On Wednesday, September 1, a homemade bomb exploded on the third level of the Manezh Square underground shopping mall—dubbed “Luzhkov’s pyramid” by critics of the Moscow mayor’s taste in architecture—in the heart of Russia’s ancient capital, only yards away from the red brick walls of the Kremlin. Forty-one people were injured, but none thus far (as of the second week in September) has died as a result of the terrorist attack. That same week, with mobs of clashing protesters—divided over the results of regional elections—gathering daily in the North Caucasian region’s capital, a call from Karachay-Cherkessiya’s leading citizens was made to Boris Yeltsin: appoint magnate (and former secretary of the Commonwealth of Independent States, the loose organization of former Soviet republics) Boris Berezovsky as Moscow’s plenipotentiary representative in the troubled “subject” of the Russian Federation. Meanwhile, Russian troops were engaged in heavy fighting with Islamic militants in the mountainous region of Western Dagestan, also in the North Caucasus. Back in Moscow, Yeltsin’s press spokesman denied any Kremlin involvement in the latest scandal to shake the Russian political-economic elite: The Russian government was not involved in laundering any funds, either IMF money or alleged kickbacks for Kremlin refurbishing, and, furthermore, the West was obviously attempting to use the story as yet another political weapon in the ancient struggle to belittle Russia and prevent her from assuming her proper place as a great power.

It was no quieter across the Atlantic. In America, House Banking Committee Chairman Jim Leach (R-IA) called for hearings on the alleged laundering of $200 million of IMF funds through the Bank of New York (BNY) by Russian mobsters and high-ranking Kremlin officials. Vice President Al Gore, who shares responsibility for Russia policy with longtime “friend of Bill” Strobe Talbott, was feeling the heat both from Republicans, already taking a halfhearted stab at stoking a “Who lost Russia?” debate, and from Gore’s Democratic challenger. Bill Bradley. Meanwhile, in Europe, Swiss investigators reportedly uncovered evidence of Yeltsin, his daughter and close advisor Tatyana Dyachenko, former privatization czar (and hero to the Wall Street journal crowd in America) Anatol Chubays, and a host of other lesser Kremlin-connected lights participating in what looked like a bribery and kickback scheme involving credit cards, Swiss bank accounts, and a refurbished Kremlin. All of this was apparently facilitated by Kosovo Albanian Mabetex construction company boss Begzhet Paccoli, a man the European and Russian press have tied to the Albanian drug mafia, which uses Kosovo as a conduit for transporting narcotics to Europe. Needless to say, Paccoli’s warm relations with longtime Yeltsin crony and Kremlin property manager Pavel Borodin raised some delicate questions about Russia’s about-face in Kosovo, first assuming a seemingly uncompromising anti-NATO stance, then gradually caving in, pressuring the Yugoslav regime to accept the occupation of Kosovo by NATO and the Kosovo Liberation Army, which many observers see as an arm of the Albanian drug mafia.

These seemingly unrelated events may well be part of two orchestrated political “kompromat” (Russian shorthand for “compromising material”) campaigns timed for upcoming presidential elections in both America and Russia. It is a strange tale of two political cultures and two sets of political elites who appear ready to force their respective peoples to bear any burden and pay any price to preserve their own power.

The tale of the venerable Bank of New York’s alleged involvement in laundering money for transnational organized crime broke on August 19 in the New York Times, followed by related pieces over the next week in the Wall Street Journal, the Washington Post, and USA Today. The papers’ unnamed sources in British, American, and Russian intelligence and law enforcement agencies wove a tale that sounds all too convincing to anyone familiar with the state of affairs in today’s Russia, as well as the state of moral decay among both American and Russian elites: BNY, interested in garnering a share of Russian business after the Cold War—”emerging market” is the catchphrase-employed Natasha Garfinkel, an immigrant from the Soviet Union, Princeton grad, and BNY executive, to establish contacts with possible clients in the former Soviet Union (FSU). By the time the scandal was exposed in the Times, Garfinkel had become Natasha Kagalovsky: She had married a very prominent “young reformer” of the first wave of Russian “democrats,” Konstantin Kagalovsky (see John Lloyd’s excellent New York Times Magazine piece, “Who Lost Russia?” which appeared a scant four days prior to the August 19 “outing” of BNY, another nice piece of timing). Kagalovsky, now deputy chairman of the Yukos oil company, owned by magnate Mikhail Khodorkovsky, was Russia’s official representative to the IMF from 1992-95 and is a longtime friend of Russia’s leading “young reformers,” Chubays and former acting premier Yegor Gaydar. The BNY’s London branch also employed Lucy Edwards, another immigrant and divorcée, now married to a Russian citizen, Peter Berlin, who works for Benex, a U.K.-based company. According to press accounts, British authorities alerted the FBI to Berlin’s and Benex’s ties to a major figure in FSU organized crime circles, Semyon Yukovich Mogilevich, who apparently used Benex to funnel money out of the FSU for laundering in Western banks, a large portion of it in six BNY accounts reportedly set up by Berlin. Benex itself has had very few business transactions, other than money transfers, and appears to be a front company. The sums involved in the BNY end of the scandal approach ten billion dollars, some of it possibly diverted IMF funds. If BNY was ignorant of the possible illicit nature of the money, it was willfully so.

