Abstract
After General Dudayev came to power in Chechnya in 1991 – with the help and complicity of President Yeltsin's administration – intimate co‐operation existed between high‐ranking corrupted officials in Moscow and Grozny. This co‐operation was based on jointly‐conducted robbery operations which resulted in the embezzlement of billions of US dollars from the State Treasury of the Russian Federation. When Dudayev became a burden for his robber partners in Moscow in their big geopolitical game over the export of Azeri and Kazakh oil through Russia, the more manageable and less avid leaders of the Chechan opposition were preferred to replace Dudayev. Furthermore, the transformation of Chechnya into a control‐free ‘turmoil zone’ guaranteed fine incomes for the corrupted members of Chernomyrdin's government. The Chechen conflict permitted the ‘magic disappearance’ of a very substantial part of the Russian budget in 1995 and 1996. These misuses of public funds should be estimated not only in terms of Millions of dollars, but also in terms of increasing top level corruption and organized crime that undermined the national interests and affected the decision‐making of the Russian state authorities. To understand why the Kremlin opted for the military intervention in Chechnya, one should realize that in Yeltsin's Russia public capabilities were subordinated to the benefits of corrupted individuals and private businesses.