The role of Vladimir Putin on the world’s stage, from Syria to Ukraine, is a complicated one, and some see him as an important moderating influence on the now virtually unchallenged Western imperial apparatus. But one thing is increasingly clear: his role within his country is a deeply troubling one. And the public is terrified. Why? Consider these names:
Sergei Magnitsky, Alexander Litvinenko, Anna Politkovskaya and now Boris Nemtsov.
All opponents of Putin, all now dead. Murdered, in brutal and very public ways.
Our guest for this week’s RadioWHO podcast, Bill Browder, knows Russia. He’s an unusual figure—his grandfather Earl Browder was the head of the American Communist Party. Bill Browder, rejecting that legacy, became the consummate capitalist. Once Russia’s largest foreign investor, Browder was forced to leave the country when he became a vocal critic of Putin, and his lawyer, Sergei Magnitsky, was jailed and murdered.
Browder talks to WhoWhatWhy about what he sees as Putin’s compulsion to steal, his ultimate goal of becoming one of the richest men in the world, and how he believes Putin has overreached.
Full Text Transcript:
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Jeff Schechtman: Welcome to another podcast on WhoWhatWhy.org
Sergei Magnitsky, Alexander Litvinenko, Boris Nemtsov, all opponents of Putin and all dead. Churchill once called Russia a riddle, wrapped in a mystery, inside an enigma. Today, there is nothing mysterious about all three of these deaths. All were critics of, or in the way of Putin, and all were murdered in brutal and very public ways. Few understand today’s Russia better than my guest Bill Browder. Sergei Magnitsky was his lawyer before Browder was forced to leave Russia. In the early days after the fall of the Berlin Wall, Browder would make fortunes while becoming one of the largest international investors in the new Russia. As it privatized and as the oligarchs emerged, things changed. When Putin went from being in opposition to the oligarchs, to being their partner, the entire underpinnings of the Russian economy would go through a tectonic shift. Bill Browder recently wrote about his experiences inside Russia in his book, Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice. It is my pleasure to welcome Bill Browder to talk about recent events in Russia, and about his own history and experience. Bill, thanks much for being with us.
Bill Browder: Thanks for having me.
Jeff: Great to have you here. When you first got out of business school at Stanford, first went to Eastern Europe and later to Russia, did you have any sense of how brutal the whole experience could be?
Bill: Back in those days, and this was now back almost 20 years ago, it was different, it was brutal, but it was brutal in a different type of way. At the end of the Soviet Union, what was left was sort of a vacuum and what filled the vacuum was chaos. And so you ended up having about 22 oligarchs took over the country in terms of getting 40% of the assets of the state. You had gangsters running around. You had hyperinflation. You had all sorts of crazy stuff, but it was what I called disorganized crime. And then what happened later was that Putin showed up and he first made a promise that he was going to sort of bring some order to the country, but his real intention was not to bring order to the country, but just to become the biggest oligarch himself and squeeze out everybody else. And what happened after that was that it became highly organized crime, and the Mafia boss was Vladimir Putin. And the way he would commit his crimes was by using the people that were supposed to be protecting you from crimes, the police, all the law enforcement agencies, and intelligence agencies were there to help maximize theft and profit. And then you ended up with really terrible things happening, including as you mentioned, the murder of my lawyer Sergei Magnitsky, who was killed for uncovering the government corruption scheme.
Jeff: Early on when you were there as an investor and battling the oligarchs and what was going on behind the scenes, initially Putin and the government were on the same side in battling these oligarchs. In fact, you were very helpful to the government agencies, but that all shifted at a certain point.
Bill: So what happened was, as you said, the government was battling the oligarchs for one simple reason because the oligarchs were effectively stealing power from Vladimir Putin when he first showed up as president. So he was just as interested as I was in taking these guys down a notch or two because they were completely out of control. And so he was very much on the side of getting these guys under control, and then he eventually won his war with the oligarchs, and that happened in late 2003 and in the summer of 2004. And the way that he did that was that he arrested the richest oligarch in Russia, a man named Mikhail Khodorkovsky, who was the owner of an oil company called Yukos. And he arrested him, he put him on trial and he allowed the television cameras to film the richest man in Russia sitting in a cage. And it had this most unbelievable psychological effect on the rest of the oligarchs because they saw a man who was far better than them, far richer or more powerful, sitting in a cage, and they didn’t want to sit in a cage, and so they went to him and said, “What do we have to do to make sure we’re not sitting in a cage?” And his answer was: “50%.” He wanted 50% of their money and that was the moment that he’d won his war with the oligarchs. That was the moment that he was no longer interested in stopping their corruption because he was a beneficiary of their corruption to the tune of 50%.
