The Kremlin Conspiracy
Brian Freemantle
writing as Jonathan Evans
For Bill and Caroline,
with love
‘Countries don’t go bust.’
Walter Wriston, US Citibank, at the
September 1982 meeting of the
International Monetary Fund, in Toronto.
‘In a serious struggle there is no worse cruelty than to be magnanimous at an inopportune time.’
Leon Trotsky: The History of the
Russian Revolution
Author’s Note
It is the wisdom of the innocent to regard bankers as shrewdly calculating men who rarely – if ever – make mistakes.
In 1982 twenty countries were unable to pay their debts to Western banks and came to a postponement arrangement technically called rescheduling. By the end of that year, the Paris-based Organisation of Economic Development assessed the total of medium- and longterm debts incurred by developing countries to be $626,000,000,000. In December, in an official report, the OECD said World finance was facing ‘the most serious economic difficulty experienced since the 1930s’.
Brazil was the biggest debtor, owing $89,000,000,000. Mexico owed $80,000,000,000; Venezuela $27,000,000,000; Chile $11,000,000,000; Costa Rica $600,000,000. Argentina owed $40,000,000,000 and to prevent a world banking crisis prime minister Margaret Thatcher had to defend in the House of Commons the apparent illogicality of the participation by British banks in a loan rescue package for a country it had defeated in the Falklands war.
Most of the countries in Africa had repayment difficulties on loans: Zaire’s debt, for example, was $3,500,000,000.
In Europe, Yugoslavia owed $20,000,000,000. Turkey owed $16,000,000,000.
In the communist bloc, Poland owed $29,000,000,000 and, under the terms of guaranteed financing of grain exports, the government of President Ronald Reagan paid $71,000,000 of Polish-owed interest to US banks. Romania owed $13,000,000,000 and declared without consultation or agreement with its creditors a moratorium – a suspension of debt payments. The banks did nothing positive to protest the Bucharest decision because they would have collapsed under the size of the accumulated debts; instead the International Monetary Fund arranged further loans to pay back those already existing.
In the belief that some countries will – eventually – repay, the loans continued.
Some debts will be settled. Others never will.
Winchester 1983
Chapter 1
Poland was one of the final tests, the occasion when so much detailed planning and preparation could have been jeopardized, but everything went exactly as Lydia Kirov predicted. The satisfaction at being proved right was a brief, passing emotion; after all, she hadn’t expected to fail. Poland was further proof for the few who still doubted, not for herself. It was still difficult for her to see it as anything other than a triumphant homecoming.
The warning sign went on and obediently Lydia fastened her safety-belt, gazing down at the approaching lights of Sheremetyevo airport. They created a square pattern of unexpected brightness from the greyness of the surrounding Russian landscape. The far-away glow would be from Moscow. It seemed dull, compared to the Western capitals into which she had flown over the past few years. And to which she’d fly again, before it was all over.
Washington would be interesting. She would have liked to have been there for the International Monetary Fund meeting. The embassy had been briefed to monitor and report as much as possible, but because of the need for secrecy they hadn’t been told the reason for the demand and Lydia knew there would be gaps in the information. She wanted more than the gossip and the rumour. She wanted the conclusions. She was sure she could anticipate them, but it would still have been useful to have confirmation. Her thoughts were interrupted brusquely as the wheels snatched at the moment of landing and the engines went into reverse thrust.
They’d reach the right conclusion, she decided: what else could they do?
The desk was a mess but Tom Pike knew where to find everything he wanted among the apparent chaos, plucking the earlier analyses and graphs from the confusion, completely engrossed in his own assessment. It would have been easier had he been in London, actually sitting in on the rescheduling meetings; in New York all the information was available but he didn’t have the feel of the negotiations. His father had always been sure to have the feel of things, and Pike had dutifully studied his father’s success.
During his two years with the Federal Reserve Board Pike had come to know the habits of the chairman and realized that Richard Volger didn’t like lengthy opinions. His first draft ran to six pages and it took two rewrites to bring it down to the two pages that were required. He carefully compared the original to the final report, to ensure that he had neglected nothing of importance, and decided to re-insert the potential of Poland’s foreign earnings from its coal exports. It took his personal assistant, Loraine Becker, only half an hour to produce finished copies, so Volger had the analysis of Poland’s debt rescheduling by mid-afternoon. Pike guessed there would be others, because Volger spread his options and got as many views as possible, but he knew his would be the first. He was a man who liked working against self-imposed deadlines, constantly wanting to prove himself. The need was carefully concealed, of course; Tom Pike was a man whom many thought they knew but few actually did.
The call came on his private line, just as Pike was thinking of leaving the office.
‘Coming down for the meeting?’ asked his father.
‘I’m part of the official delegation,’ said Pike.
‘Look forward to seeing you then,’ said the older man, who had a year of his five-year managing directorship of the International Monetary Fund still to run.
‘Yes,’ said Pike. It had to be four months since they had last met.
‘What do you think of the Polish rescheduling?’
Pike looked down at his report. ‘Pretty satisfactory,’ he said generally.
‘Agreement’s too loose,’ insisted the other man. ‘The money should have been specifically assigned. Too loose by half.’
Pike had omitted that opinion from the already submitted report. ‘It was rescheduling for existing loans and interest,’ he pointed out. ‘It wasn’t for anything new.’
‘That was the problem in the first place, insufficient control,’ said the IMF director.
‘Maybe so,’ agreed Pike. ‘The problem now is getting out of trouble, not examining how it happened in the first place. It’s too late for that.’
‘Your mother would like to see you, when you come down to Washington.’
‘Of course,’ said Pike.
There was a hesitation from the other end of the line and then his father said, ‘So would I.’
Pike stared at the receiver for several minutes after replacing it, wondering as he frequently did whether he had been wise breaking away from his father’s influence. His personal assistant broke the reverie, entering from her outside office.
‘Coming by tonight?’ asked Loraine. ‘I’ve got some good stuff: guaranteed Colombian.’
Pike looked at the woman. She was slimmer than he usually preferred, boyish almost, but it was a new affair and he was still enjoying it. ‘Sure,’ he said.
‘Want company?’
‘No,’ he said. It was safer, by themselves. And he’d gone through the group scene anyway.
‘Don’t be late,’ she said.
‘I won’t be.’
‘I thought you’d be pleased,’ said Paul Burnham.
‘I am pleased.’
‘You don’t show it.’
‘Am I going to Washington as Jane Rosen, Bank of England supervisor who has earned the trip by ef
fort and merit? Or Jane Rosen, mistress of a member of the Bank’s Court?’
Burnham frowned, looking instinctively around the panelled office, even though they were alone. ‘What the hell’s the matter with you?’
Jane shrugged, not knowing herself why she was fomenting another argument. That wasn’t true. She knew danned well why she was doing it. And why it was ridiculous.
‘We’ll be a big party,’ said Burnham. ‘Nearly all the directors as well as the governor.’
‘Not going to be easy then, is it?’
‘Easy?’
‘To be together.’
‘Don’t worry about that,’ he said confidently.
Which was the trouble, thought Jane. She did worry about it, practically all the time. Why had she fallen in love with a married man! ‘What about tonight?’ she said.
He smiled apologetically. ‘Marion’s giving a cocktail party: Conservative women’s group or something. I promised I’d be there. Tomorrow’s all right.’
For him, she thought. It never occurred to him any more to ask if it were convenient for her. She could always tell him she was doing something, she realized. ‘Tomorrow then,’ she said.
