Time to give Putin a new salvo of Panama Papers
The best leverage we have on Russia’s president and his fellow kleptocrats is the weapon of mass transparency.
Without firing a shot, or changing Nato’s borders, we could weaken Vladimir Putin by exposing the scale of his ill-gotten gains to the Russian people.
Edward Luce APRIL 23 2021
Here we go again. Vladimir Putin amassed 100,000 or so Russian troops on Ukraine’s borders before ordering their withdrawal on Thursday and threatened “asymmetric” revenge against the west for crossing undefined red lines. We have little idea how to stop the situation from deteriorating. Joe Biden has oscillated between slapping a fresh layer of sanctions on Russia last month for a number of transgressions (hacking US government computers and election interference among them) while inviting Putin to a summit. Old sticks, old carrots.
In reality, the west’s imagination is depleted. Expelling Russian diplomats and freezing the bank accounts of another handful of Kremlin officials is unlikely to shift Moscow’s cost-benefit calculus. If Putin’s troops crossed into eastern Ukraine, it is hard to know what Biden could do. Perhaps Germany would finally be pressured into cancelling the Nordstream 2 pipeline. Perhaps Washington would flood Kyiv with defensive military hardware.
In the meantime, we are stuck in a limbo land. We can neither admit Ukraine into Nato, nor can we abandon our support for its territorial integrity — a pledge that Biden and his secretary of state, Antony Blinken, have reiterated in the past few days. Which leaves Ukraine in a permanently insecure place — it is neither part of the west nor part of the east. If we could replay the 1990s, I would recommend Ukraine’s “Finlandisation” — a buffer state between Russia and the west that would reduce the scope for tension between the two. But the 1990s were a different time. Most people still believed in the end of history and that it was only a matter of time before Russia joined the western family. What happened instead was that we Russified.
As Peter Pomerantsev wrote in his splendid book Nothing is True and Everything is Possible, Russians gradually stopped looking towards London and New York as beacons of democratic light and began to see them as co-conspirators in the looting of Russian assets. Five years ago, the publication of the leaked Panama Papers exposed the degree to which the world’s kleptocrats had been serviced by western legal and accounting firms in laundering their money. Prime ministers from Iceland to Pakistan were forced from office. Putin, whose net worth is estimated to be billions of dollars, saw their publication as a western plot to undermine him. In reality the leaks were an impressive cross-border collaboration between journalists. But we should draw the necessary conclusion. As I wrote a couple of years back, Putin’s wealth is safe only as long as he is in office. He relies on our blind eye to get away with it.
The best leverage we have on Putin and his fellow kleptocrats is the weapon of mass transparency. In a barely noticed bill passed just before Donald Trump left office, the US finally required anonymous shell companies to declare their beneficial owners (it was embedded in the National Defense Authorization Act that Trump vetoed and Congress overrode). The UK is also moving in the same direction. This was a potentially big moment in the west’s halfhearted war on money laundering. Now it is up to Janet Yellen’s US Treasury department to publish the rules. They should be as robust as possible. For those interested in a more detailed plan of what the west can do, read this excellent Center for American Progress paper by Trevor Sutton and Ben Judah.
Plenty of attorneys and financial consultants in places including Nevada and Delaware — not to mention New York — would be hit by a tougher new regime. But it is the minimum Biden could do to show the rest of the world, including the Caribbean havens, that America has turned a corner. Offshore enclaves including the British Virgin Islands and Cyprus have modelled their legal tax evasion systems on the shell company regimes pioneered in many US states. Once America has tightened up, it can use its vast reach and influence to prod others to keep pace. For example, the EU still lacks a central anti-money laundering body.
I make this pitch with some feeling. The west has long claimed to have stronger moral values than the world’s autocracies. But the kleptocrats need western collaboration to survive. Without firing a shot, or changing Nato’s borders, we could weaken Putin by exposing the scale of his ill-gotten gains to the Russian people. That is precisely what Alexei Navalny has been trying to do. Some of Putin’s western facilitators would also lose out. But they are long past their sell-by-date. Property values in Palm Beach are already way too high . . .
Rana, I have little doubt you share my views on this. My question is whether you believe the Biden administration is going to get serious on this issue? They have talked a good talk but they have yet to walk it.
My column this week looks at the rise and rise of Tucker Carlson, the highest-rated anchor on Fox News, and increasingly the lead script writer for aggrieved white nationalism. If we could personify plutocracy, Carlson would come close.
Finally, while I’m on the subject of Russia, Anne Applebaum has an excellent essay in The Atlantic on why Navalny is the only person who has a strategy for defeating Putin. There is a serious and growing risk Navalny could die soon (he is several weeks into his hunger strike). Will Putin risk Navalny’s death in detention?
Original article in the FT: