Winter is Coming (27 page)

While President Bush was in St. Petersburg he met with a group of Russian NGO directors and opposition figures—at least that’s what he was told. Whether he was aware of it at the time or not, every participant at the meeting had to be preapproved by the Kremlin. No one there would have qualified as an opposition figure in my view, except perhaps for Alekseeva, the former Soviet dissident. As ridiculous as this charade was, Tony Blair wouldn’t even make that token effort and was upstaged by his wife, Cherie Blair, who met with a group of NGO heads during the summit.

When observing the West’s conciliatory dealings with Russia during this period, a favorite quotation from Winston Churchill comes to mind: “However beautiful the strategy, you should occasionally look at the results.” For five years, President Bush had been talking about maintaining an open dialogue with Putin and about how hard he had worked to convince the Russian leader that “it’s in his best interest to adopt Western-style values and universal values.” This sounded quite reasonable, but we didn’t have to go on theory. We had a track record to scrutinize and it was already clear that the strategy of discourse and appeasement toward Russia had failed.

By the time the G8 meeting came around it was long past time for Western leaders to take a harder stance if they wanted their rhetoric about the promotion of democracy in Russia to have any credibility at all. The St. Petersburg summit offered the visiting heads of state a chance to see for themselves how bad things had become. If they had opened their eyes, the leaders who talked so often about receiving “mixed signals” from Russia would have seen that the only mixture that mattered was that of oil, money, and power.

Bush and Europe’s leaders apparently believed it was best to disregard such things for the sake of getting Russia’s cooperation on security and energy. But as Solzhenitsyn foretold, this cynical and morally repugnant stance has also proved to be an entirely ineffective one. Just like old times, Moscow has become an ally of troublemakers and anti-democratic rulers around the world. Nuclear aid to Iran, missile technology to North Korea, military equipment to Sudan, Myanmar, and Venezuela, making friends with Hamas; this was how Putin repaid the West for keeping its mouth shut about human rights in Russia for eight years.

And yet the G7 leaders refused to acknowledge that it was absurd to come to Russia for help with Iran, North Korea, or Hamas when the high energy prices the Putin administration required to keep its hold on power were driven by the tension that comes with every North Korean missile launch and each Iranian nuclear threat. Russia continued to block UN sanctions against these rogue states; the only mystery is why the West continued to treat Putin’s Russia like an ally.

The Europeans in particular also pretended Putin was some species of democrat in order to promote their nations’ business interests. Of course you can expect leaders to support their national interests to a certain extent. In France, Sarkozy promoted Renault and the oil company Total. In Germany, Merkel promoted Mercedes-Benz and Deutsche Telekom. And of course Berlusconi promoted the companies of . . . Berlusconi.

Economic engagement kept the billions coming in that Putin needed to expand his repression at home. Instead of these contacts helping to liberalize and modernize Russian business practices, the flow went the other way. Russia’s biggest export was corruption, not oil or gas. Putin’s oligarchs invited foreign investors and companies to partake in sweetheart deals in Russia and cleaned their money in London and New York IPOs with the help of eager Western banks and politicians looking for a cut.

After six years of crackdowns going uncontested, Putinism was reaching its second stage. When he took power in Russia in 2000, the question was “Who is Putin?” By 2007 it had changed to “What is the nature of Putin’s Russia?” His regime had been remarkably consistent throughout its stay in power, and yet foreign leaders and the Western press still acted surprised at Putin’s total disregard for their opinions. He needed Western aid and support while he was still consolidating power in Russia. When that task was completed, Putin no longer had to pretend to care about what the rest of the world thought.

Again and again we heard cries of “Doesn’t Putin know how bad this looks?” When another prominent Russian journalist was murdered, when a businessman not friendly to the Kremlin was jailed, when a foreign company was pushed out of its Russian investment, when pro-democracy marchers were beaten by police, when gas and oil were used as political weapons, and when Russian weapons and missile technology were sold to terrorist sponsor states like Iran and Syria, “Putin has blundered!” the Western leaders would say. Why? Unlike politicians in democracies, Putin didn’t care how something looked as long as he knew nobody would act to stop him. The only image he cared about was looking tough at home, and blatantly ignoring the feeble complaints of Western leaders only helped him in that regard.

