The west seems an audience to a good-cop-bad-cop stage play. Are we being realistic when Medvedev is presented as the liberal, the guy we can like, and Putin as, as one of our readers called him, the “nasty little ferret”? In your opinion, how much of what’s presented to us is hype, and how much is reality?
My view is that we see very little reality. I think that Russia is so good at fooling us they’re fooling themselves. The tragedy at Domodedovo represents a tremendous and continuing failure of government. I call it the horizontal of incompetence as opposed the power vertical. It is rife throughout Russia. It is a cancer that is unfortunately not under any control. And I think the instability in Russia is something that is not being properly addressed.
I think the American reset narrative is sadly a joke, and I think it’s lulled many people into a false sense of security, because from a foreign policy standpoint, Russia’s foreign policy has been far more instrumentalized by the clan structure than people realize. It’s become highly mercantilistic and to that extent quite aggressive. We’re seeing what I call this form of “corruption diplomacy” occurring throughout Europe, and I think we’re seeing a dose of it here in this town.
I’ve spoken about this for years. I’ve talked about the leaders of the Putin Pension Plan, the PPP, cofounded with Gerhard Schröder which he’s offered to leaders all over Europe after they retire to join Gazprom. So I think this expansion to the municipal level here is quite interesting and worthy of study.
I’m not casting any aspersions about this individual situation. I am saying we need to be extremely cautious in dealing with the willingness of Russia to extend their state and corporate interests in manners that are less than transparent and in ways, particularly in border countries such as Estonia, can be considered potentially destabilizing.
How did our situation here come to your attention?
I’ve been following it since it’s come up [...] This has gotten attention in Moscow. We’re involved in a major case in Kyrgyzstan and we’re very closely watching a series of Russia’s successes in which Kyrgyzstan is a signal event. They have established very close relations with the Kyrgyz government. Many of the chief politicians have extraordinarily close ties with Moscow, and there is a real growth of the idea of privileged relationships again with Russia occurring in the CIS.
In terms of our situation here with Edgar Savisaar, you completely dismiss his assertion that he’s been manipulated and that the money was connected to the church?
Look, I’m a lawyer and I’m not going to take away from the man his presumption of innocence. I’m simply going to say that unfortunately there’s a pattern of conduct from the Russian side. If he can clearly establish that he was taken in or that this has been mischaracterized, then one would have to say his naïveté as a politician is fairly shocking.
But I’m not close enough to speak with authority about this, but it’s something we’re all watching as we are watching today Lithuania’s move with respect to Gazprom. Again, something we’ve covered on our blog
for years, what I call the conscious parallelism between Gazprom and certain actors in the Baltics to exert control over energy and politics here is very pronounced.
You mentioned you’re no fan of Obama’s reset program. What do you think he ought to be doing?
Firstly, I don’t believe in the reset. I also don’t believe in demonizing Russia. So to the extent that a reset in relations means that we don’t demonize or scapegoat Russia, I think that’s positive.
What is negative is that this perception that we should close our eyes to Russia’s domestic nightmare, which is its lack of governance and its justice system, as well as a level of corruption that is now at historic levels, and that somehow this disaggregated mass of clans will come together in a coherent policy on Iran or anywhere else that has a central US interest, I think that’s far-fetched.
I recognize that Mike McFaul’s theory is that the more we engage with Russia the more we influence their development. I just happen to think that he’s wrong in the sense that there is a misunderstanding within the Russian elite concerning what they perceive to be American weakness, and the reset plays into an operative concept in both the Russian and Chinese elite, which is that the United States is a declining power and now is the moment when these elites may take advantage of that to further their own goals, particularly in Europe, which is a mess in terms of trying to come up with a coherent policy. To the extent that the US financially has turned into a morass in the last number of years, its eyes have not been on its foreign-policy ball. I think the US has suffered tragically since the war on terror began, and I have concerns as to how the US will ever recover from that.
Daniel Treisman has written that one of the popular but flawed views is of Russia as “mystical” and that “Russia cannot be understood with rational thought.”
I think it can be understood. If we had the time I could take you through an organogram of the Russian leadership. It is an elite process in the way that Japanese politics is an elite process. The difference is that the Yakuza aren’t running Japan, but some of the most incredible factions and most criminal factions in Russia have more than the ears and eyes of power. And there’s a tremendous level of disaggregation. I almost feel that talking about the Russian government as if it in any way speaks with one voice is a joke.
