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So get ready for a spell of demagoguery. The question is both wrong and arrogant--Russia was never ours to lose--and the real issue is what to do now. But it's already a pundit's dream topic, since it's more fun to lay blame than confront facts and complexity. The "Who lost" phrase is custom cut for G.O.P. presidential contenders to score points against Democratic candidate Al Gore, tagging him as the front man in the Clinton Administration's "failed policy." Capitol Hill is aboil with hearings, beginning this week, aimed at flogging the Administration for everything that's gone wrong in Russia. And the Clinton folks are fighting back with high-spin verbiage, casting the debate as a stark choice between helping Russia and abandoning it, and shifting the focus to another emotional campaign sound bite: "We're safer now, aren't we?"
THE SCANDALS
A number of cases with obscure names like Benex and Mabetex are under investigation in Russia, Switzerland and the U.S. They're not connected, but taken together they seem to illustrate the remarkable variety of ways in which Russia was looted. Most so far involve sparse, unproved allegations, and it will take years before anyone knows whether any laws were broken and by whom. All the individuals whose names have surfaced deny any wrongdoing.
The scandal that set off Washington's alarms was the one that touched home at the Bank of New York. Federal agents were tipped off in August 1998 that unusually large amounts of money were zooming through the bank from Russian sources. Over the next 11 months, with the bank's cooperation, the Feds watched while at least $4.2 billion passed through several accounts, notably belonging to a mysterious British company called Benex Worldwide, then out to a confusing array of other banks and companies.
The Feds suspect that Benex served as a conduit for capital fleeing Russia, either legitimate or criminal profits, and want to know whether U.S. banks facilitated foreign theft. When the Republic National Bank sent an investigator out to an address in Queens that some of the Benex funds had been wired to, it found nothing there at all. "We have a company that exists only to collect dollars from Russia for transmission elsewhere," says an investigator. "Who the hell knows who's on the other end of the line?"
This was a question that was asked--or perhaps not asked--by hundreds of bankers dealing with Russia in the past decade. Money gushed out of the country for accounts unknown. But it is hard for investigators--to say nothing of politicians--to make a distinction between who was actively helping the Russians rob their economy and who was simply practicing don't-ask banking.