We agree that those reforms failed, and sometimes we blame ourselves for those failures: we gave the wrong advice, we sent naive Harvard economists who should have known better, we didn’t have a Marshall Plan. Sometimes we blame the Russians: the economists didn’t follow our advice, the public was apathetic, President Yeltsin was indecisive, then drunk, then ill. Sometimes we hope that reforms will return, as many believed they might during the short reign of President Dmitry Medvedev. Karen Dawisha’s Putin’s Kleptocracy is not the first book to ask this question. Indeed, she makes extensive use of the work of others, both fellow political scientists as well as journalists working across the US and Europe. Some have found fault with this method, but the resulting work has a certain admirable relentlessness. For by tying all of these disparate investigations together so thoroughly, so pedantically, and with so many extended footnotes—and by tracking down Western copies of documents that vanished from Russia long ago—the extent of what has always been a murky story suddenly becomes more clear. Dawisha, a professor of political science at Miami University in Ohio, explains: Instead of seeing Russian politics as an inchoate democratic system being pulled down by history, accidental autocrats, popular inertia, bureaucratic incompetence, or poor Western advice, I conclude that from the beginning Putin and his circle sought to create an authoritarian regime ruled by a close-knit cabal…who used democracy for decoration rather than direction. Instead of attempting to explain the failures of the reformers and intellectuals who tried to carry out radical change, we ought instead to focus on the remarkable story of one group of unrepentant, single-minded, revanchist KGB officers who were horrified by the collapse of the Soviet Union and the prospect of their own loss of influence. In league with Russian organized crime, starting at the end of the 1980s, they successfully plotted a return to power. Assisted by the unscrupulous international offshore banking industry, they stole money that belonged to the Russian state, took it abroad for safety, reinvested it in Russia, and then, piece by piece, took over the state themselves. Once in charge, they brought back Soviet methods of political control—the only ones they knew—updated for the modern era. he has also conducted dozens of interviews with businessmen and bankers all over the world. As noted, some of what she digs up has been described elsewhere, not only in Masha Gessen’s emotive account of Putin’s rise to power, The Man Without a Face (2012), but also in Clifford Gaddy and Fiona Hill’s Mr. Putin: Operative in the Kremlin (2013) and Peter Baker and Susan Glasser’s Kremlin Rising (2005). Using this mass of evidence, Dawisha nevertheless argues that the KGB’s return to power begins not in 2000, when Putin became president, but in the late 1980s. At that time, the then leaders of the KGB, who distrusted Gorbachev, began transferring money that belonged to the Soviet Communist Party out of the Soviet Union and into offshore accounts tended by Swiss or British bankers. At least initially, these transfers took place with the Party’s knowledge. In August 1990, the Central Committee called for measures to protect the Party’s “economic interests,” including the construction of an “invisible” structure, accessible only to “a very narrow circle of people.” KGB operatives who already had experience with managing foreign bank accounts—they’d been funding foreign Communist parties for decades—were put in charge. From the very beginning, Russia’s current president had a part in this process. In the late 1980s, Putin was a KGB officer in Dresden, East Germany. There are conflicting accounts of what he was doing there. In his official and unofficial biographies, Dawisha writes, quoting Putin’s German biographerAlexander Rahr, this period is covered in a “thick fog of silence.” But there is some evidence that he may have been helping the KGB prepare for what it feared could be the imminent demise of the Soviet empire. Indeed, when he became president in 2000, German counterintelligence launched an investigation into whether or not Putin had been recruiting agents who would remain loyal to the KGB even after the collapse of communism. As Dawisha explains, “the Germans were concerned that Putin had recruited a network that lived on in united Germany.” The scale of this effort is not known, but certainly a few of his Dresden contacts have become startlingly successful in the decades since 1989. Matthias Warnig, a Stasi colleague of Putin’s, opened Dresdner Bank’s first branch in St. Petersburg in 1991, by which time Putin was living there. By 2000 he headed all of the bank’s operations in Russia. In 2003, the bank participated in the dismemberment of Yukos, the oil company owed by the jailed magnate Mikhail Khodorkovsky. Since 2006, Warnig has been managing director of the Russian–German Nord Stream pipeline project, a company that won permission to operate during the term of German Chancellor Gerhard Schröder, and that later hired ex-Chancellor Schröder to serve on its board. In 2012, among other high posts, Warnig became a member of the board of directors of Bank Rossiya, one of the Russian banks now under US sanctions. Putin and his friends had other irons in the fire. Back in this very early post-Soviet moment—when Western advisers were still streaming into the country to give lectures on the rule of law and judicial reform—Putin personally organized, or helped organize, several institutions that exist to this day. One of the best known is Bank Rossiya, which was founded in St. Petersburg in 1990, using money from the Communist Party’s Central Committee. From the beginning, according to Spanish police investigators, Bank Rossiya facilitated cooperation between Putin, other city officials, and Russian organized crime, allowing the two groups to invest together. The St. Petersburg Real Estate Holding Company (SPAG) was a third institution linked to Putin. In 1999, the German Federal Intelligence Agency (BND) completed an investigation into SPAG, and published a report that accused the organization of laundering money for Russian and Colombian criminals. Among other things, the BND said that SPAG took money that had been sent out of Russia and was parked “offshore,” and helped its owners—among them the leaders of the Tambov gang, a part of the St. Petersburg mafia—repatriate it back into the country through the purchase of property and other legitimate assets. Notably, when Schröder became chancellor of Germany, this investigation was slowed down; Putin’s name had, in any case, been kept out of it. Several other company founders were indicted by courts in Liechtenstein. Vladimir Kumarin, the former Tambov gang leader, has been in prison since 2012. Dawisha also describes the origins of the Twentieth Trust, a “construction company” also linked to Putin. According to Russia’s own Ministry of Internal Affairs, the Twentieth Trust received money from the budget of the city of St. Petersburg and subsequently transferred that money abroad. Novaya Gazeta, a Russian newspaper, discovered that the company had purchased property in Spain where it constructed villas using Russian army labor. These kinds of reports led Spanish police to become suspicious of Russian activity in Spain, and in the 1990s they began monitoring the Russian oligarch Boris Berezovsky, as well as several well-known leaders of Russian organized crime, all of whom had houses on the southern coast of Spain. In 1999, to their immense surprise, their recorders picked up an unexpected visitor: Putin. He had arrived in Spain illegally, by boat from Gibraltar, having eluded Spanish passport control. Among others, he removed the CEO and chairman of Gazprom—the old Soviet gas ministry, now a private company—and replaced them with Dmitry Medvedev, a St. Petersburg lawyer and Putin’s colleague since his days in the St. Petersburg mayor’s office, and Aleksei Miller, his former deputy at the St. Petersburg Committee for Foreign Liaison. Very quickly, Gazprom became a source of personal funds for Putin’s projects, useful, for example, when he needed a large chunk of money to bribe the president of Ukraine. Gazprom’s new leadership grew in wealth and power, and they knew exactly who they had to thank for it. This was not the first time this kind of policy had been deployed in Russia: “Change the elite” is an old Stalinist tactic too. the fate of Bill Browder—grandson of Earl Browder, leader of the American Communist Party—who set up a Russian investment fund that invested heavily in Gazprom. After he turned out to be an annoyingly activist shareholder—he kept asking why the company’s accounts were so untransparent—Browder was barred from the country in 2005. His companies in Russia were subsequently destroyed by a particularly Putinist form of corporate raiding: tax officials and police attacked their offices, reregistered them, declared them bankrupt, stole their money, and arrested and harassed their employees. Browder’s lawyer, Sergey Magnitsky, was eventually beaten to death by guards in a Russian prison. At the same time—while constantly speaking of “reform” in Western capitals—Putin was systematically destroying the nascent institutions of liberal democratic society. Whatever embryonic political movements had come to life in the 1990s were crushed in the 2000s. Refusing to tolerate any real political opposition, Putin instead sponsored phony political parties whose leaders were ultimately loyal to himself. He eviscerated independent media, especially television, which he considered to be an essential tool of social manipulation. Although he left a few very small “dissident” newspapers open, presumably in order to placate the tiny middle class, he pushed back hard when they went too far. Anna Politkovskaya, an extraordinarily brave reporter who wrote about Putin’s war in Chechnya, was one of several Russian journalists to be brutally killed in gangland-style murders. With the media out of the way, Putin also took on “civil society,” meaning any charitable, educational, or advocacy organizations over which he did not exert direct control. This included the slow suffocation of apolitical groups such as Memorial, the historic human rights organization that has produced internationally admired accounts of the crimes of Stalin, the history of the Gulag, and more generally the history of repression in Russia. Because Memorial had received foreign funding—from organizations such as the Ford Foundation—it was told that it had to be registered as a “foreign agent,” a phrase that heavily implies foreign espionage. More recently, the Russian Justice Ministry has filed a lawsuit that seeks to shut down Memorial altogether, on spurious administrative grounds place of a genuine media and a real civil society, Putin and his inner circle slowly put into place a system for manufacturing disinformation and mobilizing support on a new and spectacular scale. Once the KGB had retaken the country, in other words, it began once again to act like the KGB—only now it was better funded and more sophisticated. Today’s Russian “political technologists” make use of their state-owned media, including English-language outlets such as the TV news channel Russia Today; armies of paid social media “trolls” who post on newspaper comment pages, as well as on Twitter, Facebook, and other sites; fake “experts” whose quotes can be presented with fake authority; and real experts to whom Putin’s officials have granted special access, or have simply paid. Former Western ambassadors to Moscow, businessmen who have been recruited to Russian company boards, European politicians as high-ranking as Schröder and Silvio Berlusconi—all have been well compensated, directly or indirectly, for offering their support. Since 2000, Russia has been ruled by a revanchist, revisionist elite with origins in the old KGB. This elite had been working its way back to power since the late 1980s, using theft on a grand scale, taking advantage of the secrecy provided by Western offshore havens, and cooperating with organized crime. Once in power, the new elite sought to maintain control using the same methods that the KGB always used to maintain control: through the manipulation of public emotion, and by undermining the institutions of the West, and the ideals of the West, in any way that it can. Based on its record so far, it has every reason to expect continued success. nybooks/articles/archives/2014/dec/18/how-he-and-his-cronies-stole-russia/
Posted on: Sat, 29 Nov 2014 19:47:51 +0000
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