IMF and the Russian missiles
by J Michael Waller, Washington Times, January 23, 1998
American national security depends on Congress providing more money for the International Monetary Fund. That’s what Defense Secretary William Cohen is telling fellow Republicans on Capitol Hill, in a last-ditch administration effort to bail out troubled economies in Asia and elsewhere.
For those unmoved by economic arguments, national security concerns are often persuasive. But before accepting the Pentagon chief’s pleas, Congress should look at how the IMF has helped secure U.S. national security goals in one of the Fund’s largest recipient states: Russia.
Since 1992, the IMF has approved more than $20 billion in loans to the Russian government. Currently, the IMF is paying out a three-year, $10.2 billion loan, and IMF Managing Director Michel Camdessus recently said he’s open to sending more. These monies are transferred directly to the Russian Central Bank to be spent as the Kremlin chooses. Even though American tax dollars serve as collateral for one-fifth of the loans, the U.S. has demanded no accountability for any of it. As a result, as Mr. Camdessus acknowledged to reporters during the height of the Chechnya war, Moscow used IMF loans to fund the carnage.
No sooner did the IMF agree earlier this month to release its latest tranche of $667.5 million to Moscow than the Finance Ministry, which lobbied hard for the release, announced the money would be poured into military industry. Citing First Deputy Finance Minister Aleksei Kudrin, Russia’s Interfax news agency reported January 9 that most of the cash “will be spent mainly on settling government debt . . . for orders placed with the defense industry.”
This runs against U.S. interests for four reasons. The IMF loan props up companies owned or controlled by the state. Second, the loan subsidizes a virulently anti-Western political constituency. Third, the money fuels the very sector most responsible for weapons proliferation to rogue regimes. And fourth, the IMF loan is financing the modernization of Russia’s submarines and weapons of mass destruction.
Soldiers have been reduced to begging, fighter pilots are grounded for lack of spare aircraft parts and fuel, surface ships rust away at their berths, and the Defense Ministry is happy to accept Western aid to dismantle obsolete weapons systems already slated for the scrap heap anyway. Since the Soviet collapse, Moscow has neglected obsolete systems — and the men who operate them — as it focuses scarce financial resources on research and development in high-tech and strategic weapons. According to Richard F. Staar of the Hoover Institution, R&D funding in this area ballooned from $2.1 billion in 1994 to an estimated $12.8 billion in 1997.
With these priorities, what kind of military industry orders might the IMF — and by extension, the American taxpayer — be funding?
It might be paying for one of First Deputy Prime Minister Anatoly Chubais’s pet projects: the Yuri Dolgoruki. Chubais doesn’t mention the military when asks Washington for more money for economic reform, but the Yuri Dolgoruki is the first in a series of Russia’s fourth-generation nuclear-powered ballistic missile submarines.
In October 1996, Chubais hailed the Yuri Dolgoruki as “a submarine for the next century.” To spur the stalled project along, he announced that he had arranged for the Finance Ministry to free up funds in time for the official keel-laying ceremony at Shipyard No. 402 of the Russian State Center for Nuclear Shipbuilding in Severodvinsk. But the same day, the IMF announced it was postponing its monthly tranches of the $10.2 billion loan, citing Moscow’s inadequate economic policies. The keel-laying ceremony was hastily postponed, supposedly due to inclement weather.
Finally, on February 7, 1997, the IMF released the money. That very day, the Finance Ministry announced that it had come up with cash to pay the Russian State Center for Nuclear Shipbuilding, averting a strike. Construction of the Yuri Dolgoruki continued. Once in service, the main targets of the submarine’s nuclear missile complement will be American cities. (In the same port, the new Severodvinsk-class of attack submarines has also begun production. Its advanced features are forcing the U.S. Navy to revise its defensive strategy.)
Perhaps the IMF loan will pay to perfect the SS-NX-28, the next-generation submarine-launched ballistic missile with a range of nearly 5000 miles. The missile will be deployed aboard the Yuri Dolgoruki. The SS-NX-28 underwent its most recent trial last November at a test range near Arkhangelsk, but malfunctions require more testing, and therefore, more money.
Or the IMF cash might help the Strategic Rocket Forces speed up production of the new Topol-M2 intercontinental ballistic missile (ICBM), known in the West as the SS-27. Late last fall, senior Republican congressional staffers heard a Pentagon briefer pooh-pooh the missile as inconsequential because Russia’s strapped military didn’t have the funds to begin serial production. But on December 27, the Strategic Rocket Forces deployed the first Topol-M2s at the Tatishchevo missile base in the Saratov region, and announced that the missiles would soon be stationed in Valdai, the southern Urals, and the Altai region.
Speaking of the Urals, we are reminded of Yamantau Mountain, site of one of the largest underground construction projects in human history. A nuclear blast-proof subterranean city sprawling across an area the size of the greater Washington, D.C. area inside the beltway, the complex is described in one Russian newspaper as a new strategic missile command center. Top Russian military leaders refuse to comment on it, and the Clinton administration hasn’t pushed the issue. Construction work continues unabated. The money has to come from somewhere, and the IMF is just as good a source as any.
Troubling, too, are persistent reports that Russia maintains a clandestine binary chemical weapons program in violation of its international commitments. While concealing binary weapons production, it appeals to the West for aid to destroy obsolete chemical weapons stocks. And even President Clinton has been unable to certify to Congress that Moscow has terminated its germ warfare development and production. Might the IMF money be channeled to these sensitive programs?
We don’t know, because Washington has never wanted to embarrass Moscow by asking. And until it does, Congress should treat the defense secretary’s national security talk with a bit of skepticism before approving any more money for the IMF.