McCain's Kremlin Ties
by Mark Ames & Ari Berman


Over the course of the presidential campaign, John McCain has repeatedly
emphasized his willingness to stand up to Russian Prime Minister
Vladimir Putin as proof that only he possesses the fortitude and
judgment to become the next leader of the free world. In his acceptance
speech at the Republican convention, McCain lashed out at Putin and the
Russian oligarchs, who, "rich with oil wealth and corrupt with
power...[are] reassembling the old Russian Empire." McCain rushed to
publicly support the Georgian republic during its recent conflict with
Russia and amplified his threat to expel Moscow from the G-8 club of
major powers. His running mate, Sarah Palin, suggested in her first
major interview that the United States might have to go to war with
Russia one day in order to protect Georgia--the kind of apocalyptic
scenario the United States avoided during the cold war.

Yet despite McCain's tough talk, behind the scenes his top advisers have
cultivated deep ties with Russia's oligarchy--indeed, they have
promoted the Kremlin's geopolitical and economic interests, as well as
some of its most unsavory business figures, through greedy cynicism and
geopolitical stupor. The most notable example is the tale of how McCain
and his campaign manager, Rick Davis, advanced what became a key victory
for the Kremlin: gaining control over the small but strategically
important country of Montenegro.

According to two former senior US diplomats who served in the Balkans,
Davis and his lobbying firm, Davis Manafort, received several million
dollars to help run Montenegro's independence referendum campaign of
2006. The terms of the agreement were never disclosed to the public, but
top Montenegrin officials told the US diplomats that Davis's work was
underwritten by powerful Russian business interests connected to the
Kremlin and operating in Montenegro. Neither Davis nor the McCain
campaign responded to repeated requests for comment. (Davis's extensive
lobbying work, especially on behalf of collapsed mortgage giants Fannie
Mae and Freddie Mac, has already attracted critical media scrutiny.)

At the time, Putin wanted to establish a Russian outpost in the
Mediterranean, and Montenegro--a coastal republic across the Adriatic
from Italy--was seen as his best hope. McCain also lobbied for
Montenegro's independence from Serbia, calling it "the greatest European
democracy project since the end of the cold war." For McCain, the
simplistic notion of "independence" from a country America had gone to
war with in the late 1990s was all that mattered. What Montenegro looked
like after independence seemed not to interest him. This suited Putin
just fine. Russia had generally sided with Serbia against the West
during the Balkan wars of the 1990s, but for the Kremlin, cutting
Montenegro free from Serbia meant dealing with a Montenegro that could
be more easily controlled. Indeed, today, after its "independence,"
Montenegro is nicknamed "Moscow by the Mediterranean." Russian oligarchs
control huge chunks of the country's industry and prized coastline--and
Russians exert a powerful influence over the country's political
culture. "Montenegro is almost a new Russian colony, as rubles flow in
to buy property and business in the tiny state," Denis MacShane, Tony
Blair's former Europe minister, wrote in Newsweek in June. The
takeover of Montenegro has been a Russian geostrategic victory--quietly
accomplished, paradoxically enough, with the help of McCain and his top
aides.

In mid-September The Nation's website published a photo of McCain
celebrating his seventieth birthday in Montenegro in August 2006 at a
yacht party hosted by convicted Italian felon Raffaello Follieri and his
movie-star girlfriend Anne Hathaway. On the same day one of the largest
mega-yachts in the world, the Queen K, was moored in the same bay of
Kotor. This was where the real party was. The owner of the Queen K was
known as "Putin's oligarch": Oleg Deripaska, controlling shareholder of
the Russian aluminum giant RusAl, currently listed as the ninth-richest
man in the world, with a rap sheet as abundant as his wealth. By
mid-2005 Deripaska had already virtually taken control of Montenegro's
economy by snapping up its aluminum plant, KAP--which accounts for up to
40 percent of the country's GDP and some 80 percent of its export
earnings--in a nontransparent privatization tender strongly criticized
by NGO watchdogs, Montenegrin politicians and journalists. The
Nation has learned that Deripaska told one of his closest associates
that he bought the plant "because Putin encouraged him to do it." The
reason: "the Kremlin wanted an area of influence in the Mediterranean."

