Russian oligarchs are now kleptocrats. Their mansions are mapped, their private jets are tracked on Twitter (@RUOligarchJets), and their super-yachts are on the run. The invasion of Ukraine has finally forced the West to stop serving as the playground and hidey-hole of the Russian elite.
The Justice Department just announced a multilateral task force to “identify, hunt down and freeze” the assets of Putin loyalists. In his State of the Union address, Biden warned, “Tonight, I say to the Russian oligarchs and the corrupt leaders who’ve bilked billions of dollars off this violent regime: no more.”
ExxonMobil says it will pull out of Russia, leaving $4 billion in assets. Even Hollywood is getting into the act, canceling the distribution of current films in Russia—although given the dismal reviews for The Batman, Warner Bros. could be accused of giving comfort to the enemy.
Boris Johnson, who is desperate to pull a curtain around the scandals over Partygate, the boozy bacchanals he and his colleagues tossed at 10 Downing Street while ordering everyone else on coronavirus lockdown, is sounding particularly bellicose—never mind that the Conservatives have been in power for 12 years and have done little to curb Russian real-estate holdings, influence peddling, and money-laundering schemes. Some British politicians were on the oligarch payroll—literally.
It took a Russian invasion of Ukraine to prod Johnson’s defense secretary to question whether it is right for Greg Barker, a former Tory energy minister and a member of the House of Lords, to be collecting up to $8 million a year from the Russian aluminum giant EN+. As the Daily Mail pointed out last weekend, sanctioned oligarch Oleg Deripaska was until recently a major shareholder. (Barker took a leave of absence from his parliamentary duties in 2019, but kept his title.)
The world is so appalled by Putin’s barbaric invasion of Ukraine that even Monaco and Switzerland say they will freeze Russian assets. Each according to his means: in Austin, Texas, the owner of a bar and restaurant called Russian House chiseled off the word “Russian” from its sign; now it’s just “House.” (As an aside: chicken Kyiv is now on the menu at the Waverly Inn, partly owned by my Air Mail co-editor. Profits from the dish will go to Ukrainian charities. Every butter spurt helps.)
The invasion of Ukraine has finally forced the West to stop serving as the playground and hidey-hole of the Russian elite.
The invasion has certainly elevated the reputation of Ukrainian president Volodymyr Zelensky, whose bravery in the face of brutal odds has moved the world.
And one would have to have a heart of stone not to take some pleasure in the squirming of Roman Abramovich, the smooth-talking, globe-trotting, super-yacht-sailing, Chelsea Football Club–owning multi-billionaire who got his start in oil, is now a citizen of Israel and Portugal, and is currently No. 1 on the list of the Top 35 Putin enablers compiled by the jailed opposition leader Alexei Navalny. Unlike some of his fellow oligarchs, especially those with Ukrainian roots, who publicly broke with Putin over the invasion, Abramovich reportedly flew to Belarus to try to help negotiate an end to the fighting, but stopped short of condemning the president who started it.
From the comfort of one of her homes abroad, his daughter Sofia Abramovich posted an image on Instagram showing the phrase “Russia wants a war with Ukraine” with the word “Russia” crossed out and replaced with “Putin.” It was a noble gesture but one that ignores how her horse-shows-and-châteaux lifestyle in Europe was made possible by her family’s good standing with Putin back home.
But before we pour any more vodka down the drain—and, by the way, Stoli is not Russian; it’s made in Latvia—this may be a good time for Americans to take a look in the mirror. Putin didn’t create his oligarchy on his own. The wealth that this circle of men was awarded (control of assets such as oil, gas, and aluminum after the collapse of the Soviet Union) was partly made possible by the well-meaning arrogance of economists such as Jeffrey Sachs and Larry Summers, as well as Robert Rubin, who was Treasury secretary under Bill Clinton.
In the Clinton administration, they were in an Ivy League clown car of advisers who prodded Boris Yeltsin to apply “shock therapy” to the post-Soviet economy and turbocharge it into a free-market system.
I was in Moscow for The New York Times back then, and I had a close look at the bold, blinkered confidence of American experts, both from Washington and from the private sector. They seemed to be enacting their own version of A Connecticut Yankee in King Arthur’s Court.
