Putin’s Thiefdom

Submitted by cathy n on 14 November, 2018 - 7:08 Author: By Barrie Hardy

Russian president Vladimir Putin's personal fortune is estimated at $40 billion, making him one of the richest men in Europe.

He owns vast holdings in three Russian oil companies which are concealed behind a vast network of offshore companies. The level of corruption over which he presides accounts for an enormous amount of Russia's GDP - putting half of the economy in the hands of various shades of criminal enterprise.

In the early 1990s, advocates of free market capitalism promised bright futures for 150 million Russians, who would supposedly share the spoils of mass privatisation. Instead, 22 oligarchs ended up owning 40% of the economy by the end of the Yeltsin era. The result was a vast increase in inequality.

The Russian people have been robbed blind over the past three decades as a result of incompetence and criminal conspiracy. State assets to be privatised were valued at eye watering low amounts. The valuation of the entire economy, at $10 billion, was a sixth the value of Walmart.

Putin put his former spy cronies in charge of running the country despite their lack of economic competence. They seized upon it as a chance to enrich themselves beyond their wildest dreams. Although property relations have changed since the collapse of the Soviet Union, Russia's foreign policy still services the criminal gangs that runs the state, with assassination being its extreme form of censorship.

Stalinist methods of dictatorial rule through the medium of the secret police are now put to use to facilitate grand larceny. The fallout from the poisoning of Sergei and Yulia Skripal in March made many feel they were back in the Cold War era.

The knee jerk reaction of some leftists was to give the Kremlin the benefit of the doubt and cast around for alternative explanations in conspiracy theories. Even some calling themselves Trotskyist questioned the Kremlin's likely use of assassination as a means of silencing political opponents.

Yet the attack on the Skripals had all the hallmark of a Russian secret service operation, the modus operandi being similar to the plutonium poisoning of Litvinenko in 2006.

It was never plausible that the poisoning was organised by a British government mired in the Brexit mess. The last thing May needed was a confrontation with Russia that would graphically expose Britain's weakness in the run up to departure from the EU. The Tories have always been partial to accepting oligarch money with no questions asked. May dragged her feet for four years as Home Secretary before allowing an inquiry into Litvinenko's murder. Ten other mysterious deaths in the UK of Putin's enemies and their associates also went without serious investigation.

FSB and GRU activity has not been confined to assassinations. Many cyber attacks and disinformation campaigns have been used to further Russian state policy. Trump in the White House and Brexiting Britain are its most notable successes.

Spain seems to have been a target because law enforcement there has been very active in cracking down on Mafia style crime operations linked to Russia (and mischief making over the Catalan secession conflict is another front in the attack on the EU). Spain's national court prosecutor, Jose Grinda, famously described Russia as a "virtual Mafia state", claiming that it was impossible to differentiate between the activities of its government and organised crime groups. Spain has conducted two major operations against Russian inspired Mafia networks, arresting more than 60 suspects. Grinda has received death threats and is obliged to get around under armed guard.

Comparable actions against Russian criminal activity in Britain in the same period have been pathetic. The British authorities started their first case using an Unexplained Wealth Order only in October 2018.

Grinda says it's an "unanswered question" as to what extent Putin himself is involved with the Russian mafia and able to control its actions.


Bribes and kickbacks are a major source of self enrichment. It is estimated that bribery costs Russia $300 billion per year, accounting to some 18% of GDP. Privatisation of state owned assets is another way the kleptocrats feather their nests, selling these, preferably to relatives, at knock down prices. Gazprom's sale of seven major oil fields for next to nothing is one of many notable examples. Tax fraud on a grand scale has been another way for the kleptocratic class to enrich itself.

Sergei Magnitsky discovered that organised criminals had been given help by the police to fraudulently reclaim $230 million in taxes. Magnitsky's exposure of the tax refund fraud implicated police, the judiciary, tax officials, bankers and the Russian Mafia. For his pains he was imprisoned, tortured and eventually murdered in jail. Then Magnitsky was put on trial for tax evasion four years after his death and found guilty!

In Soviet times most high ranking bureaucrats would have aspired to a bigger apartment, an official limo, a dacha in the countryside and privileged shopping in foreign currency stores. Today they might still earn official salaries of $1000 a month, but they manage to afford flats in Belgravia and send their kids in English private schools. They form a strange political class. The kleptocrats keep their money outside Russia, thinking perhaps that the stability Putin ensures soon come to an end. Despite frequent nationalist rhetoric, Putin has presided over the biggest single flight of capital the world has ever seen.

More people are starting to question the corruption and the poor performance of the economy. Support for Putin’s party, United Russia, has fallen to 31% - its lowest ever. A big factor in this has been the pension reforms which will delay retirement by five years (Russian men have the worst life expectancy in Europe). Putin and his stooges fear being overthrown by some kind of popular revolt such as the "Orange revolution" in Ukraine in 2004. The mass demonstrations organised by the trade unions in October are a sign that large scale working-class protest in the region is possible.

More oligarchs will scurry to be united with their ill-gotten laundered cash - if they are still welcome in countries like Britain. Socialists should have no illusions that the Putin regime is some kind of progressive or anti-imperialist force. In a conflict between American and Russian imperialisms we stand for the "third camp" of the working class against both sides.

Meanwhile, the Russian state plays a significant role in supporting the far right in Europe. Inside Russia it has also been complicit in or indifferent to numerous attack on ethnic minorities perpetuated by Russian neo-nazis. When the likes of Jean-Luc MĂ©lenchon, in France, or the post-mortem Stalinist element around the Morning Star, appear to court Putin, that only shows that "useful idiots" have yet to call it a day.

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