In mid-2005 Ambassador Richard Sklar, the former lead US official in the
Balkans, ceased advising the Montenegrin government (he'd worked as a
pro bono adviser after leaving the US diplomatic service) when it became
clear the plant was being handed to Deripaska under heavy Russian
pressure. "I quit because it was a bad deal, not for any political
reasons. The Russians scared all the other buyers off. They offered far
too little money and got themselves a sweetheart deal."

Russia's virtual takeover of Montenegro was well under way by January
2006, when Rick Davis introduced Deripaska to McCain at a villa in
Davos, Switzerland. They met again seven months later, at a reception in
Montenegro celebrating McCain's birthday, as reported in the
Washington Post.

The story of how Oleg Deripaska, 40, rose from a Cossack village to
become a Putin-blessed aluminum tycoon with an estimated $40 billion
fortune does not begin with a lemonade stand and old-fashioned elbow
grease. Like most post-Soviet success stories, Deripaska's rise began
abruptly and violently, during the chaotic reign of Boris Yeltsin. Among
all the battles for control of valuable state assets in the 1990s, none
were as bloody as the "aluminum wars," in which organized-crime gangs
hired by competing interests assassinated dozens of executives,
shareholders and bankers. During a visit to the United States in 1995,
Deripaska threatened the lives of two aluminum rivals, Yuri and Mikhail
Zhivilo, according to a RICO lawsuit filed against Deripaska in New York
district court in 2000. The RICO case is just one of many lawsuits,
including one filed in Israel by a former business partner claiming that
Deripaska illegally wiretapped an Israeli cabinet minister. In addition,
German prosecutors have begun a criminal money-laundering investigation
in Stuttgart. (Deripaska did not respond to requests for comment.)

Deripaska understands that success in Russia today comes from a mixture
of brute force, political influence and personal connections. In 2001,
about a year after Putin signed a decree granting legal immunity to
Yeltsin's family, Deripaska married Yeltsin's granddaughter, thereby
cementing his own immunity and power. Throughout Putin's reign,
Deripaska has adhered to an unwritten understanding between Putin and
the oligarchs: as long as they support the Kremlin, they can operate
with impunity. Deripaska has thus taken on numerous projects dear to
Putin, such as building a new airport in Sochi for the 2014 Olympics and
buying out Tajikistan's aluminum plant to help Putin reassert control
over that key ex-Soviet republic. Deripaska openly admits that his RusAl
holdings are subservient to the Kremlin's wishes, telling the
Financial Times last year, "If the state says we need to give it
up, we'll give it up."

Yet Deripaska faced a serious obstacle to his business ambitions,
hampering his duties as a Putin surrogate. Because of numerous
accusations of involvement in death threats, extortion, racketeering and
money laundering, he had been barred from entering America since 1998.
Putin has lobbied for Deripaska's US visa. In an interview with Le
Monde earlier this year, Putin complained, "I have asked my American
colleagues why. If you have reasons for not delivering him a visa, if
you have documents on illegal activities, give us them.... They give us
nothing, explain to us nothing, and forbid him from entry."

The visa ban was costing Deripaska billions: for years he and fellow
RusAl shareholders had sought to cash in their wealth by launching an
IPO in London, which could have netted up to $10 billion for RusAl's
owners. However, finding institutional buyers would be difficult if not
impossible as long as RusAl's primary owner was barred from entering the
United States.

Despite rampant Russophobia among Republicans, Deripaska turned to
powerful GOP figures to solve his problem--especially to Republicans
connected with McCain. In 2003 Deripaska hired former presidential
candidate Bob Dole, who had nearly picked McCain as his running mate,
and Dole's lobbying partner Bruce Jackson (also a McCain aide) to lobby
the State Department to overturn the visa ban, according to Glenn
Simpson and Mary Jacoby of the Wall Street Journal. Over the next few years
Dole's firm, Alston & Bird, was paid more than $500,000 to push for
Deripaska's visa.