Like Mark Twain’s engineer who time-traveled back to medieval England and used modern technology to bedazzle Camelot, those can-do technocrats and consultants seemed so sure that their mastery of markets would give them the upper hand. Using Wall Street know-how and neoliberal theories of deregulation, they were going to help the backward Russians build a Western-style economy.
Instead, smart, ruthless Russian buccaneers took advantage of weaknesses in the new system to plunder gas and other state assets and build vast fortunes. Meanwhile, the collapse of the managed economy impoverished millions of ordinary Russians in a full economic free fall known as katastroika. When I arrived in Moscow in 1994, newly pauperized army officers, nurses, and professors lined up on the sidewalks trying to sell military medals, teapots, boots, icons, and toys—anything they had—for cash.
Sachs, now at Columbia University, has moved onto bigger issues; notably, a plan to end extreme poverty worldwide by 2025 (ticktock). He still gets tetchy when people ask about Russia. He crossly told a biographer, Nina Munk, that he took a “ridiculous” amount of blame for Russia’s economic malfunction. He says there was nothing wrong with the policy, but notes that others, including Larry Summers, who was a high-level Treasury Department official under Rubin, were far more at fault than he.
An Ivy League clown car of advisers prodded Boris Yeltsin to apply “shock therapy” to the post-Soviet economy and turbocharge it into a free-market system.
It’s important to remember that Putin wasn’t elected; he was appointed acting president by Yeltsin a year after the ruble collapse of 1998, at a moment of deep disillusionment and fear. For years, even some of my most liberal Russian friends felt that democratic freedom was a fantasy, and that putting up with Putin was a small price to pay for economic stability.
Meanwhile, Putin reorganized the oligarchy he’d inherited in his own image, putting loyalists in the place of cocky troublemakers like Mikhail Khodorkovsky, who had grabbed hold of Yukos Oil under Yeltsin. Khodorkovsky thought he could speak his mind under Putin and was rewarded with nine years in prison. Other business tycoons and government officials in Putin’s inner circle got the message, fell in line, and were richly rewarded for it.
But let’s not forget that their overseas holdings, secret bank accounts, and tax havens would not have been as accessible without the unfettered, unregulated financial system that Wall Street, the White House, and Congress have stoked—and, as we’ve seen recently, sometimes used for personal financial gain—for decades.
At the moment, it’s tempting to paint Putin as a raving, isolated madman, though it wasn’t entirely crazy of him to look at Donald Trump’s lunacy and conclude the United States was no threat.
And belatedly pointing a finger at the Russian oligarchs who took the money and looked the other way may be unsatisfying; so much of their ill-gotten gains are by now too artfully hidden and out of reach. But it’s never too late to acknowledge the possibility that other Western miscalculations fed his aggression.
As they did with the Russian economy, American policymakers in both parties (including, by the way, Joe Biden, when he led the Foreign Relations Committee) pushed the pedal hard on NATO’s eastward expansion, without fully understanding how Russia would react. George W. Bush made it worse by insisting in 2008 that the North Atlantic military alliance could even absorb Ukraine and Georgia. The invasion of Ukraine may look like a folie à un, but as my friend Andrew Gould, a banker and longtime Russia-watcher, put it: “Putin kept warning the West that if something wasn’t done to restrain NATO expansion, he would do it himself. And now he has. ”
The world has to stand up to Putin and try to save Ukraine from war and destruction. It’s a shame Biden didn’t admit to Americans that they may have to endure some discomfort to do so. Then again, we fought two wars across almost 20 years in Afghanistan and Iraq, and yet no president called for sacrifices on the home front. Instead, like Graham Greene’s antihero in The Quiet American, our leaders keep pushing bromides that look great on paper, sound simple on television, and are doomed to fall apart on the ground.
America and Russia are back to a Cold War standoff, but it is the people of Ukraine who are paying the unthinkable cost.
Alessandra Stanley is a Co-Editor of Air Mail. Previously she was a New York Times correspondent and bureau chief in Moscow and Rome