Monday, September 1, 2014

Anne Applebaum on state sponsored corruption & crime in Russia // War in Europe is not a hysterical idea

Back in 2006, an energy company called Rosneft floated itself on the London Stock Exchange. Even for a Russian company, its prospectus, as I noted at the time, contained some unusual warnings. "Crime and corruption could create a difficult business climate in Russia," the document noted; some directors' interests "may cause Rosneft to engage in business practices that do not maximize shareholder value".


This was only fitting, for Rosneft was created by a blatant act of thievery. A couple of years earlier, the Russian government had forced another oil company, Yukos, into bankruptcy by demanding $30bn (£18bn) in back taxes and eventually sending its chairman, Mikhail Khodorkovsky, to a labour camp (from which he was recently released). Yukos's assets were then sold to a mystery company that gave its address as that of a vodka bar in Tver, north of Moscow. The mystery company in turn sold the property to Rosneft for a pittance, and no wonder. Rosneft's major shareholder was the Russian government. Its chief executive was President Vladimir Putin's deputy chief of staff.

As I also wrote at the time, the Rosneft sale established a principle: illegally acquired Russian assets can receive the imprimatur of the international financial establishment, as long as they are sufficiently valuable. This general principle has since been applied to many Russian assets in the United States and Europe, especially Britain. Millionaires and billionaires from the former Soviet Union dominate the London art and property markets. Some of that money represents oil profits. But some of it comes from theft.

That tacit decision to accept all Russian money at face value has come home to roost in the past week. Some of the general European reluctance to apply economic sanctions to Russia is, of course, directly related to the Russian investments, interests and clients of European companies and banks. But the laundering of Russian money into acceptability, in both Europe and the United States, has had far more important consequences in Russia itself. Most Russians don't draw a line, as we do, between economic issues and human rights. In Russia, corruption and human rights are actually one and the same issue. The Russian elite controls the media and represses dissent precisely because it wants to protect its wealth. At the same time, the elite knows that its wealth derives directly from its relationship to the state, and thus it cannot afford to give up power in a democratic election.

Western politicians who speak grandly about democracy while ignoring violations of their own anti-corruption laws back home are thus perceived in Russia as hypocrites. They also contribute to the Russian elite's feeling of impunity: Putin and his colleagues can do what they want, whether in Ukraine, Georgia or Britain, because everyone knows that, whatever the Westerners say, they are all for sale in the end. This double-speak also grates with the beleaguered Russian opposition, which no longer sees the West as particularly friendly, or even appealing: no one wants to hear about human rights from someone whose business leaders are funding an oppressive state.

But this state of affairs is not inevitable. Without sending a gunship or pressing a reset button, we could change our relationship overnight with the Russian government – and with ordinary Russians – simply by changing our attitude towards Russian money. It shouldn't require a Russian invasion of Crimea to persuade Western governments to band together and deny visas to someone whose wealth comes from corrupt practices. It shouldn't require a threatened Russian attack on eastern Ukraine for us to shut down the loopholes and tax havens we have created in the British Virgin Islands or the Swiss Alps. After all, this is money that corrupts our societies, too. The Western financial elite that has become dependent on foreign oligarchs' cash is the same elite that donates to political parties and owns television stations and newspapers at home. The ex-politicians who sit on the boards of shady companies still have friends in power.

