. If they get the economic fundamentals right, the money
will return. I cannot remember whether anybody put it so explicitly,
but the implication was clear: it doesn't matter who has the money or
how it was acquired, even if by theft; so long as it is private, it
will return to do good things if there is a market.

About a year later, my retired colleague updated me on subsequent
developments. On its own, his company located substantial funds
expatriated by the KGB. It informed its client and suggested
approaches for recovering the funds. By that time, however, the
Russian government no longer seemed interested. Obviously, top
officials and organizations had found ways to access the funds that
did not require, indeed would be disrupted by, official efforts to
repatriate them. When some while later I read an interview in which
Pavel Borodin, the long-time quartermaster of Yeltsin's Kremlin,
proudly reported that he managed several hundred private companies to
bring in off-budget revenues, I had a feeling I knew where he got his
start-up capital. I also felt I knew more about the suicide of
Central Committee money handler Nikolai Kruchina after the aborted
August 1991 coup. He obviously feared the most severe punishment at
the hands of the post-communist regime.

Lessons to Learn

This tale conveys several lessons: The great Russian rip-off began
not under Yeltsin but under Gorbachev. It set the course for what
accelerated after him. This should put into perspective the clamor of
Russia's communists about corrupt reformers and comprador
capitalists: are they outraged by the crimes committed by their
former (and some present) associates, or by their failure to get a
share of the loot? It should also give pause to those who pine for
the lost opportunities of perestroika. While Gorbachev pondered the
"500 Day Plan", his minions were already plundering Russia.

When the KGB was energetically moving money west and south, Primakov
was a very influential adviser to Gorbachev on security and
intelligence affairs, and Maslyukov was head of Gosplan. Did they not
know what was going on? Later heading the svr, Primakov inherited
control over the funds. Yet, reportedly, he urged closing down the
Supreme Soviet investigation into what happened to them. It would now
be a nice gesture, at least, to include a fresh look into this matter
among the current Russian government's anti-corruption measures.

Washington's part in purveying in Russia the dogma that markets will
triumph over all, that the ownership and source of wealth matter not,
so long as it is (or seems) private, began not in the Clinton
administration but under President Bush. I confess some chagrin for
not making more of a fuss at the time. If the KGB's theft of Russia's
money in 1985-91 was capital flight, then so was the smuggling of
Nazi gold in 1945. The crime spree that began under Gorbachev and the
dogmas about Russian economic reform that began in Washington under
Bush had a similar fate: they both escalated to do more damage under
their successors.

The burden of the foregoing is that American intelligence analysts
and policymakers should have known about the Russian crime and
corruption problem as a threat to reform and as a challenge to our
grasp of Russian realities. Indeed, a fine analysis was done by the
State Department's Bureau of Intelligence and Research in April 1992.
But subsequently, neither American intelligence analysis nor American
policymakers adequately appreciated the crime and corruption problem.
Why was this?

One source of trouble was what we call "politicization", the warping
of intelligence analysis to fit political agendas. Risen's New York
Times article alluded to above charged that the Clinton
administration's Russia hands did not want to hear about Russian
crime and corruption, especially that involving top figures, because
this whole theme would complicate ongoing policies and tarnish the
images of those Russian and American officials who were partners in
reform and a new strategic relationship.

Risen's article cites unnamed policy making officials as objecting
that reporting about the corruption of high Russian figures was
vague; that it contained no "smoking gun"; and that it implied that
the United States should not deal with reportedly tainted figures.
These objections constitute, in my judgment, admission to the charge,
affirming that policymakers did resist this information and also
resisted explaining why they did so. But such rebuttals were and are
entirely beside the point. This analysis aimed not to support
prosecution of, or estrangement from, the foreign officials being
analyzed, but to inform American decisionmakers about their interests
and the context in which they had to operate. The recipients
evidently did not want to hear this. Their disdain for analysis about
corruption of Russian politics and their Russian partners did,
indeed, have a chilling effect on treatment of these topics,
especially during the critical years 1993-96. Friends in the foreign
service tell me that the same syndrome crimped reporting, especially
on economic reform, by our embassy in Moscow. But there were other
culprits than "customer sales resistance" at work.

Intelligence analysis brought its own vulnerabilities to the table,
first in the form of a post-Cold War agenda that has become ever more
operational (i.e., supportive of daily business) rather than focusing
on understanding the big picture; and second, a management code that
prizes above all serving--which can easily degenerate into
pleasing--the customer. Our policymakers did not much want, and our
intelligence analysts had little incentive to provide, a big-picture,
long-term assessment of Russian realities. They mainly wanted to get
through the next Gore-Chernomyrdin meeting, or the next quarrel about
Russian missile dealings with Iran.

Another difficulty was the tendency of a large bureaucracy to
pigeon-hole a topic with many aspects into one, typically
turf-conscious, organization. Needed, but lacking, was a multifaceted
team effort bringing together perspectives on Kremlin politics,
Russian business, privatization, banking, economic reform,
intelligence, foreign relations and weapons proliferation. Meanwhile,
the downtown customer community was fragmented by differing agendas,
such as managing our diplomacy with Moscow, supporting economic
reform, stopping proliferation and thwarting international organized
crime. The challenge to intelligence posed by Russian crime and
corruption was in these respects similar to other topics on the
post-Cold War agenda, such as weapons proliferation.

Nevertheless, efforts to paint the big picture still occurred. When
they did, intellectual blinders were as important as political
inhibitions in complicating the task. In particular, economic dogma
was at work. Analysts with impressive credentials in economics but
little appreciation for Russian history would say such things as,
"Russia's robber barons will ultimately go legit, just like ours
did." In doing so, they overlooked the fact that our robber barons
operated in a culture of law that eventually regulated or dismantled
the monopolies early industrialization allowed. American robber
barons, unlike the Russian, actually built productive enterprises.

Again, some opined (as Anatoly Chubais did in a recent interview)
that criminal protection rackets meet an objective economic need for
security that is unmet by the state. This claim reminds one of a
scene in the movie GoodFellas, where the local Don is described as
providing police protection to people who cannot go to the police.
While it may be sound economics, this claim is socially perverse; it
says something damning about both the situation and about those who
make it. And yet again, some analysts noted that corruption and officially
tolerated crime are the rule in most parts of the world, and the
at the United States, as an island of cleanliness, is very much the
exception--thus ignoring both our own corruption and what John Donne
said about islands. And, of course, they neglected the fact that
Russia is not Sicily, Colombia or the Philippines, but a nation of
ten time zones with twenty thousand nuclear weapons. It matters
whether any country is ruled by tyrants or thieves; but in the case
of Russia it matters more, much more.

In the end, these failings did not, I believe, have a direct impact
on U.S. policy. Rather, they represented some participation by U.S.
intelligence analysis in a general pattern of overlooking the darker
sides of Russian realities with respect to the Yeltsin regime, the
reform team, the consequences of the monetarist dogma, the real
nature of privatization, the fiscal and financial environment, and
flaws in elections. Where these realities impinged dangerously on
pressing U.S. security concerns, such as Russian nuclear technology
and weapons dealings with Iran, there was greater willingness to
accept and act on bad news. But even here, failure to face the
Byzantine disorder of Moscow politics and institutions probably
impeded our ability to get the desired results.

Essay Types: Essay