Ever since the Russian military began its extended imperial sojourn into Ukraine this week, the American press has been doing some long-distance spelunking through the mind of Vladimir Putin. Is he trying to establish a facsimile of the Soviet Union? Is he drunk on the illusion that he is divinely called to empire, the way the Tsars used to be? Is he just an international thug on a land-grabbing crime spree? Is he on some kind of kamikaze mission to take western democracy down with him?
I suspect it’s all in there somewhere, amid a dozen other dark motives nobody’s thought of yet. But there is one thing that should not get lost in all the noisy speculation. Putin in a king thief. Moreover, he is a thief among thieves. Almost everyone who got wildly rich after the USSR came apart is at least half-a-thief. Putin is more than that.
In January of 2021, supporters of jailed Russian activist Alexander Navalny released a video Navalny had filmed describing a massive and opulent palace that Putin had built along the Black Sea. According to the video, the palace is 39 times the size of Monaco. From the BBC:
The report claims the property in the resort town of Gelendzhik was constructed using illicit funds provided by members of Mr Putin's inner circle, including oil chiefs and billionaires. "[They] built a palace for their boss with this money," Mr Navalny says in the video. It alleges that Russia's Federal Security Service (FSB) owns some 27 sq miles (70 sq km) of land surrounding the private residence.
The report describes various details of the property, and claims it features a casino, an underground ice hockey complex and a vineyard. "It has impregnable fences, its own port, its own security, a church, its own permit system, a no-fly zone, and even its own border checkpoint," Mr Navalny says in the video. "It is a separate state within Russia," he adds. "And in this state there is a single, irreplaceable tsar. Putin.
Putin’s government, of course, denied all this, and Navalny is still in jail. But clearly, Putin is particularly tender on the subject of his personal wealth, how he got it, and what he’s been doing with it. In 2014, Karen Dewisha, a professor at the University of Miami in Ohio, published a book about how the kleptocracy produced Putin, and how he has come to dominate it because of the political position into which the kleptocracy propelled him. She traced the roots of his wealth back to the end of his time with the KGB, which grabbed every ruble it could as the USSR was coming apart. In an interview with NPR, Dewisha explained what happened next.
Putin has created a system where he nationalizes the risk and privatizes the reward. So when we think about the Sochi Olympics, for example, it's well-known that they cost about $50 billion and most of those contracts were awarded as no-bid contracts to people close to him. And billions were made by them. Another example would be the collaboration of Putin's closest circle in the establishment and funding of Bank Rossyia, a bank that has emerged as one of Russia's top 10 banks that receives a lot of government state budgeting, but it's a private bank. So here you have a case where the money to fund comes from the state and the profit goes to friends of the current president.
Estimates are that Putin now has a net worth of somewhere in the vicinity of $200 billion, almost none of which he’s actually earned. The number first originated with Bill Browder, an American fund manager who’s been a harsh critic of the Putin regime ever since his tax attorney, Sergei Magnitsky, died in custody in Russia. However, since Putin touched off the Ukraine crisis, according to Bloomberg, many Russian billionaires have taken big hits. Did the kleptocracy create Putin, or was he its natural protector? What is certain is that he considers any attempt on his fortune to be the equivalent of a military attack. It’s about the money because, in this world, it’s always about the money.
It's all about the money, because the money isn't just money.
In April 2016, Reuters ran a story in which Putin threw a nutty. Not long before, the so-called Panama Papers exploded into the news in a massive torrent of financial documents that demonstrated in gruesome detail the many ways in which the world’s plutocratic elite dodged taxes, laundered pilfered millions, and otherwise concealed a huge portion of the world’s economy. Prime among these usual suspects were a number of Russian plutocrats with ties to Putin. From the initial report by the International Consortium of Investigative Journalists:
The records show Roldugin is a behind-the-scenes player in a clandestine network operated by Putin associates that has shuffled at least $2 billion through banks and offshore companies, an investigation by the International Consortium of Investigative Journalists, German daily Süddeutsche Zeitung and other media partners has found. In the documents, Roldugin is listed as the owner of offshore companies that have obtained payments from other companies worth tens of millions of dollars. A company linked to the cellist also grabbed secret influence over Russia’s largest truck maker, another snagged a big slice of Russia’s TV advertising industry.
It’s possible Roldugin, who has publicly claimed not to be a businessman, is not the true beneficiary of these riches. Instead, the evidence in the files suggests Roldugin is acting as a front man for a network of Putin loyalists – and perhaps for Putin himself.
Roldugin, it should be noted, is a cellist. He is perhaps the world’s richest cellist. He is also one of Putin’s childhood friends.
(The leak also ensnared Petro Poroshenko, then the president of…wait for it…Ukraine.)
When the story broke—with, this being 2016, no apparent sense of irony—Putin used a televised phone-in town hall to call the leak a sophisticated act of Western ratfcking. From Reuters:
“Who does it, these provocations? We know that there are some staff of official American institutions,” he said at an annual televised phone-in with the Russian public. Putin said that German newspaper Suddeutsche Zeitung, which he said had been first to publish the Panama documents, belonged to a leading U.S. bank. “Süddeutsche Zeitung is a media holding company owned by an American financial corporation, Goldman Sachs,” he said. “That is, the ears of the instigators are sticking out everywhere, but they do not even redden.”
“We should not be expecting them to show any kind of a remorse. They will keep on doing it and the closer to the (Russian) elections, there will be more of that stuff.”
(One of the other theories at the time of the leak was proposed by a Russia specialist for the generally sober-sided Brookings Institute who postulated that the Panama Papers leak itself was an elaborate plot by…wait for it…the Russian government.)
Now, with the United States and its allies ratcheting up the financial pressure on the Russian oligarchs, it’s helpful to note that Putin has been charging that Western “institutions” have been targeting the various Volga Bagmen since long before the current crisis. Moreover, in 2017, the Washington Post reported that, in a book published by two Russian authors, the Panama Papers leak was said to be a precipitating event in Putin’s effort to ratfck the 2016 U.S. presidential election. As one of the authors told the Post:
We also believe that the meeting of the Russian Security Council on April 8, when Putin urgently gathered only the most trusted officials — most of them with secret services background — could be the meeting when a very sensitive matter was discussed, such as the need for a retaliatory response to the Panama Papers exposés.
It was seen as an attack on personal friends of Putin, his immediate circle. It's a line you cannot cross with Putin, and the Russian media learned that in a hard way. When a small Moscow publication reported in 2008 that Putin divorced and was going to marry a famous gymnast, the publication was immediately shut. When the RBC media holding published stories about Putin's daughter in 2015, the media holding's owner corporation was raided by police, and the media holding soon changed hands. Worse, Putin believed the Panama Papers attack was sponsored by Hillary Clinton's people — this, in a way, provided him with a “justification” for a retaliatory operation.
Without the support of the oligarchs and the piles of money they’ve stashed around the world, Putin is an old KGB hand telling spy stories in some dim bar in St. Petersburg. Beyond his own natural gifts as a dictator, he is a creature of the Russian kleptocracy. It is the river in which he swims, the air that he breathes, the thick, poisonous fog in which he hides. He exists as a world leader only on the strength of what he and his cronies have stolen. He knows it and the kleptocrats know it. I suspect a goodly portion of the Russian people know it, too. After all, they’re the ones from whom it has been stolen, day after day, year after year, up until this moment.
Ultimately, in an important way, this has been all about the money. So much is all about the money. In the annals of human folly and human disasters, it’s the constant in so much crime and sorrow, and it is the one thing that never, ever changes.
(from Charles Pierce Esquire newsletter)