Stratfor.com's Global Intelligence Update - 12 July 2000 __________________________________________ It's not news; it's intelligence. Philippine Victory over Rebels: Temporary Peace http://www.stratfor.com/asia/commentary/0007112101.htm Turkey Hints at Increased Water Flow to Iraq and Syria http://www.stratfor.com/MEAF/commentary/0007120008.htm _________________________________________ Mafiya Murder and The Russian Power Struggle Summary The director of Russia's "factory of factories" is shot outside his apartment by two hooded gunmen. The local press claims the attackers to be members of the region's most powerful mafiya. As Sverdlovsk Regional Governor Eduard Rossel steps in to lead the investigation, the Interior Ministry announces that it will take control. President Vladimir Putin is now presented with an opportunity to achieve his ultimate goal of Russian economic and political power. Putin needs to quash corruption as well as reassert his control over the regional governors. Analysis The director of the Uralmashzavod machine works, Gen. Oleg Belonenko was shot outside of his company apartment July 10 by two hooded gunmen according to ITAR-Tass and Agence France Presse reports. Local press claimed the attackers to be members of the Uralmash Mafiya group, which has previously attempted to gain control of Uralmashzavod and extract profits from the company. Sverdlovsk Regional Governor Eduard Rossel initially announced that he would lead the investigation, but the Russian Interior Ministry later announced it would take control. President Vladimir Putin plans to exploit Rossel's connections to the Uralmash mafiya, using his corruption as justification for tightening control over the regional governors. Belonenko's murder occurred in the Sverdlovsk region of Russia, in the city of Yekaterinburg, which is widely regarded by organized crime experts as the mafiya capital of Russia. Belonenko, a rising star in the Russian economy, had increased productivity at Uralmashzavod by 58 percent and sales by 90 percent. He succeeded in negotiating a full order schedule since his installment in December 1999. Belonenko was also named one of Russia's top business managers and was scheduled to meet with Putin July 13 at a Russian arms exhibition. Under Belonenko's supervision, Uralmashzavod continued to play a critical role within the Russian economy, producing 90 percent of the mining equipment, 50 percent of the nuclear power equipment and 70 percent of the drilling equipment used in Russia. The factory's operations, which also include the production of strategic alloy and military hardware, are the cornerstone of Russian economic production and vital to Russian heavy industry. ________________________________________________________________ Would you like to see full text? http://www.stratfor.com/SERVICES/giu2000/071200.ASP ___________________________________________________________________ Belonenko had succeeded in rooting out mafiya influence already established under his predecessor Viktor Korovin. As recently as July 5, Belonenko won a court order to force the Uralmash mafiya to change its name, which he claimed negatively impacted the company. Being the largest mafiya group in the region, Uralmash are almost institutional figures, having run for parliamentary seats and started an anti-drug campaign within Yekaterinburg. Under Korovin, the Uralmash mafiya set up one hundred front companies to sell products produced at the plant. Thus, while Belonenko increased production, the profits were taken by the mafiya, who controlled the distribution channels. Immediately following the killing, Sverdlovsk Regional Governor Eduard Rossel announced to local media that he would personally handle the investigation. Rossel, who has previously denied the existence of the Uralmash mafiya, has entered into construction and investment deals with Uralmash mafiya front companies. He and his former chief of the regional internal affairs Valeriy Krayev have attended birthday parties of Uralmash mafiya members. In addition, the group supported Rossel in his gubernatorial campaign in December 1999. Upon hearing of Rossel's statement, Russian Interior Minister Vladimir Rushailo immediately placed the investigation under control of his office and dispatched Interior Ministry investigators to Yekaterinburg. Putin's personal representative to Yekaterinburg canceled a regional trip and was recalled to Moscow on July 11. _______________________________________________________________ For more on Russia, see: http://www.stratfor.com/CIS/countries/Russia/default.htm __________________________________________________________________ Vladimir Putin is now presented with a perfect test case to show his resolve, after taking a strong stance against corruption and organized crime in his State of the Union address to the Federal Assembly July 8. In order to achieve his ultimate goal of Russian economic and political power, Putin needs to quash corruption as well as reassert his control over the regional governors. Eduard Rossel is the poster child for Putin's cause: a corrupt governor in a powerful region with obvious criminal connections. Additionally, Rossel has publicly criticized Putin on a variety of issues and has been talking to Putin foe Boris Berezovsky about forming a new political party. Rossel's blatant corruption provides a precedent-setting case with ample justification for Putin to act. Putin may now be able to counter his recent setback in the Federation Council, where he was denied the right to dismiss governors who violate federal laws. The deaths of rising stars in the Russian economy, such as the March 1995 murder of media executive Vladislav Listyev, are handicapping Putin's efforts for economic recovery. Because of that, Putin will concentrate all his efforts on taking out Rossel. By placing the Interior Ministry on the case, Putin can control the investigation directly and avoid a potential cover-up by Rossel. The governor's connections to the mafiya - and especially his support for Berezovsky - make him an easy target for Putin. A governor like Rossel is a liability while Putin attempts to consolidate power in Moscow. In order to gain back power from gubernatorial control, Putin must act directly in order to show his enemies that he is serious about cracking down on corruption and asserting control over the regional administrations. _______________________________________________________________ For more on Russia & the CIS, see: http://www.stratfor.com/CIS/default.htm __________________________________________________________________ (c) 2000 Stratfor, Inc. _______________________________________________ SUBSCRIBE to the free, daily Global Intelligence Update. Click on http://www.stratfor.com/services/giu/subscribe.asp UNSUBSCRIBE by clicking on http://www.stratfor.com/services/giu/subscribe.asp _______________________________________________ Stratfor.com 504 Lavaca, Suite 1100 Austin, TX 78701 Phone: 512-583-5000 Fax: 512-583-5025 Internet: http://www.stratfor.com/ Email: [EMAIL PROTECTED]
