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. Last Updated: 07/27/2016

Papers See Cold War Reprised In Scandal




A revival of McCarthyism. A new Iron Curtain. The freshly erected Berlin Wall. Monica Lewinsky and Kenneth Starr.


These are the images several Moscow newspapers were evoking Thursday to explain a two-week-old money-laundering scandal - in which Russian mob bosses, with Kremlin complicity, reportedly spirited as much as $15 billion in embezzled public and corporate funds through the Bank of New York. And analysts say that this paranoia, denial and finger pointing will find a fertile audience among Russia's disillusioned population.


"The Iron Curtain," screamed a front-page headline in the daily newspaper Izvestia, over an article about U.S. Treasury Secretary Lawrence Summers' announcement Wednesday that future IMF loans to Russia are in jeopardy. The story, accompanied by a photo of the Berlin Wall with a soldier peering through a crack, claimed that Summers' announcement "could be the first step in the isolation of Russia." The Interros holding company, run by Vladimir Potanin - whose name has surfaced in connection with the scandal - has a majority stake in Izvestia.


Not to be outdone, Kommersant, recently bought by business tycoon and Kremlin insider Boris Berezovsky, ran a front-page story entitled "McCarthyism Lives. And His Cases Are Fabricated." The story claimed the Bank of New York money-laundering reports are zakaznoi, or made to order.


Kommersant attempted to call the accuracy of these reports into question by citing a comment made by Vyacheslav Soltaganov, head of Russia's tax police. Earlier this week, Soltaganov told reporters that a correspondence he received from the U.S. Embassy in Moscow requesting a joint investigation into the Bank of New York money-laundering scandal turned out to be false.


Soltaganov did not clarify how the documents may have been falsified.


And the U.S. Embassy would neither confirm nor deny the existence of such a correspondence.


"We do not comment on matters regarding negotiations between governments," an embassy spokesman said, adding that the U.S. government enjoyed "fruitful cooperation" with Russian law-enforcement bodies.


"It turns out that the first document to appear after a dozen rather revealing publications in the Western media about the Bank of New York scandal is now thought to be false," Kommersant editor Andrei Vasilyev wrote, vowing to unmask the interested parties who "ordered" the scandal.The Kommersant story came complete with a Cold War vintage photograph of Senator Joseph McCarthy testifying before Congress in the 1950s - during the so-called "Red Scare." There was also a biography of McCarthy for anybody who might be interested.


"Not so long ago, the phrase 'Soviet threat' was born into the American political lexicon. But political fashions change. Now, 'Soviet threat' has been exchanged for 'Russian mafia.'"


Vasilyev goes on to write that the new Western practice of equating Russian business with the mafia may result in foreign banks refusing to do business with Russian banks and clients "simply because they are Russian." This, Vasilyev writes, will "deprive us of the ability to transfer money to our relatives and children who reside abroad."


Perhaps these concerns of growing anti-Russian sentiment in the West are not without basis. The Wall Street Journal, for example, reported Thursday that U.S. authorities suspect Russian organized-crime groups of placing moles in major Western banks and securities firms.


Perhaps the most original - and amusing - take on the matter was provided by Vremya MN, a daily partially financed by the Central Bank. Writing that "Russia is suffering from the American presidential elections," the paper compared the Bank of New York scandal to last year's Monica Lewinsky fiasco.


"The idea that a whole scandal could be provoked by Republicans who aspire to occupy the White House would have been unrealistic prior to the scandal involving Ms. Lewinsky," Vremya MN wrote. "But [now] to use materials like bank transfers, international financial relations and 'the Russian question' against the Democrats looks respectable, and even conservative."


Starting last month, various American media reported that as much as $15 billion in Russian money has churned through the Bank of New York in what U.S. investigators believe was a major money-laundering scheme. American media have linked the investigation to many leading political allies of Yeltsin over the years, and also to organized crime. Some of those reports also alleged that as much as $200 million in IMF loans to Russia may have been included in the laundered funds.


The allegations have led to the White House calling future IMF loans to Russia in doubt. The U.S. Congress has also scheduled hearings on the matter for later this month.


"If Russia believes that this is some Western conspiracy, that is both unfortunate and dangerous," said Andrew Parmentier, a spokesman for U.S. Representative James Leach, Chairman of the House Banking Committee, which will hold the hearings. "Russian democracy is at stake and America needs a strong, democratic Russia."


"There is so much more at stake here than politics. It is the Russian people who have lost the most here. These loans were given to Russia to help its transition to a market democracy, and thieving oligarchs should not be allowed to get in the way of that," Parmentier said.


Analysts say the anti-Western conspiracy rhetoric will play well with the general public.


"Accusations that the West is attacking Russia will unfortunately have considerable resonance in our society," said Alexei Levinson of the Russian Center for Public Opinion Research, or VTsIOM. "This scandal reminds people how dependent Russia is on the West, it makes them angry about this, and it makes them afraid that Russia will lose the Western credits it needs."


Levinson added that it isn't important whether people believe the conspiracy rhetoric or not. "Russians are sufficiently cynical about their public officials and have no illusions about them being honest," he said. "What is important here is emotions, and this scandal is pushing most of Russia's emotional buttons."


Not every newspaper was spinning conspiratorial yarns about Western plots. This week's edition of Obshaya Gazyeta ran a front-page story entitled "Farewell, Oh Laundered Russia" that laid the blame for the scandal squarely on Russia's officials.


"In the West they are not searching for ***kompromat***,"


the weekly wrote, suggesting that Russia should investigate each allegation rather than get offended. "Since 1992, Russia has received with great difficulty $20 billion from the IMF. Such an amount is sufficient to establish a somewhat normal economy, but only under one condition - that this money is managed by a normal government."