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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: Rob Shilling who wrote (528)8/26/1998 1:39:00 AM
From: CIMA   of 1301
 
Global Intelligence Update
August 26, 1998

Is Yeltsin "Wagging the Dog?"

As Russia's economy crumbles, options for salvaging the situation dwindle,
and calls for his ouster intensify, Russian President Boris Yeltsin may be
brewing a "Wag the Dog" scenario, in a last ditch effort to save himself.
Recent incidents in the Russian republic of Dagestan, which borders on
Chechnya, have the Kremlin drumming up a war on Wahhabism in the region.
The Wahhabi are a sect of Sunni Islam originating in Saudi Arabia, who have
come to be equated with the threat of fundamentalist Islamic militance
throughout the former Soviet Union.

On Friday August 21, the mufti of Dagestan, Said Mukhamed-Khadzhi
Abubakarov, was killed when a bomb destroyed his car near the Jama Mosque
in the Dagestani capital of Makhachkala. The bombing occurred at about
1300 Moscow time. By 1700, "Russia TV" was attributing the bombing to
Wahhabi activists in the region, whom Abubakarov had spoken out against at
a session of the State Council on August 19. The report stated "Wahhabism
is now gaining ground, gathering more and more young people under its
banners." At 1937, the Russian news agency "ITAR-TASS" reported that
Russian Interior Minister Colonel General Sergei Stepashin had taken
personal control of the investigation of the mufti's murder.

Stepashin sent a message of condolences to the Dagestani government on the
21st, in which he emphasized that Russian law enforcement bodies would
"take all measures to find and punish those who assassinated Dagestan's
mufti and to prevent the destabilization of the situation in the North
Caucasus." In the message, Stepashin claimed that "there are forces today
which, in their agony, are prepared to use any means to unleash another
fratricidal war in the North Caucasus."

A "shocked" President Yeltsin also sent a particularly overwrought message
of condolence to the Dagestani leadership on the 21st, in which he
described the mufti's murder as "a monstrous crime, which cannot be
justified." Wrote Yeltsin, "This is another attempt to destabilize the
sociopolitical situation in the republic and the whole of the North
Caucasus. The aim of that impudent action is obvious -- to seed discord
between the believers and put Dagestan on the brink of civil war."

The Russian Federal Security Service chimed in on Saturday, August 22,
telling Russian "NTV" television that "We have no doubts that this is a
deed performed by extremists from among the religious activists in the
North Caucasus." The head of FSS public relations said "I would like to
remind you that we have an FSS department that is functioning and actively
working in Dagestan." He promised that exhaustive inquiries would be
carried out and that "This case will not be closed without a result."

The Dagestani government mimicked Moscow's analysis of the bombing in a
statement released the evening of the 21st. The statement claimed that
"The terrorist act is backed up by political forces both inside and outside
Dagestan, that want to destabilize the situation in Dagestan and the whole
of the North Caucasus at any cost."

Abubakarov's assassination wasn't the only reported Wahhabi activity on
August 21. Moscow reported that three villages in the Buinaksk district
declared their intention to adopt Islamic Shariah law, secede from
Dagestan, and join Chechnya. The villagers reportedly flew a green flag,
set up roadblocks on a key road, and fired on a police checkpoint. On
August 16 Russian news services had widely reported that the three
allegedly Wahhabi-dominated villages had declared their independence. The
change in Moscow's reporting of the breakaway villages is part of an
clear effort by the Kremlin to portray Dagestan's troubles as a regional
crisis.

Actions attributed by Russian and Dagestani authorities to the Wahhabi have
continued. On Saturday, August 22, the Dagestani Interior Ministry claimed
that it had found and disarmed a bomb, fashioned from an artillery shell,
by the side of a road near the town of Buinaksk. The Interior Ministry
said that the assumed target of the bomb, a military unit near the town,
did not have shells of that type, and that the shells could be found in the
arsenals of the military unit in Budennovsk, in Stavropol Territory.

On Sunday, August 23, according to the local administration, unidentified
masked gunmen stormed a police station in the Gergebilskii District of
Dagestan, tied up the policemen on duty, and made off with a large number
of assault rifles, pistols, and documents. Also on the 23rd, a bomb
destroyed the home of a businessman in Makhachkala, injuring four.

All of the incidents in Dagestan were heavily reported on in the Moscow
media, which always emphasized the regional connections or implications.
Russia's efforts to inflate and regionalize the situation in Dagestan were
made ominously clear in the August 25 issue of the "Moscow Times." The
newspaper quoted the spokesman for Dagestan's chief executive, Magomedali
Magomedov as saying "Formation of organized bandit groups is underway, and
they are attempting to arm themselves yet further." The newspaper pointed
out that the phrase "formation of organized bandit groups" was used by
Yeltsin and other Kremlin officials to describe the Chechen leadership in
1994, immediately after sending tanks into Chechnya to put down its
rebellion.

The sudden escalation of the situation in Dagestan is no knee-jerk response
to Russia's current economic crisis. Russia, with the help of other
Commonwealth of Independent States members, has been building a case
against the "Wahhabi threat" for most of this year. However, Russia's
economic crisis was no surprise either, being in development at least as
long as the "Wahhabi threat." While there was a long buildup to both
crises, the speed and enthusiasm with which the Yeltsin administration very
publicly pounced on Abubakarov's assassination suggests that, if Moscow did
not have a hand in fabricating this particular crisis, at very least they
were well prepared to exploit the situation when it emerged. The official
responses from Russia and Dagestan were almost read from the same script.

Over the past month, Moscow has tried without success to instigate a crisis
in the Caucasus. Full Army-sized military maneuvers along the Chechen
border from July 27 to 31, and clashes on the Chechen border on August 7,
both failed to elicit a suitably belligerent response from Chechnya. The
Dagestan crisis may prove more effective in "justifying" a Russian military
intervention in the Caucasus.

Chechen field commander Shamil Basayev played into Moscow's hands on August
20, when he met with representatives of Dagestan's breakaway villages and
warned the Dagestani authorities that he would send troops into Dagestani
territory if force was used against the Wahhabi. In announcing Basayev's
warning, Chechen Foreign Minister Movladi Udugov denied that the Wahhabi
were a threat to Dagestan. He said that Chechnya hoped to help resolve the
situation peacefully, and that "Any attempt to use force will inevitably
lead to escalation of tension in this republic and destabilization of the
situation in the North Caucasus." Udugov insisted "A strange game is being
played around Dagestan, a game on the brink of war, a game which may lead
to serious slaughter."

The Chechens are well aware of what Moscow hopes will happen. They saw the
tanks warming up less than a month ago. By applying pressure in Dagestan,
Russia has opened rifts within the Chechen leadership, between the warriors
and the pacifiers. Still trying to disassociate Chechnya from the
Dagestani incidents, Chechen First Vice Premier Turpal Atgeriev on August
23 ordered Chechen law enforcement agencies to assist in the investigation
of Abubakarov's assassination. On August 22, Chechen Vice President Vakha
Arsanov offered an alternative explanation of the mufti's murder, claiming
Abubakarov was killed by the U.S. and Israeli special services "which want
the Caucasus to secede from Russia." However, he then stated that Chechnya
was establishing diplomatic relations with the Taleban, repeating an
announcement made by Udugov the previous day.

Yeltsin is facing an economic and political disaster in Moscow. He shows
every sign of hoping that the Chechens will answer Russian provocations,
personify the "Wahhabi threat," and offer him a distraction from Russia's
meltdown. Considering the serious rifts within the Chechen government,
they just might oblige him. The question is, will the Russian public see
the Caucasus distraction for what it is?

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