Puzzle Pieces
Jude Wanniski & Criton Zoakos
January 20, 1994


MOSCOW MYSTERY: You can't tell by reading the western press, but the good news is that the "reformers" are being bounced left and right out of the Kremlin. Boris Yeltsin's two most arrogant advocates of shock therapy, Economics Minister Yegor Gaidar and Finance Minister Boris Fyodorov, are gone -- for good we hope. Yeltsin has made his peace with the Parliament and the military, which has had enough shock therapy, keeping Viktor Gerashchenko as chairman of the Central Bank of Russia. The western press uniformly characterizes Gerashchenko as opposed to market reforms, but he is simply retreating from the abyss as the new government prepares to chart a new path toward market reforms. There's nobody in Russia better able to manage the central bank than Gerashchenko in this change of direction, although he still does not realize he could avoid much of his stress by cutting the ruble price of oil, instead of printing rubles so Russians can afford to buy it. The ruble is sliding on the foreign exchange market and the bank will probably try again to steady it at 2000 to the dollar. Further, the appointment of Alexander Shokhin as Economics Minister is a hopeful sign, as he spent the last year and a half studying the Chinese reform experience from central planning to market economy. The U.S. Senate Banking Committee is holding a hearing February 8 to ask the Clinton Administration to defend its shock therapy strategy. This is as a result of Senate Minority Leader Bob Dole questioning the strategy. I've been asked to testify and plan to. (JW)

WHITEWATER ENIGMA: Attorney General Janet Reno is said to have decided on Robert B. Fiske, Jr., a New York white shoe lawyer and Establishment Republican, to be the special counsel to investigate the real estate investments of the Clintons. Is she crazy? When Fiske was nominated for a Deputy A.G. post in the Bush Administration, conservative Republicans went nuts, identifying him as a liberal Democrat in GOP pin stripes. He is a law partner of Lawrence Walsh, the maniac special prosecutor who tried to put both Reagan and Bush behind bars, spending $39 million in the process. He has represented Clark Clifford and Roger Altman in the BCCI scandal, and if the Whitewater story extends to the Jack Stephens financial empire in Little Rock, which itself was involved in BCCI, the loop will be closed. We also hear Fiske has represented the Sultan of Abu Dhabi in the BCCI mess. For Janet Reno to think that this special counsel will cool off the Whitewater story is plain madness. It only escalates suspicions that the Clintons are hiding deep dark secrets. Lawyer Fiske is a red flag waved at the bullish press corps. For sure, this means a revival of GOP demands for an open bipartisan congressional hearing, with subpoena powers. (JW)

INMAN PUZZLES: What's really behind Bobby Inman's bizarre departure? By suspicious coincidence, the two reasons Admiral Bobby Inman cited for his withdrawal as President Clinton's defense nominee, i.e., "new McCarthyism" and Senate Minority Leader Bob Dole, have to do with Whitewater. Twenty-four hours before Fiske's appointment as special counsel, Inman fired a shot across the bow of the Minority Leader, the highest elected official trying to keep the special prosecutor honest by asking for a parallel congressional investigation. In a subsequent McNeil-Lehrer interview, Inman explained that by "New McCarthyism" he has in mind, among other things, the press coverage of the Whitewater affair. Puzzle number one: Why did Inman not simply withdraw rather than build an elaborate rationale the net effect of which is to intimate dark warnings against those who demand an accounting of Whitewater? Moreover, in the attempted "dark warnings," Admiral Inman insinuated that columnist William Safire, Dole's supposed co-conspirator, has acted, at least once in the past, as an advocate of Israeli intelligence. To make this rather heavyhanded insinuation, the Admiral, a former head of the National Security Agency, disclosed "methods and procedures" of U.S. intelligence activities during the 1981-82 period that had "never been made public before," according to Reuters quoting a U.S. government official. On the face of it, this would be a violation of the National Security Act by Inman, and he would know it. In the process, he raised some nasty questions about the integrity of William Casey, President Reagan's CIA chief, Safire's close friend, and, by extension, against Casey's legacy in the intelligence community. This was a legacy of keeping friendly relations with Israel and of shunning the chillier attitude toward Israel known to prevail among the more blue-blooded, high-Anglican, old-boys-network in the intelligence community. These latter have shown a preference of coddling Arab friends and assorted BCCI business associates. In recent weeks, gossip mills at the fringes of the "intelligence community" in Washington say that "pro-Israeli" elements are pushing the Whitewater investigation. Will we next have it suggested by the Democratic power structure that the very essence of our democracy is under challenge by a foreign power? Hmmm. Puzzle number two: What are the stakes that prompted Inman to scuttle his own position in favor of running cover for Bill and Hillary? Do those who attempt to rescue the Clintons expect that they will have a grateful President in their hip pocket? The New York Times tells us today the President himself instructed his team to refrain from any criticism of Inman. The White House also knew in advance what he would say at his press conference, but did not attempt to dissuade him from making his accusations. At the very least, the answers to these puzzles involve a brewing bureaucratic war involving a great many secrets that are bound to soon break the surface. (CZ)

MARX MYSTERY: Late next week you will be receiving a lengthy essay, "Karl Marx Revisited: A Fluid Society," which I've been working on for several weeks. I've essentially invited my old friend Marx back to life, briefed him on the last hundred years, and asked him to assess the state of the world in early 1994. The longest report we've published in recent years, it may seem extraneous, ponderous, even forbidding at first glance; I spend several thousand words first introducing you to a Marx you have never known. Give it a chance. Plan on a couple of readings. I think you'll come away with a different appreciation of what's happening on our planet these days. You have our permission to copy and circulate to family and friends. It is rated "PG." (JW)