The Autocratic Regime System Spread By Putin Threatens Us All

Sifting through the imminent challenges of the coming year it looks like the Covid threat will abate in a way that the geo-strategic threats will not – as Russia reverts inexorably to peak Cold War belligerence. The difference between then and now is simply put: in contrast to the present, the West at that time knew it faced an existential challenge and acted accordingly. Moscow is manifestly determined to take back its empire. The West remains in denial. The Kremlin has lined up invasion forces on Ukraine, a country it has with impunity twice invaded since I co-wrote two books in the mid-twenty teens warning of such events to come. Since then, we have given Putin no reason to desist. A brazen kind of chest-thumping has entered the tone of official Russian demands from the US: Washington must negotiate directly with Moscow over the head of Europe; spheres of interest must be reinstated; the Warsaw pact countries must be handed back. If you do not believe it, read this absolutely riveting and highly alarming summary of the Kremlin’s stance (“Americans.. must take seriously what is put on the table, or they face a military-technical alternative”).

How did we get to this point?

For a start, we offered no pushback against all the myriad assaults, small and large, on the West’s credibility. The incessant cyberwarfare, the Havana syndrome incidents, interference in American and allied elections with money and disinformation, abetting the Taliban insurgents, assassinations of political dissidents on our turf, the instrumentalizing of Kremligarchs and dark money networks worldwide, misusing of Interpol, upholding authoritarian regimes, corrupting of Western elites, and much else. Perhaps the greatest single concrete difference between peak Cold War conditions and the present is the astonishing amount and fluidity of Kremlin money deployed abroad. That was once the West’s great insuperable advantage – we had all the money. Not anymore. Yet much of it still originates in the West and we help financially support the Cold War against us – via petrodollars, investing in and purchasing Russian raw materials and companies, at least to the extent that they can also do business in the global economy. To keep the process going Moscow keeps appointing Western ex-politicians to the board of Gazprom, especially Germans. The argument for appeasement is that it comes back beneficially – in purchases of German cars, American real estate, French wines, tourism all over and the like. But it also comes back to subvert our rule of law.

The decades-old model for such economic recycling derives from the West’s dealings with oil kingdoms such as Saudi Arabia whereby petrodollars went east for oil and came back in the form of expenditure on Western arms, political PR, real estate, luxuries, consumer goods, and the like. Russia plays the same oil-state game but more malevolently. And it sets an example that other countries with autocratic systems now freely emulate. Let us itemize the ways by focusing on oligarch/Kremligarchs. Their funds have infiltrated the West’s arteries using and abusing legitimate institutions. Lawyers and PR professionals retained by oligarchs, notably in the UK, happily target journalists whose work causes discomfort. The author Catherine Belton and her publisher Harper Collins were sued for defamation by Roman Abramovich and the Russian state energy company Rosneft. The book in question is Putin’s People: How the KGB took back Russia and took on the West. The case was recently settled with the author and publisher agreeing to retract some passages, including the allegation that Abramovich purchased the soccer team Chelsea at Putin’s behest.

But the seemingly endless ultra-expensive lawsuit caused great alarm among transparency advocates. Here is a link to a petition by concerned groups fearing the muzzling effect on free speech. Lawsuits of this kind chill the scrutiny into oligarch’s affairs, now more needed than ever, and can serve as an arm of disinformation.

If one accepts the premise that oligarchs retain their billions only with the Kremlin’s sufferance, then how they deploy their funds abroad surely deserves extra scrutiny. Take the example of Dmitry Ryboloviev who for some years has been suing his one-time art dealer Yves Bouvier, aka the King of Freeports, in numerous jurisdictions for (essentially) overcharging the oligarch for artworks (among other things). Here is a BBC article expanding on freeports. Thus far Ryboloviev has lost in every jurisdiction while causing a huge scandal in Monaco which led to the resignation of Monaco’s prosecutor for being in Ryboloviev’s pay. The details are summed up in this Artnet article.