Chapter 2
There was still a guide and an escort as well, because the Praesidium building of the Supreme Soviet is the most closely guarded area within the Kremlin, but after so long Lydia Kirov knew the passageways and corridors as well as any of them. She strode slightly ahead, to show she didn’t need them, and there was no attempt to correct her. There would have been once, but not now. Even here, among underlings whose robot-like function was to shepherd people from point A to point B, hearing nothing, seeing nothing and saying nothing, Lydia Kirov was known to be important, to be regarded with respect. After so long. Nine years, she realized: almost ten. A decade during which every major forecast she had made had been proven right, even allowing for their stupid policy mistakes. A decade during which she had ceased to be the shy hesitant economics graduate with a plan so revolutionary that at only twenty she had been allowed to enter this guarded, prohibited place – walking nervously behind her escort then – and become what she was today, someone with ready access to the Finance Minister, able to telephone him personally and fix a meeting within hours. It hadn’t been necessary to get Vladimir Malik to rearrange his schedule that day but Lydia liked exercising her power, just as she liked walking ahead of her escorts to prove they were unnecessary. There was another reason for seeking Malik’s company, too, but she was beginning to despair of his ever realizing it.
She slowed at the approach to Malik’s office, so they could move ahead to open the door for her, then she swept through briskly. There were hesitant smiles from the secretaries as she passed, more doors were opened. Malik had received news of her arrival and was standing in the centre of his huge room, with its view of the Saviour Tower and St Basil’s cathedral beyond. He came forward as she entered, seizing her shoulders and kissing her on both cheeks – an official greeting, Lydia thought, disappointed.
‘Welcome back, Comrade Kirov: welcome back,’ said the man.
‘It’s good to be back,’ she said. Impersonal though it had been, she had enjoyed his touch.
He led her towards an area away from the desk, arranged with leather button-back sofas and easy chairs. Tea was already arranged and there was drink, imported whisky as well as vodka.
‘I would have suggested the meeting myself but I thought you’d be tired, so soon after your return,’ said Malik. He was a precise, neat man whose grey suits mirrored his unobtrusiveness, an unusual characteristic for a Georgian. He was one of the youngest members of the Politburo and Lydia knew he was determined to avoid any problem that might prevent his attaining the ultimate office. It had been three years – a three-year test period to ensure her proposals could actually work – before she got beyond the assistants and committees to meet him personally.
Even now, their contact was rigidly official. She was aware that he was married but knew nothing about his family, despite working with him in relatively close proximity for more than two years. She wanted to know more: much more. She’d once thought it might be possible, but as time went on she wasn’t so sure.
‘I thought it best we talk at once,’ she said. It had been a month since she’d seen him.
‘Of course,’ accepted Malik immediately. He gestured towards the table.
Lydia chose tea and Malik poured for both of them. They were each as careful as the other, she thought.
‘So it went well?’ said Malik.
‘I think so.’
‘What are the terms?’
‘The immediate repayments for which Poland are responsible came out at something like $52,000,000,’ said Lydia. ‘We also agreed the overall rescheduling and an emergency loan allocation to re-finance the interest.’
‘With the Narodny participating?’
Lydia, who had taken part in the London meeting in her official capacity as a Moscow-based director of the Russian central bank, nodded. ‘And the remainder comprising the same consortia as the original debtors: Barclays and National Westminster in England, Citibank and Chase Manhattan in America, Societé Generale in France.’
‘How big is the concern in the West?’
Lydia shrugged uncertainly. ‘Sufficient,’ she estimated. Knowing the importance of apparent modesty, she added, ‘I never anticipated the over-commitment that would arise in Latin America, in my original proposal. That’s become an advantage to us.’
Malik smiled. ‘I was reading your original paper before you arrived. It’s practically an historic document: it’ll probably become one.’
Lydia smiled at the exaggeration, pleased to receive praise from Malik. ‘It was comparatively easy to predict the banks’ eagerness to offer the Eurodollars and the Petrodollars after the OPEC oil increases of the 70s,’ she said.