But now there has been an attack. The Russian president has broken a series of international treaties, some of which were designed to protect Russia's rights to its naval base in Crimea. In his public statements and actions, that same president has openly revealed his disdain for the West. His state-owned television channels are publishing stories that are verifiably untrue. This is our wake-up call: Western institutions have enabled the existence of a corrupt Russian regime that is destabilising Europe. It's time to make them stop.
NB - A comment by a friend who is a Russian history scholar: 'Anne Applebaum has taken on such a cold war and Russia-bashing position, that there is little analysis in such pieces; this is unforgivable since she is a proper historian, not just a frothing ideologue. When the liberalization was taking place under Yeltsin, it was pure theft of state assets handed over to cronies who financed the political machine and helped to defeat the communist party. We see similar scandals here on coal blocks allocation, spectrum, and the Uday Vilas palace disinvestment. Putin's system is making full use of such methods, it is obviously corrupt, like our own, but getting so hot under the collar about it, being so sanctimonious, is all to address specific constituencies in the US. Not worth reading I would say. The partition of Ukraine is a more serious matter than this. It is restoring the pre-Soviet divisions, and the Europeans and Russians are doing well out of it, the Ukrainians the victims as they were in the eighteenth century when Poland was partitioned. I suppose you are aware that much of Ukraine was under the Polish crown. Frederick the Second said, "I have partaken eucharistically of Poland." Now it is the turn of the European Union. Ironically, Ukraine enjoyed political and cultural unity and stability and statehood short of sovereignty in effect only in the Soviet Union. Its "independent" phase has been painfully uncertain, and now lost. .'

War in Europe is not a hysterical idea
In the past few days, Russian troops bearing the flag of a previously unknown country, Novorossiya, have marched across the border of southeastern Ukraine. The Russian Academy of Sciences recently announced it will publish a history of Novorossiya this autumn, presumably tracing its origins back to Catherine the Great. Various maps of Novorossiya are said to be circulating in Moscow. Some include Kharkiv and Dnipropetrovsk, cities that are still hundreds of miles away from the fighting. Some place Novorossiya along the coast, so that it connects Russia to Crimea and eventually to Transnistria, the Russian-occupied province of Moldova. Even if it starts out as an unrecognized rump state — Abkhazia and South Ossetia, “states” that Russia carved out of Georgia, are the models here — Novorossiya can grow larger over time.
Russian soldiers will have to create this state — how many of them depends upon how hard Ukraine fights, and who helps them — but eventually Russia will need more than soldiers to hold this territory. Novorossiya will not be stable as long as it is inhabited by Ukrainians who want it to stay Ukrainian. There is a familiar solution to this, too. A few days ago,Alexander Dugin, an extreme nationalist whose views have helped shape those of the Russian president, issued an extraordinary statement. “Ukraine must be cleansed of idiots,” he wrote — and then called for the “genocide” of the “race of bastards.”
But Novorossiya will also be hard to sustain if it has opponents in the West. Possible solutions to that problem are also under discussion. Not long ago,Vladimir Zhirinovsky — the Russian member of parliament and court jester who sometimes says things that those in power cannot — argued on television that Russia should use nuclear weapons to bomb Poland and the Baltic countries — “dwarf states,” he called them — and show the West who really holds power in Europe: “Nothing threatens America, it’s far away. But Eastern European countries will place themselves under the threat of total annihilation,” he declared. Vladimir Putin indulges these comments: Zhirinovsky’s statements are not official policy, the Russian president says, but he always “gets the party going.”
A far more serious person, the dissident Russian analyst Andrei Piontkovsky, has recently published an article arguing, along lines that echo Zhirinovsky’s threats, that Putin really is weighing the possibility of limited nuclear strikes — perhaps against one of the Baltic capitals, perhaps a Polish city — to prove that NATO is a hollow, meaningless entity that won’t dare strike back for fear of a greater catastrophe. Indeed, in military exercises in 2009 and 2013, the Russian army openly “practiced” a nuclear attack on Warsaw.
Is all of this nothing more than the raving of lunatics? Maybe. And maybe Putin is too weak to do any of this, and maybe it’s just scare tactics, and maybe his oligarchs will stop him. But “Mein Kampf” also seemed hysterical to Western and German audiences in 1933. Stalin’s orders to “liquidate” whole classes and social groups within the Soviet Union would have seemed equally insane to us at the time, if we had been able to hear them. But Stalin kept to his word and carried out the threats, not because he was crazy but because he followed his own logic to its ultimate conclusions with such intense dedication — and because nobody stopped him. Right now, nobody is able to stop Putin, either. So is it hysterical to prepare for total war? Or is it naive not to do so?