Putin's Kleptocracy: Who Owns Russia?

The raging question in the world today is who is the real Vladimir Putin and what are his intentions. Karen Dawisha's brilliant work provides an answer, describing how Putin got to power, the cabal he brought with him, the billions they have looted, and his plan to restore the Greater Russia.

“A long-time Russia scholar . . . Dawisha spent almost eight years researching her book. . . . In studying high-level corruption under the Putin regime, Dawisha does a thorough job of analysing the relevant material in the historical archives and court records, and collating reports in the Russian and western press. The power of her argument is amplified by the coolness of her prose.”

Autorentext

Karen Dawisha is the Walter E. Havighurst Professor of Political Science in the Department of Political Science at Miami University in Oxford, Ohio, and the director of the University's Havighurst Center for Russian and Post-Soviet Studies. She has written five previous books, eight edited volumes, and numerous journal articles, and continues to do research and teaching in the areas of post-communist transitions and Russian politics.

Leseprobe
Putin’s Kleptocracy

Chapter One

The USSR at the Moment of Collapse

IN DECEMBER 2012, in a judicial hearing in London into the death of Aleksandr Litvinenko, a former operative for the Russian FSB who for some time had been a virulent critic of President Vladimir Putin, Hugh Davies, the counsel to the inquest, stated that evidence possessed by the British government established “a prima facie case in the culpability of the Russian state in the death of Alexander Litvinenko.”1 In July 2014, as relations with Russia deteriorated, British prime minister David Cameron announced he would let the public inquest proceed. At the center of the inquiry was a claim by Litvinenko’s widow that, at the time of his 2006 death by polonium-210 poisoning, he was providing evidence to Spanish authorities about “Russian mafia links to the Kremlin and Vladimir Putin.”2

The inquest pointed to the tangled web of relations between the Russian state and the mafia, relations that were known to Western governments and much discussed in U.S. cables released by Wikileaks. In particular, a series of events in Spain underlined what had become an interlocking network of associations and clan-based politics centered on Putin. First there was the arrest in Spain in 2008 of the reputed leaders of the St. Petersburg–based Tambov-Malyshev organized crime group,I including Gennadiy Petrov and Aleksandr Malyshev. Then there was the warrant for the arrest of Vladislav Reznik, who was the cochairman of the ruling United Russia Party and chairman of the Duma’s Finance Committee.3, II Finally, there was the revelation that Communications Minister Leonid Reyman owned a beachfront house in the same resort in Majorca as Petrov, who introduced him to potential Spanish partners, and that Reyman himself was under investigation by Spanish authorities.5

All those under investigation in Spain came from St. Petersburg, and all were close associates of Putin, as they rose up together from the early 1990s onward. This incident goes to the heart of whether, as Spanish prosecutors stated in classified briefings to U.S. and other Western governments, made public via Wikileaks, Russia under Putin had become a virtual “mafia state”6 in which state structures operate hand in glove with criminal structures to their mutual benefit, with the mafia operating within guidelines established by top Kremlin elites for the purpose of strengthening Putin’s hold on power, silencing critics, and maximizing mutual economic benefits.

Briefing U.S. officials behind closed doors, the Spanish prosecutor called Russia, Chechnya, and Belarus “mafia states” and stated that in such countries “one cannot differentiate between the activities of the government and OC [organized crime] groups.” Further, the security services “control OC in Russia. . . . The FSB is ‘absorbing’ the Russia mafia” and using them for black operations as a price for operating on Russian territory. But at the same time, the prosecutor told U.S. officials, Russian organized crime responds to pressure by taking advantage of “the corruption of high-level ministers.” Extensive wiretaps showed that these Russian organized crime leaders had a “ ‘dangerously close’ level of contact with senior Russian officials.”7 The secret cable reported Spanish press allegations that the Spanish government had compiled a list of Russian procurators, senior military officers, and politicians, including current and former ministers, who were involved with Petrov and Russian organized crime. The list included at least four sitting ministers, including the Russian minister of defense at that time, Anatoliy Serdyukov, who was notable for his “very close ties” to Petrov.8 The cable that was released also referenced other classified lists of compromised officials that were not part of the Wikileaks documents but indicate that the U.S. government has had a very specific idea of the officials involved in links between the Russian government and Russian organized crime since at least 2008.III

The questions arising from this fascinating story are many: What kind of system has Putin created? When did these plans emerge? Who is at the center of them along with Putin? What kind of control does Putin have over the plans themselves? I suggest that the antidemocratic and politically illiberal aspects of the plans were present from the beginning, as were the efforts to create a liberal economic system that would allow Russians to enjoy the fruits of their labors more than at any time in their history. The plan was always that those closest to power would be in a position to enjoy those fruits on an unprecedented scale. The story starts when the Soviet Union was still standing, if declining, in the 1970s and 1980s.

Beginning in the 1970s, when the Soviet leadership started to enter the world economy to sell oil in exchange for technology (some of it bought illegally at high prices) and grain to offset the structural problems in their own economy, they began to accumulate funds in hard currency abroad. Conflicts in the Middle East quadrupled the price of oil in the 1970s, thus massively increasing the amounts in Soviet overseas accounts. These accounts were under the strict day-to-day control of the KGB and were used to fund foreign operations, underwrite friendly parties and movements, and purchase goods for import. The strategic decisions about how the money would be spent were made by the Communist Party hierarchy, while the KGB was in charge of implementation. However, under Soviet president Mikhayl Gorbachev there is reason to think that the KGB declined to repatriate funds and only increased the economic crisis of a leadership in which they had no confidence. Indeed even more funds began to flood out of the USSR in the late 1980s for safekeeping abroad. As one well-placed Russian cooperative owner observed in 1989, “The West thinks the KGB is gone. They [the KGB] are no longer concerned with investigating people, but they are very involved in destabilizing perestroika. Last week the KGB created a new division of forty agents to do nothing but start joint ventures with Western firms. This is their experimental sociological work. If the crowds rush in tomorrow to kill Gorbachev, the KGB will do nothing because they are concentrating on their scientific …