Moglievich, known as “Seva,” now lives in Hungary and is a boss in the Solntsevo mafia organization, as any Muscovite could have told the BNY. Seva is a sitting member of an informal commission of FSU mob bosses that was established by the father of FSU organized crime, Vyacheslav Ivankov, known as “Yaponchik” (“the Jap”) for his slanted eyes. Yaponchik is now serving a term in a D.S. prison, but his North American-based Organizatsiya is running at full steam, maintaining its ties to other FSU crime bosses, many of whom, like Yaponchik and Seva, have gone transnational. Russian press accounts have bed Seva to narcotics and weapons trading, prostitution rings (which often lure young Russian girls to Europe on “modeling” assignments and then enslave them in Seva’s brothels), and contract killings.

Moglievich, Ivankov, and other FSU mobsters established close ties with the politicos and “new Russian” “businessmen” who sprouted up like mushrooms after the rain in Boris Yeltsin’s Russia. All of the “seven bankers,” the “oligarchs” (including Kagalovsky’s boss, Khodorkovsky) who formed an informal commission of their own in 1996 after enriching themselves through insider deals on state-owned enterprises brokered by Chubays, have maintained ties to the mobsters of the FSU kommisiya, which brings us back to the BNY scandal. It appears that another BNY affiliate based in Switzerland may be partly owned, according to some Russian press accounts, by “oligarch number one,” informal financial advisor to the “family” (Yeltsin’s entourage), modern-day Rasputin, and “Russian Moriarty” Boris Abramovich Berezovsky, known as “BAB.” And this is where the two scandals—Mabetex and BNY—meet.

Yuri Skuratov is now in limbo, having been suspended by Yeltsin from his post as prosecutor general of the Russian Federation. Nevertheless, the Federation Council, the upper house of Russia’s parliament (made up of regional governors), sensing an opportunity to gain the upper hand in parliament’s efforts to reduce the declining Yeltsin’s powers, refused to recognize Skuratov’s suspension. The investigations initiated by Skuratov of the “family’s” business interests have continued, and Skuratov has been tacitly supported by Moscow Mayor Yuri Luzhkov, whose premature presidential aspirations have greatly irritated the Kremlin.

Those investigations uncovered the Kremlin refurbishing kickback scheme that tied the “family” to Paccoli and Mabetex. They also uncovered, with the help of aggressive Swiss Prosecutor General Carla Del Ponti (now conveniently being reassigned to the Hague war crimes tribunal), a network of shell companies used by the “family” for laundering siphoned-off government budget funds (and perhaps IMF money), including a Swiss firm owned by BAB called “Andava,” originally a conduit for funds embezzled from the Aeroflot airline company, headed by Yeltsin son-in-law Valeri Okulov (he is married to Yeltsin’s older daughter, Yelena). The network also includes the BNY affiliate in which BAB reportedly holds an interest.

Yeltsin has been severely criticized in both the West and in Russia for his seemingly mercurial behavior, firing governments with increasing frequency in the midst of an ongoing socioeconomic crisis set off by the August 1998 default and ruble devaluation. It is now apparent to most careful observers, however, that Yeltsin’s actions are hardly impulsive. The Kiriyenko government was fired as a scapegoat sacrifice; Someone had to take the fall for the collapse of Russian financial markets in August 1998, a collapse partly brought on—or at least exploited—by the financial speculations of both the oligarchs and their Western partners. Yevgeni Primakov was fired not so much because he was a Brezhnevite retrograde, but because he was determined to use Skuratov’s investigations—and his own friendly ties to intelligence and law enforcement agencies (Primakov is a former chief of the SVR, Russia’s foreign intelligence service)—to imprison the “seven bankers,” an effort that inevitably uncovered the involvement of the “family” in the systematic robbery of the country. Stepashin was replaced not because he was ineffectual (he held the post for a mere three months), but because he refused to manipulate the “power structures”—the security and law-enforcement agencies-in order to shut off Skuratov’s investigations and unleash a kompromat war on Luzhkov and Primakov, who are now involved in a fragile anti-Kremlin political alliance. (Stepashin apparently was also not interested in the Kremlin’s plans to provoke a conflict with the Communists and ban them before December’s parliamentary elections.) That is where newly minted Premier Vladimir Putin, a former KGB operative in East Germany, comes in.