Deripaska also reached out to a Washington-based intelligence firm,
Diligence, chaired by GOP foreign policy hand Richard Burt, McCain's top
foreign policy adviser in 2000 and an adviser in '08 (Burt left
Diligence in 2007 to join Henry Kissinger's consulting firm).
Deripaska's business partner in London, Nathaniel Rothschild, an heir to
the English Rothschild fortune, bought a stake in Diligence, according
to the New York Times and confirmed by a Rothschild spokesman.
The firm offered Deripaska many useful services: corporate intelligence
gathering, visa lobbying through considerable GOP connections and,
crucially, help in obtaining a $150 million World Bank/European Bank for
Reconstruction and Development loan for a Deripaska subsidiary, the Komi
Aluminum Project. Getting the loan was useful in providing a layer of
comfort to Western investors skittish about RusAl. So Diligence, now
partly owned by Rothschild, provided a "due diligence" report to the
World Bank, which the Bank then used to approve its loan to Deripaska.

Not surprisingly, the lobbying worked: in December 2005 Deripaska was
issued a multientry US visa, according to the State Department. During
his brief stay he signed his World Bank loan, spoke at a Carnegie
Endowment meeting and attended a dinner for Harvard University's Belfer
Center, where, thanks to a generous donation, he became a member of its
international council.

However, Deripaska's trip did not end well. Under the visa's terms, he
was forced to endure lengthy FBI questioning. According to the
mining-industry newsletter Mineweb, the list of his enemies had
grown from jilted former business partners to the heads of powerful US
metals companies and government officials unhappy with RusAl's control
of key Third World bauxite mines, which threatened beleaguered US
aluminum giants. The interview went badly--according to people who know
him, Deripaska had little patience for prying bureaucrats. When he left
the country, the visa ban was reinstated. Once again Deripaska turned to
powerful Republicans--this time, to McCain and campaign manager Davis,
who arranged the January 2006 Davos introduction. The McCain campaign
later claimed that "any contact between Mr. Deripaska and the senator
was social and incidental," but afterward Deripaska thanked Davis for
arranging "such an intimate setting." The Washington Post
reported that Davis was "seeking to do business with the billionaire."
Indeed, Deripaska's subsequent thank-you letter mentioned his possible
investment in a metals company Davis represented through a hedge-fund
client.

If you're wondering how Deripaska came to know Davis & Co., the
answer lies in Russia's next-door neighbor Ukraine.

In December 2004 Ukrainians poured into the streets of Kiev and other
cities in the peaceful "Orange Revolution," which overthrew a
Putin-backed corrupt leader, Viktor Yanukovich, who had tried to steal
the country's presidential election that year (during which the
pro-Western opposition candidate, Viktor Yushchenko, was poisoned and
almost died). It was a serious blow to Russia's geopolitical standing.

Putin's Ukrainian proxies were also in trouble. Shortly after the Orange
Revolution, a murder investigation was launched against the country's
richest oligarch, Rinat Akhmetov, Yanukovich's main backer. Akhmetov
fled the country. In exile in Monaco, he turned to Davis's business
partner, Paul Manafort--the second name in the lobbying firm Davis
Manafort. An old GOP hand, Manafort, like Davis, had played a key role
in Dole's failed 1996 presidential run and had worked for dictators like
Ferdinand Marcos of the Philippines and Mobutu Sese Seko of Zaire.
Akhmetov initially hired Manafort to improve the image of his
beleaguered conglomerate, SCM, but soon Manafort's role shifted to
helping Yanukovich.

Manafort assembled a skilled team of political operatives in Ukraine and
set about raising the popularity of Yanukovich's pro-Russian Party of
Regions, which Akhmetov financed. It was a very lucrative deal for Davis
Manafort--and successful (according to Ukrainian investigative
journalist Mustafa Nayem, Akhmetov paid Manafort upward of $3 million).
Yanukovich's disgraced party won a resounding victory in the March 2006
elections--and Akhmetov returned as the top Ukrainian oligarch. Thanks
in part to the work of Davis Manafort, the Orange Revolution was
essentially undone, putting Putin back in the chess match over Ukraine's
future.

