MOSCOW ON THE DEFENSIVE IN MONEYLAUNDERING INVESTIGATION.

Summers’ demarche was the first indication that the Bank of New York scandal could have serious negative consequences for Russia, which at the end of this month is supposed to receive a second US$640 million tranche from a US$4 billion loan to pay off previous debts to the Fund. While the money is in essence nothing more than a rollover, a decision by Washington to postpone or cancel that transfer could serve as a red light to others among Russia’s creditors, including the World Bank and Japan. Given the stakes, it is perhaps no surprise that yesterday, for the first time, a top Russian official lashed out at the Western media highlight on the Bank of New York moneylaundering investigation. Foreign Minister Igor Ivanov called the recent spate of articles about the scandal “an attempt to manipulate unconfirmed facts to cast a cloud on our nation,” adding that “certain circles who do not want our country to take on its proper role in the world as a great power” were behind the attempt (Russian agencies, September 1).

Other top Russian officials and politicians weighed in on the controversy yesterday, and, collectively, their reaction might be characterized as a peculiar mix of “it’s all lies” and “we’re looking into it.” Aleksandr Livshits, Russia’s emissary to the IMF, said that he did not understand Summers’ call for an audit. Apparently referring to the FIMACO audit, he said: “I don’t understand what he wants to audit after an audit was carried out by a solid auditing firm. I don’t understand what is meant by an adequate audit.” Finance Minister Oleg Vyugin called Summers’ comment the result of “political pressure” (presumably from the Republicans).

Even Gennady Seleznev, speaker of the State Duma and a member of the opposition communists, joined with the hated Yeltsinites in circling the wagons. While saying the moneylaundering charges should be investigated, Seleznev charged that the international press had “declared war on Russia” in order to “discredit our country, to portray it as a country of thieves, of dishonest people.” In a similar vein, former Deputy Central Bank Chairman Sergei Aleksashenko said the articles in the Western press have been based totally on rumors, suggesting that it is part of an “absolutely coordinated campaign.” He added, however, that he was “surprised” by the Russian authorities’ silence in the face of the charges, and called on them to come up with “clear statements on the matter” up to and including filing lawsuits against the accusers. Likewise, Vladimir Ryzhkov, who heads the Russia is Our Home faction in the Duma, warned that the authorities’ silence could create the impression that Russia is “simply ignoring” the Western press reports. Ryzhkov called on President Boris Yeltsin and Prime Minister Vladimir Putin to announce that they will take all possible measures to investigate the charges and take a hard line against corruption.

Putin himself said that Russian law enforcement was tracking the moneylaundering allegations and that the Interior Ministry and Federal Security Service were in “constant contact” and exchanging information with their American counterparts (Russian agencies, September 1).

TENSIONS CONTINUE IN KOSOVO; MOSCOW ACCUSES U.S. TROOPS.