Putin is allegedly behind the now famous (in Russia, at any rate) video of a man “similar to Prosecutor General Skuratov” frolicking with a pair of prostitutes, who were obviously set upon the lustful man “similar to Skuratov” by the “special services.” When the tape was aired on state-run TV, it merely boosted Skuratov’s public-approval ratings. Putin, who ran KGB shell companies which funneled the party’s gold out of the collapsing Soviet Union in the late 80’s and early 90’s, has now been tasked with plugging the leaks in Yeltsin’s porous political dike. Most Moscow Kremlin watchers believe that the source of leaks from “Russian law enforcement officials” to American and European newspapers is the cagey old ex-SVR chief Primakov and that Luzhkov is encouraging the leaks as a means of scoring points for the 2000 presidential race. Putin’s task is either to destroy Primakov/Luzhkov or to cut a deal and buy Yeltsin some time to wangle himself out of the latest “family” mess. To that end, the Kremlin appears to be pursuing a “carrot-and-stick” approach to the Primakov-Luzhkov problem. On the one hand, stories about front companies that have financed Luzhkov’s political operations (and probably laundered Moscow city government money for the mayor) have been planted in the Russian press: Turnabout is fair play, and if the Kremlin cannot uncover anything on the serupidous ex-SVR chief, then it is easy enough to besmirch the reputation of his unserupidous political partner. (The stories have also implicated a Luzhkov front company, Sistema, reportedly founded with seed money from Mogilevich’s Solntsevo mafia, in the BNY money-laundering operation.) Barring that, the Kremlin is allegedly probing the Primakov-Luzhkov team for a possible deal: The Kremlin will hand over “oligarch number one” in exchange for protection for Yeltsin and a few members of the “family.”

BAB, who survived an assassination attempt a few years ago, is not one to go quietly. In the Caucasus, he may be encouraging the confrontation in Karachay-Cherkessiva (his strong-arm men are said to be provoking clashes between the two chief factions in the political struggle), and BAB himself probably suggested to regional elites that he might be of use in mediating the dispute, once again proving to Yeltsin the value of his friendship and the danger of his enmity. Rumor also has it that BAB is financing the Chechen-backed Islamic guerrilla war against the infidel in Dagestan. Once more, BAB could play peacemaker in the region. Alternately, he is not above helping to foment the Kremlin’s worst nightmare: Islamic revolution inside Russia. The Dagestan militants have long threatened Moscow with a wave of terrorism if the infidel persisted in resisting the encroachments of “pure Islam ” on Russian territory. The Moscow explosion may have merely been the first warning from BAB and his Islamic friends.

There is another area where BAB can damage the Kremlin. His media have surprisingly not downplayed the interconnected stories of BNY, Mabatex, Andava, and the “family’s” Swiss bank accounts. He will not go down alone, if that is the Kremlin’s game. BAB’s fondest desire seems to be for Yeltsin to rise the Dagestan crisis, the terrorist threat, unrest in Karacbay-Cherkessiya, and economic instability as pretexts for the introduction of a state of emergency and the cancellation of upcoming elections. It may be that Putin and Yeltsin had a band in exacerbating these crises, at least in the beginning. BAB only desires to push them along to assure their mutual protection.

But Russian elites are not the only ones whose hands have been soiled by filthy political games. The Washington establishment knew all about Yeltsin and the Kremlin kleptocracy long before the BNY story appeared. The Kremlin could be conveniently bought off—in the Balkans, over NATO expansion, over the continuing U.S. assault on Russia’s old ally, Iraq—with IMF “loans” and World Bank “programs.” Besides, many Western big shots, like George Soros, had opportunities opened to them in Russia’s “emerging market.” The World Bank and IMF globalist bureaucrats had new opportunities for justifying their existence by aiding Russian “restructuring.” Thus, Washington overlooked Yeltsin’s occasional deviations horn Robert’s Rides of Order: The shelling of the Russian parliament in 1993 and the unleashing of the unconstitutional Chechen war in 1994-95 (which left nearly 100,000 dead in its wake, according to estimates in the Russian press) were merely the most visible manifestations of Yeltsin’s increasingly untrammeled power after the failed August 1991 coup attempt.

Meanwhile, the orchestrated appearance of the BNY story and its Mabatex twin in the American establishment’s mouthpieces should arouse suspicions. In Russia, there is a phrase to describe the true nature of the elite class, a class whose only real interest, despite alleged ideological and political differences within it, is die maintenance of its own power: the “party of power.” The Washington party of power appears to be unleashing a kompromat campaign that implicates Clinton’s would-be successor, Al Gore. The establishment clearly means to stop short of discrediting the IMF as an institution (in fact, as of this writing the IMF seems prepared to pass along the next scheduled “tranche” of hundreds of millions of dollars to Russia with nary a peep from establishment media) or globalism as an ideology (interventions across Hie globe continue with little protest within America). It may be that Gore is deemed to be toting too much Clinton-era baggage, making him an unacceptable candidate in 2000. Policy wonk Bradley or the innocuous George W. may be deemed safer bets. Besides, what better way to deflect Perotista and Buchananite attacks on the New World Order than by conducting a “thorough” investigation of the Kremlingate scandal? Then Bush and Bradley can easily posture as populists and sap the energy of any possible Middle American Revolution.