Russian Prime Minister Primakov attacks pervasive economic crime; Powerful oligarch loses control of Aeroflot


MOSCOW -- Everywhere he looks, Russia's most powerful tycoon sees Prime Minister Yevgeny M. Primakov coming after him.

Boris Berezovsky comes under more pressure every day -- with investigators raiding his holdings, spectacular revelations in the press, and thinly veiled threats from Primakov himself.

But that might be the only way to tackle a man who, among other attributes, has long enjoyed the confidence of President Boris N. Yeltsin and his family.

The prime minister had presented a mild face to the nation for nearly five months, seemingly trying to do nothing wrong by doing practically nothing at all. But now he has latched onto a campaign against economic crime in general and against the one man in particular who more than any other embodies the power and arrogance of Russia's financial oligarchs.

Yesterday, Berezovsky's associates were kicked off the board of Aeroflot, the Russian airline ostensibly run by Yeltsin's son-in-law but generally believed to be under Berezovsky's control.

Prosecutors said they were continuing to look into the affairs of Aeroflot, a related advertising firm, a financial holding company in Switzerland that handled Aeroflot's foreign revenue, and Sibneft, an oil company owned by Berezovsky.

Earlier in the week they charged that a security company linked to Berezovsky had bugged the Kremlin, tapping the Yeltsin family telephones.

The full-scale assault has little to do with prosecutors' conscientiousness and almost everything to do with politics.

All the allegations have been made in the press before, but Primakov could hardly have picked a more tempting target than Berezovsky, whose rise to wealth and influence seemed out of proportion to the size of the auto sales company he ran in the early 1990s.

Primakov has inveighed against economic crime several times in the past few days, even suggesting that a prisoner amnesty was being planned to open up space in Russia's prisons for financial criminals. Although he sounds at times like a throwback to the Communist days when officials sought to root out "wreckers," no one has suggested that the problem isn't real.

"We cannot move on without purification," Primakov told the Duma yesterday. Law enforcement bodies, he said, must address "a series of mistakes made during privatizations and the hasty bankruptcy of companies."

Later in the day, he called for the "consolidation of society and its political as well as economic elites."

He met with Yeltsin in the Kremlin yesterday, but it is difficult to gauge how the president is reacting. Reports have suggested that some of his aides want him to dismiss Primakov, a move that would set off a monumental political crisis here. Yeltsin reportedly agreed in principle yesterday to a proposal by Primakov under which he would agree not to dismiss the Cabinet without consulting the Duma first.

The prime minister has been careful to secure his standing. Yeltsin, recovering from a bleeding ulcer, has ceded most of his real power to Primakov. The prime minister's people are in place throughout much of the government.

A former chief of the KGB, Primakov has placed Federal Security Service people in key positions -- at the main arms exporter, for instance, and at Russian television. Yesterday, Oleg Osobenkov, a former deputy director for economic security at the Federal Security Service, which is the KGB's successor, was named adviser to the general director of Aeroflot after the purge of Berezovsky's men.

At the same time, other intrigues are roiling the surface. Prosecutor General Yuri Skuratov delivered a report to the Duma on Monday alleging that Russia's Central Bank had turned over $37.3 billion to an asset management company based on the island of Jersey. Skuratov resigned the next day. Yesterday, bank officials dismissed the report, saying the Jersey company was under the bank's control and had never had more than $1.4 billion on deposit. They did not explain why such an arrangement was needed.

In the Siberian region of Krasnoyarsk, Gov. Alexander I. Lebed, a potential presidential contender who at one time was a favorite of Berezovsky, is locked in a fierce and apparently losing battle for power with forces led by an aluminum company. Yesterday, the Security Council decided to send what was described as a "large investigative group" from the Interior Ministry to check on it.

Primakov and other government officials joined Moscow Mayor Yuri Luzhkov in fervent denunciations of a neo-Nazi march that took place last weekend. In truth, a couple of dozen men met on a street in northeast Moscow; the politicians' thunderings have led some here to think they are trying to divert attention from something else.

The economy, perhaps? It continued to contract in January. Inflation was 8 percent for the month. The labor minister said real unemployment was not 11 percent, as reported, but closer to 17 percent.

Yesterday the Duma approved a budget that even some of its proponents agree contains unrealistic assumptions about revenue, inflation, and the value of the ruble. It depends on $4 billion from the International Monetary Fund that is by no means certain. It will probably have to be rewritten in April, if not sooner.

Or perhaps the unpalatable problems lie abroad. Even as Russia was busily feeling affronted by the U.S. and British attacks on Iraq in December, Azerbaijan was preparing to invite the United States to set up a military base on the shores of the Caspian.

Uzbekistan, only a few years ago a faithful Moscow ally, announced Wednesday that it was withdrawing from the military pact of the Commonwealth of Independent States.

Ukraine turns to the West more and more; the upper house of Russia's parliament recently refused to consider ratifying a treaty that would settle some of the long-standing issues between Moscow and Kiev, a move that will make NATO look all the more appealing to the Ukrainians.

It hardly seems to matter. Moscow's focus is on Moscow right now, and the churning that may have only just begun.

Pub Date: 2/06/99

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