Bouvier is countersuing the oligarch with multiple allegations including the rather pointed one that “he wanted to steal my freeport business in Singapore and build his own for the Russian Federation in Vladivostock”. Vladivostock is a frontier town through which flows all manner of profit from Siberian raw materials such as logging and diamonds and everything in between. Suffice it to say that freeports if misused can be a very efficient channel for money laundering and evading US sanctions. In effect, Bouvier is accusing Rybolovyev of acting for the Kremlin. One shouldn’t forget that it was Rybolovyev who paid an extra $50 million for Donald Trump’s property in Palm Beach. Rybolovyev made his money in Russian potash and invested hugely in Belarus’s potash industry, that country’s key export, thereby helping hold up the regime there. The regime has since moved towards integration with Russia.

The alternate dark money economy in the world worth many trillions operates symbiotically with oligarchs and helps to corrupt countries where oligarchs operate. The process started in the 1990s when tough guy oligarchs intimidated or outright assassinated rivals and took over industries by force. In Ukraine, they then poured money into politics to fund politicians who would in turn protect the oligarchs’ power and money. In Russia, a different outcome prevailed. Putin simply allowed bosses to stay if they complied with his demands. Others he imprisoned or replaced. Whether oligarch-kleptocrats control the state or vice-versa, or something in between, a rough version of that structure has proliferated around the world and threatens the West in various ways.

Take top Ukrainian oligarch Ihor Kolomoisky, now under official sanctions by the US for corrupting Ukrainian governance. He is also under investigation by the Feds for siphoning billions out of a Ukrainian bank and parking it in assets across middle American, such as major real estate in downtown Cleveland and worn-out steel plants in small towns. Against which he and partners borrowed huge loans from local authorities and defaulted on the loans, according to allegations.

The great achilles heel of the global autocratic-oligarchic system pokes out periodically and massive street protests erupt, as they inevitably do – hence the riots in Kazakhstan now. What consolation such regimes offer to citizens – stay out of politics and we will take care of you – fails at predictable stress points (Moscow’s version differs slightly; the deal there is ‘you stay out of politics and we make you feel good by rebuilding the empire’). Elites monopolize power and funds leading to inefficiency and corruption. A lot of money disappears abroad. The country’s staple raw material’s value often dips on world markets hitting internal subsidies. Inevitably they fail, at various points, to provide their part of the bargain. Here’s a terrific essay on the phenomenon titled “Can ‘Good’ Economics Coexist with ‘Bad’ Politics?”

The author, among other things a former senior official at the world bank, identifies how the corruption spreads outward to affect global standards. The World Banks’ ease of doing business rankings includes one such instance. “There are invariably,” he writes “large public sectors – particularly when natural resources are important – in which state-owned enterprises continue to play a prominent part. The latter function symbiotically with strategically placed private companies, some of which have been acquired through privatization”. He points to the famous Yukos dispute in Russia and the Tristan Oil case in Kazakhstan.

Here is another way in which the post-Soviet autocratic regimes are awash in money – the iffy domestic rule of law allows privatization of outside investors’ assets. The issue can then be litigated ad infinitum in multiple Western jurisdictions thereby exploiting Western institutions against Western interests. In the UK and US the governments have launched various initiatives to halt the inroads of dark money, to enhance transparency and the like (for example, to halt the abuse of Interpol by autocratic regimes see the TRAP Act). But too many separate jurisdictions, states and cities still prefer to look the other way as the funds flow in, especially in the Covid era. Until sufficient clout and co-ordination is demonstrated at the Federal level there’s little hope of a real fight-back.

https://www.forbes.com/sites/melikkaylan/2022/01/05/the-autocratic-regime-system-spread-by-putin-threatens-us-all/?sh=36f87b0951fb

7 comments

  1. We are in this position because the West is full of greedy corrupt politicians, who will turn a blind eye to war crimes and mass murder for a bank account full of rubles. The West need to start weeding these people out and tossing them in prison, and confiscating all assets.

    Liked by 4 people

  2. Maybe I haven’t searched hard enough, but thus far I haven’t found any news as to what the West is saying about the situation in Kazakhstan and the mafia interference. I’m afraid that we will get the usual bullshit that we’ve been served since the days after the Euromaidan. The West is once again blissfully asleep, with but an occasional snore.

    Liked by 3 people

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