Publicly McCain and his campaign chief's lobbying firm were on opposite
sides. In 2005 McCain had nominated Orange Revolution hero Yushchenko
for the Nobel Prize, and that spring he'd honored Yushchenko in the
headquarters of the International Republican Institute, whose board
McCain has chaired since 1993. But behind the scenes the former head of
IRI's Moscow office, Philip Griffin, was recruited by Manafort to work
on Yanukovich's campaign against Yushchenko. Davis Manafort's work was
considered so detrimental to US interests that a National Security
Council official called McCain's office to complain, according to the
New York Times. The McCain campaign denies receiving the NSC
complaint.

But the firm's work was only just beginning. The same month Davis
Manafort helped deliver this victory to Putin's proxies, it started work
on another key Kremlin success story: an independent and
Russia-dominated Montenegro.

First, a little history. Montenegro was the smallest of the former
Yugoslavia's six republics. When Slobodan Milosevic was overthrown in
October 2000, Montenegro's longtime strongman, Milo Djukanovic, figured
the West would reward him by supporting his push for independence. But
the European Union and the United States opposed Montenegro's secession,
which they feared would undermine the new, pro-Western leaders in Serbia
and bring more war. So under heavy pressure from the EU, an agreement
was struck in 2002 putting off an independence referendum for at least
three years.

Djukanovic then looked beyond the West for support. That same year his
closest ally and mentor, Milan Rocen, was dispatched to Moscow as
ambassador of the Serbia-Montenegro confederation. Rocen nurtured ties
to Putin's Russia, and by 2005 the biggest Montenegrin industrial asset,
the KAP aluminum plant, was snatched up by Deripaska at Putin's request.
After that, Russia surprised everyone by dropping its objections to
Montenegrin independence, which Russia's historic ally Serbia vigorously
opposed. "There seemed to be a belief that Deripaska and the Russians
wanted to gain control of the aluminum plant as part of a Russian move
for greater influence throughout Montenegro," says former ambassador
Sklar.

Meanwhile, Rick Davis was also eager for a piece of Montenegro's
independence, lobbying hard for Davis Manafort to run the referendum
campaign. Bob Dole, who has been paid $1.38 million by the Montenegrin
government since 2001 to lobby for it in Washington, urged his
Montenegrin friends to hire Davis. Whether it was because of Dole or, as
some speculate, the Russians, Davis got his deal.

Though Davis has claimed no connection to his partner Manafort's
controversial activities in Ukraine, he nevertheless hired at least
three specialists recommended by Manafort, from the same team Manafort
used for Yanukovich's victory, to work on Montenegro's independence
referendum. They included Russian political operative Andrei Ryabchuk,
an elections specialist who had previously worked on pro-Putin campaigns
in Russia. Ryabchuk told The Nation that he was "recruited by
Manafort's people" out of Moscow to the Ukraine operation and then on to
Montenegro.

Davis's team was vetted by Montenegro's Russian ambassador Rocen, who
was returning from Moscow to oversee the independence campaign. Why was
Davis hired? The top McCain aide was as much a political symbol as a
campaign consultant. "I think the Montenegrins hired Rick to have
political cover--it was important to show they had support from the
United States," said an American democracy expert who's worked in
Montenegro. Though disclosure is required by Montenegrin law, Davis
Manafort's contract with the ruling Montenegrin party was never publicly
released. In addition, Djukanovic's party never listed payments to Davis
Manafort on its election filings, lending credence to private claims by
top Montenegrin officials that Russian business interests paid for
Davis's work through hired third parties, an oft-used though illegal
tactic in Eastern Europe to disguise money trails.

At key points in the campaign, Davis reached out to Deripaska's allies
for help. With the referendum too close to call, the Serbs tried to sway
public opinion by threatening to revoke scholarships and other education
privileges of Montenegrin students if the country should secede. This
caused a panic--so to counter the Serbs, Davis turned to Deripaska
emissary Nathaniel Rothschild (Rothschild has reportedly become the
richest of all the Rothschilds, thanks to his privileged role as a
Deripaska adviser).

Three weeks before the independence referendum, Davis asked Rothschild
to come to Montenegro. After arriving in his private Gulfstream jet,
Rothschild was trotted out before the cameras with the Montenegrin prime
minister, where he pledged $1 million to support students who might be
hurt by Serbia's scholarship threat. Another Deripaska ally brought in
to secure the student vote was Canadian billionaire Peter Munk, CEO of
Barrick Gold, the world's largest gold-mining corporation (it was Munk
who had hosted the Davos meeting between McCain and Deripaska a few
months earlier). Munk, who serves on the advisory board of RusAl,
delivered pledges of support from Canadian universities.

At the same time Deripaska's allies were employed by Davis, Dole was
lobbying McCain to promote Montenegro's independence. Dole's aides held
a teleconference with McCain's Senate office when Montenegro's foreign
minister visited Washington; shortly thereafter, the referendum passed
by a razor-thin 0.5 percent. In April 2006 McCain announced that
Montenegro's independence was the "greatest European democracy project
since the end of the cold war." Despite opposition cries of vote
rigging, the United States and other major powers accepted the
results--and Putin's Russia recognized newly independent Montenegro
before the EU did.

A few months after the vote, McCain and a contingent of GOP senators
visited Montenegro. The day before they arrived, Djukanovic had flown to
Putin's dacha on the Black Sea. "Your government made it possible for
large-scale Russian investments," Putin told the Montenegrin leader.
Djukanovic then returned to Montenegro and warmly received McCain, who
also met with the Montenegrin president, speaker of Parliament and
opposition leader Predrag Bulatovic. Bulatovic told McCain about how
Russian capital was taking over the country and of his concern that
"this investment can have a negative impact on the democratic process."
McCain listened but kept criticism of Russia to himself. Meanwhile,
Davis was still in the country, helping Djukanovic's Russia-allied party
win the upcoming parliamentary elections. (At the time, Djukanovic was
under investigation by Italian prosecutors for cigarette smuggling and
"Mafia-type activities.")

Soon after the referendum, the powerful figures behind Montenegro's
independence were carving up the country. That summer Rothschild started
discussions with top Montenegrin officials about gaining control of the
valuable shoreline, including the half-billion-dollar Porto Montenegro
project, which aims to become the world's top mega-yacht marina,
complete with luxury hotels, shopping and the country's first
eighteen-hole golf course. The property was handed to the
Munk-Rothschild-fronted offshore consortium for a pittance, according to
MANS, the local NGO partner of Transparency International, in yet
another backroom deal. Eventually, Deripaska's role in Porto Montenegro,
which was initially secret, was formally acknowledged, although the full
list of owners is still a mystery. Deripaska is also developing an 8
billion-euro resort in southern Montenegro and seeking control of a coal
mine and a thermal power plant.

Roughly two years later, in March of this year, Rothschild hosted a
high-dollar fundraiser for McCain at London's posh eighteenth-century
Spencer House, which Rothschild donated for the occasion. Given the
close relationship between Rothschild and Deripaska, some speculated
that Deripaska was the hidden hand behind the event. The conservative
watchdog group Judicial Watch filed a complaint with the Federal
Election Commission, alleging that the fundraiser amounted to an illegal
contribution by foreign nationals to McCain's campaign.

Aside from a little campaign dough, what has McCain gotten out of all
this? It's hard to tell--either he was utterly clueless while his top
advisers and political allies ran around the former Soviet domain
promoting the Kremlin's interests for cash, or he was aware of it and
didn't care. McCain was reportedly so angry about Davis Manafort's role
in stifling Ukraine's Orange Revolution that he almost removed Davis as
campaign manager. But in the case of Montenegro, he should have known
what Davis & Co. were up to. After all, McCain lent a helping hand.
And by the time he visited the country, the Russian takeover was plain
to see.

The story of how McCain's closest aides and employees have been
undermining his vociferously expressed opposition to Putin and Russia's
oligarchs offers a highly disturbing preview of what a McCain
administration might look like. When McCain's campaign proclaims
"country first," one has to wonder, Which country? The one with the
highest bidder?



This article can be found on the web at:

http://www.thenation.com/doc/20081020/ames_berman

Further proof that McCain truly IS the Manchurian Candidate.

sounds like mcCain is already in the know and in the loop, huh?

so much for barack being anointed by the powers that be.

oh well....