‘But not how to use that eagerness to our advantage,’ said Malik. ‘No one anticipated the financial brilliance of that.’
Not even you, who held back for three years and are still distant, thought Lydia. ‘There’s still a long way to go, before it’s completely successful,’ she said, modest still.
‘I’ve no doubt,’ said Malik. ‘No one has.’ He smiled again. ‘Those who matter in the Politburo have been convened for tomorrow. Do you consider we could move?’
Instead of answering directly, Lydia said, ‘Who’s to be purged?’
‘Anatoli Karelin, the man responsible for overall economic planning; he was the obvious one to go. Boris Medvedev, because it was necessary to include someone from agriculture. Arkady Chebotarev, within the ministry here. And Nikhail Paramov, of course.’
‘Well-known names,’ said Lydia.
‘They need to be.’
‘Karelin is one of the originals: a true Bolshevik.’
‘Who’d realize the necessity for the sacrifice,’ said Malik. From an apparently old gun-metal case Malik produced a Russian cigarette, loosely packed with half its length made up of a cardboard tube. ‘Do you mind?’ he said.
‘No,’ said Lydia. In theory her plan had been perfect. She hadn’t properly realized the reality of it being put into practice: of people being destroyed. It was too late for any sentimentality. She added, ‘With these sort of people we can’t fail to get the right assessments in the West.’
‘We don’t intend to fail: I’ve told you that already.’
‘How many silos?’
‘Four hundred completed, all concentrated around the major cities: Moscow, Leningrad, Kiev, Minsk, Kaunas, Gorki, Volgograd, Kazan, Sverdlovsk, Chita and Khabarovsk.’
‘The locations are not as important as the concealment,’ she pointed out.
‘All underground,’ Malik assured her.
‘What about constructional work? The Americans have satellites in geostationary as well as orbital patterns.’
‘Every installation was constructed in such a way as to conceal its true purpose from any orbital patterns. In Gorki an
d Chita, for instance, we know from intelligence reports from America that the work has been analyzed as being for railroad assembly yards: in Sverdlovsk, a chemical plant.’
‘Certainly we’re ready with the financial planning,’ she said finally.
‘So we can move?’ he said, repeating his original question.
Lydia hesitated, suddenly conscious that upon her reply depended an event practically as momentous as the revolution itself. She paused further, wondering at her own hyperbole. It wasn’t an exaggeration, she decided; what was about to begin was momentous.
She spoke at last. ‘Yes,’ she said simply. ‘We can move.’ It was the moment of positive commitment. There had been checks and balances in everything that preceded this, avenues along which they could have escaped without censure or suspicion. But not any longer.
‘It’s going to mean a lot of work for you,’ said the man.
‘It’s meant a lot of work for several years now.’
‘Which all of us are very aware of,’ said Malik. ‘There’ll be proper gratitude, believe me.’
She wanted something different from gratitude, thought Lydia. Sustaining the supposed modesty she said, ‘It’s still got to succeed.’
‘Nothing can go wrong,’ Malik insisted. He laughed suddenly, an unexpected eruption of noise in the echoing room.
‘Isn’t it going to be the most marvellous irony!’ he said. ‘We’re going to teach capitalism to capitalists!’
‘Marvellous,’ she agreed. She hadn’t known he smoked until today. There was still so much to learn.
The ordinary people weren’t included within her comparisons – which were entirely calculated against the favoured, indulged hierarchy in which she had existed for most of the past ten years – so realistically Lydia Fedorovna Kirov accepted that few Russians would consider she had made sacrifices. The hierarchy itself would have found it difficult.
Her three-bedroomed apartment – unnecessarily spacious for only one – was in Kutuzovsky Prospekt, the enclosed, guarded Moscow compound in which they themselves lived. Its furnishings had been imported not only from Finland – the traditional source for the privileged – but from Italy, America and France. There were seemingly no restrictions.
Kremlin Conspiracy Page 1