What needed to be asked was what sort of government would continue such behavior, and where such a government would end up. Putin’s regime operated on an amoral scale, something entirely different from that of the Western nations struggling to understand what was happening behind the medieval red walls of the Kremlin. By 2007, I had become a full-time Putin explainer in my articles and lectures.

Putin’s government during that transitional period from fragile democracy to full-blown dictatorship was unique on the historical timeline. It was part oligarchy, with a small, tightly connected gang of wealthy rulers. It was partly a feudal system, broken down into semiautonomous fiefdoms in which feudal payments were collected from the serfs, who had no rights, and the smaller lords pay the bigger lords. Over all of that there was a democratic coat of paint, just thick enough to earn Russia entry into the G7 and keep the oligarchy’s money safe in Western banks.

As I wrote in the
Wall Street Journal
in July 2007, if you really wished to understand the Putin regime in depth, you had to go to the bookstore. Not to buy the works of Karl Marx or Adam Smith. Nothing by Montesquieu or Machiavelli, although the author you are looking for is of Italian descent. Skip Mussolini’s
The Doctrine of Fascism
for now (but hold on to it for later . . .) and the entire political science section. Go directly to the fiction department and take home everything you can find by Mario Puzo.
The Godfather
trilogy is a good place to start, but do not leave out
The Last Don, Omerta,
and
The Sicilian.

The rise of Vladimir Putin and his St. Petersburg clan has been described as Machiavellian, but it is better described by the achievements of Don Vito Corleone: the web of betrayals, the secrecy, and the blurred lines between what is business, what is government, and what is criminal—it’s all there in Puzo’s books.

A historian could look at the Kremlin in 2007 and see elements of Mussolini’s corporate state, Latin American juntas, and Mexico’s pseudo democratic Institutional Revolutionary Party machine. A Puzo fan sees the Putin government more accurately: a strict hierarchy, extortion, intimidation, a tough-guy image, a long string of convenient deaths among leading critics, eliminating traitors, the code of secrecy and loyalty, and, above all, a mandate to keep the revenue flowing. In other words, a mafia.

As long as you are loyal to the capo, he will protect you. If one of the inner circle goes against the capo, his life is forfeit. Once Russia’s richest man, Mikhail Khodorkovsky, wanted to go straight and run his Yukos oil company as a legitimate corporation and not as another cog in Putin’s KGB Inc., he quickly found himself in a Siberian prison, his company dismantled and looted, and its pieces absorbed by the state mafia apparatus of Rosneft and Gazprom. Private companies were absorbed into the state while at the same time the assets of the state companies moved into private accounts. State and corporate power merged. It became a perverse combination of Adam Smith and Karl Marx in which the profits were privatized and the expenses were nationalized.

Alexander Litvinenko was a KGB agent who broke the loyalty code by fleeing to the UK. Even worse, he violated the law of omerta by going to the press and even publishing books about the dirty deeds of Putin and his foot soldiers. Instead of being taken fishing in the old-fashioned
Godfather
style, in November 2006 he was killed in London in the first recorded case of nuclear terrorism. The Kremlin refused to hand over the main suspect in the murder and eventually Britain shelved the case, only to reopen it in 2014 when Putin’s invasion of Ukraine finally persuaded the British that engagement with his regime was no longer a possibility.

For seven years, from Putin’s election until the moment of the Litvinenko assassination, the West tried to change the Kremlin with kind words and compliance. They believed that they would be able to integrate Putin and his gang into the free world’s system of fair trade and honest diplomacy. Instead the opposite happened. The Kremlin was not changing its standards; it was imposing them on the outside world. The mafia corrupts everything it touches. Bartering in human rights begins to appear acceptable. As an added benefit, Putin and his cronies received the stamp of legitimacy from Western leaders and businesses while making those same leaders and businesses complicit in their crimes.

