Russia's President interrupts his vacation and fires his spy chief

By ANDREW MEIER /MOSCOW

oris Yeltsin is renowned for his mercurial ways, but last week he did something truly shocking. He broke off his vacation, trading the blissful lakes and birches of Karelia for the clamor of Moscow in midsummer. A survivor of serial heart attacks who has already surpassed the average age of his male compatriots by eight years, Yeltsin does not forfeit holidays without good cause. But even he felt the urgency to fly home.

Russia is wracked by troubles. Despite a recent $22.6 billion bailout led by the International Monetary Fund the stock market is oscillating and the promise of renewed investor confidence fades with every day. A leading economist last week termed devaluation of Russia's currency "unavoidable." But the President's troubles are not just financial. It seems everyone is ganging up on Yeltsin, from Siberian miners to Chechen secessionists. Worse, the Duma, the contrarian lower house of parliament, commenced discussions on impeachment--far-fetched, perhaps, but disquieting to a President in search of trout and mushrooms in the Russian outback. August--that fateful, coup-ridden month in Russian politics--has arrived.

One of Yeltsin's first moves, taken even before leaving the forests of Karelia, was to dismiss his spy chief, Nikolai Kovalev. A man of the old KGB school, Kovalev had served two years as the seventh boss of the post-Soviet era Federal Security Service (FSB), the domestic intelligence successor to the KGB. He will not be sorely missed: his most notable initiative was a hot line to lure informants, an idea that earned him widespread ridicule. And--in a personal humiliation for Yeltsin--he had failed to free the Kremlin's envoy to Chechnya, Valentin Vlasov, who was kidnapped May 1 and remains missing.

At any other time Kovalev's fall may not have been big news. But the timing, and the man chosen to replace him, reveal the gravity of the fears engulfing the Kremlin. Yeltsin opted for loyalty over experience, plucking the new FSB head from his own administration. Vladimir Putin, a veteran intelligence operative who boasts fluent German--dating from a tour in the former East Germany--and a Soviet law degree, moves to what he calls his "native home," the brooding spy and secret police headquarters on Lubyanka Square. At 45, he is closer to the generation now ruling Russia than his predecessor. Since May, he has served as first deputy chief of the Kremlin staff, in charge of controlling the centrifugal forces tugging at Russia's 89 regions.

Most significantly, his appointment marks the arrival of an intelligence chief spawned by the St. Petersburg clan led by Anatoli Chubais, the former Deputy Prime Minister who met with Yeltsin Friday to report that the first of the IMF funds had arrived on schedule. "He's a Chekist, but one of ours," a Chubais associate says bluntly, using the once feared nickname for Russia's secret police. In 1996, it was Chubais, then Yeltsin's chief of staff, who found Putin his comfortable Kremlin job. In the final Soviet years, Putin had hitched onto the perestroika bandwagon of Anatoli Sobchak, then St. Petersburg's mayor and a darling of Western liberals. Though he spent years by Sobchak's side, Putin remained a Lieutenant Colonel in the KGB reserves. "Before Chubais turned him, Putin was a traditional KGB officer," says Konstantin Preobrazhensky, another former KGB officer. "It won't be easy for him to face the rank and file, whose sympathies lie with the communists."

Moscow's unruly press was abuzz last week with versions of the maneuvers at Lubyanka. Some wrote that Kovalev was fired for botching an assassination attempt on Chechen President Aslan Maskhadov. Others claim Yeltsin feared an August putsch like the one that befell Mikhail Gorbachev in 1991. But Yeltsin's youthful Prime Minister, Sergei Kiriyenko, offered a simpler motive. "Economic security," he said, "must become the FSB's priority." That would involve not only "combatting the intelligence activity of other states," Kiriyenko explained, but also "countering the illegal export of capital and technology" from Russia.

The trouble is that the agency--having lost its best and brightest to the banking and business elite--is woefully ill-equipped to fight financial crime. "They're Soviet dinosaurs," says Yuri Shmidt, a leading human rights lawyer, of the secret policemen dominating the agency. "Other ministries may have reformed, but not the KGB. The same people work there, in just the same way."

Yeltsin may in fact be hoping to recast his intelligence apparatus. But Moscow is thick with a fin-de-regne atmosphere. By switching spy bosses and installing one who owes his ascent to the Kremlin, Yeltsin no doubt is trying to ensure the troops will be loyal and battle-ready. "We believed the IMF's billions would calm the markets and quiet the country," a Kremlin adviser explains, "but the fires still burn." And August may get hotter yet.