Mikhail Gorbachev has been recently outspokenly critical of Putin in the press. Are his words having any impact at all?
No. Gorbachev is someone I’ve met, spoken to, and liked, but he is, unfortunately, as you may well know, not well received in Russia. I have brought on to our firm a Moscow partner […] and the level of corporate raiding going on today in Moscow—it’s accelerating exponentially. Dmitry Medvedev may want to give the keynote at Davos on modernization, but until he gets control of the FSB, you can talk about modernization all you want, it is not going to happen.
And what’s the likelihood of him getting control?
There’s no way a rational person would be able to predict that occurring.
I think the question for all of us is: What incentives will Moscow have to clean up its act? The only incentive we’ve seen in the last three years has been when the price of oil dropped. The increase in the price of oil is a terrible negative in respect to the possibility of Russian reform.
What about World Trade Organization membership? Is that a carrot?
You would think in a rational structure it would be a carrot. But there’s not much rational about the way they’ve reacted to the WTO. If you remember there was a moment when they actually internally contradicted themselves. One ministry announced that they were doing the customs union and they were going to go to the WTO that way; another one, on the same day, spoke about the continuing Russian application.
There’s even been talk in the US of tying WTO acceptance to the Khodorkovsky case, some form of release for Khodorkovsky. I really couldn’t predict where it’s going. I know that’s something that Obama has promised to Medvedev.
What about visa-free travel to the EU for Russian citizens?
I’m a big supporter. We need more Russia. We need more Russian culture. We need more Russian interaction. We should not treat Russians as second-class citizens when it comes to travel.
At the same time we need to be tougher when it comes to the Russian state. There’s a difference between how you treat an incredibly corrupt bureaucracy and how you treat its citizens who are full-fledged, in my view, Europeans.
In other words treat them with dignity and we might get some of the same back?
Exactly. I can’t tell you on a personal level how tragic I find the queues at embassies, what Russians are put through on a personal basis to get here. It’s one of the few areas where Vladimir Vladimirovich and myself agree. I think something has to be done to regularize that situation.
I’m not aware whether it’s even up for discussion, but do you think Russians ought to get visa-free travel to Canada and the US?
Yes. I have absolutely no problem with that. Because I think we all owe Russia a tremendous amount culturally and academically, and I’m a big fan of more Russia. More Russia here, in my view, translates to more demand for democracy and rule of law there.
David Hoffman in his book The Oligarchs talks about “dirty” and “unglamorous” ways oligarchs make money. He talks about how they’re now using that for philanthropy, essentially “telescoping” an image change into one generation, something which took American families [Carnegie, Rockefeller] several generations. Do you see that as growth or maturation in Russia’s wealthy and does that have benefits for society as a whole?
It’s very difficult to generalize. You have a guy like Khodorkovsky who for many reasons has turned inward and has matured and developed himself incredibly. You have other people who even today continue to battle over their fortunes and engage actively in matters that are not transparent.
I don’t tend to view the oligarchs as a class, and I don’t believe that philanthropy for the sake of appearing to transform oneself is necessarily a great formula for the country. Khodorkovsky did very real outreach when he set up Open Russia. That had a concrete impact on children, the orphanages, and the educational system. That’s where money should be deployed in my view. It’s a complex subject for a brief discussion, but I’m very uncomfortable talking about, quote, “the oligarchs.”
So when you talk about the clans who do you specifically mean?
I’m talking about structures within Russia. Groups of men who populate state-owned enterprises and various sectors of the bureaucracy.
Siloviki is one. The St. Petersburg clan is another. There are clans around some of the major industrial groups.
Those clans exert a tremendous amount of control because the Russian state has been captured by many of these groups who use the Russian state to further their particular interests.
That’s why we have this incredible situation in Russia where a brilliant man like Igor Sechin has the power to be not only deputy prime minister in the morning but chairman of Rosneft in the afternoon. It’s very hard to understand where his various responsibilities begin and end.
You wrote recently about the BP-Rosneft marriage and mentioned amnesia on the part of BP as to “past experiences with state corporatism.” Certainly there’s no amnesia. Is it simply desperation as you also posited?
I think it’s desperation. On the BP side, any headline is better than the gulf. On the Russian side, any headline is better than Khodorkovsky if you’re planning to go to Davos. And the Russians are running serious problems structurally in terms of Rosneft and trying to tap harder and harder to extract hydrocarbons. BP has in their view the technology and the ability to raise cash to do what they’re having a terrible problem doing.
Interview by Scott Diel