With energy prices so high, the temptation to sell out to the Kremlin was almost an offer you couldn’t refuse, and many didn’t even try. Schroder and Berlusconi could not resist and found themselves entirely compromised. Then we saw the spectacle of Nicolas Sarkozy boosting the interests of French energy company

Total in the Shtokman gas field. There, too, we tried to warn everyone that foreign companies and investors were not immune. Shell found this out when the Kremlin pushed them out of the Sakhalin 2 gas fields in 2006, and British Petroleum learned the hard way in 2008 when its CEO fled Russia in fear for his life. Of course both of them soon came running back for more. If you want to invest in KGB Incorporated you should remember that they are very, very active shareholders.

In case you have forgotten the tale of Gazprom, Gerhard Schroder, and his dear friend Vladimir, its details are worth recalling. Not because anyone should care how Schroder spends his days, but because of the Kremlin methods the deal exposed to the world without an ounce of shame. What was one more small step for Putin was one giant leap for corruption in the West. When Putin invaded Ukraine in 2014, it was deals like these and thousands more that made it nearly impossible for Europe to disengage itself from Russia, let alone lead an effective boycott.

Just days after being pushed out of office as chancellor of Germany in November 2005, Schroder made sure he wouldn’t add to the high rate of unemployment he left behind. He accepted a top post with Russian energy giant Gazprom, which was the company in charge of a controversial gas pipeline project that Schroder actively supported as chancellor. The dubious ethics of this move and the speed with which it was made led to many obvious questions about whether or not Schroder abused his office to set up the deal, especially as he was trailing badly in the polls for most of the campaign against Angela Merkel. But the groundwork for Schroder’s new job was laid out in advance as part of a well-organized operation that brought in capital before personnel.

Matthias Warnig, as head of Russian operations for Germany’s Dresdner Bank, first brought in a deal to purchase 33 percent of Gazprombank in August. (Dresdner also helped the Kremlin pick the bones of Yukos.) Accordingly, Warnig was given a top position at the North European Gas Pipeline Company. Finally everything was ready for the arrival of Mr. Schroder.

The deal also kept everything in the family as Warnig was a spy for the East German secret police, the Stasi, at the same time Putin was running agents for the KGB in Dresden. As Putin himself has said, there is no such thing as a former KGB agent. In reality this was the lesser story: that Germany’s most powerful politicians and businessmen could be purchased the way a Russian oligarch might buy an aristocratic Bavarian estate to gain entry to high society The larger and darker picture was how Putin has made the nation’s energy resources the center of his ruling clique. They completely erased the lines between public and private power and assets.

In Russia everyone was wondering, “Does the state run Gazprom or does Gazprom run the state?” Putin made a priority of tightening the unholy bond between his regime’s internal and external goals and the company that provides most of the natural gas to Central and Eastern Europe. They are not state-run companies; they are the state. Gazprom’s chairman at the time was Dmitry Medvedev, who had recently been named first deputy prime minister. Putin’s deputy chief of staff Igor Sechin headed the other Russian energy goliath, Rosneft. But that wasn’t the only reason Rosneft wasn’t investigated for its shady takeover of Yukos’s prime asset, Yuganskneftegaz, in a bogus auction. Taking
la famiglia
literally, Sechin’s daughter was married to the son of then-Russian attorney general Vladimir Ustinov.

So Schroder didn’t just join a Russian company; he joined the Putin administration. For Schroder’s price, Gazprom and Putin’s regime bought legitimacy in the eyes of the West. Deals like that one also provided Putin with priceless propaganda fodder. He could trumpet this coup of putting a former German chancellor in his pocket while at the same time the state-controlled media presented it as an example of how the West was only after money and oil.

Totalitarian regimes everywhere love to tell their citizens that for all their professed interest in democracy and human rights, Americans and Western Europeans are just as corrupt as their own leaders. It does tremendous damage to the pro-democracy cause in Russia, and elsewhere, when a figure like Schroder, the former leader of the third-largest industrial democratic nation, enthusiastically allies himself with authoritarian thugs. Using energy as a political weapon is a tried and true tactic, and the hiring of Schroder allowed Gazprom to act with even more impunity.