Jeff: The other part of it is what he did with Khodorkovsky was really part of a pattern that he has engaged in right up until the present, in that he finds someone that becomes a symbol and then goes after them in a brutal way.
Bill: Exactly. So basically he doesn’t have enough people, sort of competent people working for him to instill terror on a wide scale basis because there’s just not enough of these people around. So he’s got to be very opportunistic about it in the way, and symbolic about it. So what he does, is he picks in each group, a person that’s most symbolic of that group, and then he destroys them one way or another. And so in that case, he put the richest man in Russia in prison for 10 years. In another case, a very famous case, there was a famous investigative journalist whose name was Anna Politkovskaya and she was one of these people who was just exposing all of his lies and dirty deeds, and so one day she was assassinated, killed, in her stairwell of her apartment building. And after that all the other investigative journalists, either stopped being investigative journalists or toned down their stuff and didn’t go after anything that was close to Putin. In my case, Putin, when I was making all this noise about companies corruption in the big Russian companies, Putin had me expelled from the country and declared a threat to national security. So no other investor wanted to do that. And in the most tragic and brutal case which just happened a little more than a week ago, Boris Nemtsov, either the number one or number two leading opposition politician in the country, the former Deputy Prime Minister of Russia, and someone who had been advocating as of two days before he was killed, to get people out on the street to protest Putin to bring him down – all of a sudden he is brutally murdered on the street in front of the Kremlin. It’s kind of like a contract hit taking place in front of the White House. Whoever did it wanted to send a message that, even with an infinite number of closed-circuit television cameras and security everywhere, that this person could be murdered right there to send a message to everybody else which is, “Don’t be messing with Putin.”
Jeff: One of the things that’s so remarkable about all of these murders, the murder of Magnitsky, the recent murder of Nemtsov, the murder of Alexander Litvinenko, is that they get away with this, that these things happen pretty much in broad daylight. Everybody knows who’s responsible, and there were no repercussions.
Bill: Yeah, this is the thing that that’s most horrifying about it is that if you have a dictator in charge of a country, like Putin, and he decides to murder people – and where there’s sort of clear evidence of murder because he controls all of the agencies of law enforcement, there’s no consequence inside Russia. And that’s one of the things that upsets me most of all when my lawyer Sergei Magnitsky was murdered in 2009, which was that all the people involved were enjoying the impunity in Russia, they were enjoying the fruits of their crimes. In our case, Sergei had discovered a massive government corruption scheme. And so we actually came up with our own version of consequences – the best we could do outside of Russia – which was the idea that these people like to travel to the West – they like to be treated as legitimate people in the West, they like to keep their money in the West – and so we came up with this idea, which was that, let’s take that away from them, and that doesn’t require honest, law enforcement In Russia. That requires honest governments in the West, and I went to Washington and I met a number of senators and came up with this idea called the Magnitsky Act – named after my lawyer, Sergei Magnitsky, which would impose visa sanctions and asset freezes of the people who killed him and the people who do similar terrible things in Russia. And after some difficult political maneuvering because Pres. Obama was not interested in upsetting Russia, but Congress was very upset about this crime, we ended up in 2012 having it come up for vote in Washington. And it was probably the most unanimous thing that’s ever happened in Washington, it passed in the Senate, 92 to 4, and in the House of Representatives 89%. And the president in spite of his desire not to upset Russia really had no choice, and he signed it into law on December 14, 2012. And this is the first time there’s ever been any consequences for this type of thing.
Jeff: One of the things that we’ve seen, particularly in the case of Alexander Litvinenko is that Putin is not afraid to reach outside Russia to commit these crimes as well.
Bill: Well of course there’s the very, very public and horrifying assassination that took place here in London where I live, of former Russian spy Alexander Litvinenko. He had fled Russia, come to London, become a British citizen, and Putin and his guys came after him – and it is by the way after he had exposed some really dirty crimes of Putin regime including accusing Putin of blowing up apartment buildings, domestic terrorism. So Putin and his guys come over to London and they use a nuclear compound called Polonium 210 and they slip it in his tea and he suffers the most horrifying death you could ever imagine – where all his hair falls out, everything, all of his organs fail, and eventually three weeks later dies the most hideous, painful death that’s ever possible. And they wanted everyone to know that they did it. This was not something hidden. But in spite of that, the assassins, the people assigned by Putin to do this, fled back to Russia and when the British government asked for their extradition, the Russians said, “No, we’re not going to give them back to you.” And one of them is now a member of Parliament in Russia.
Jeff: What is the level of fear inside Russia now? It’s been a while since you’ve been there, but certainly you have contacts there, relationships there. What is the level of fear right now, particularly with the recent murder of Nemtsov.
Bill: Well, the level of fear I would say is off the charts at this point. Nobody feels safe, here either. Part of the system or you’re part of the opposition. The opposition people I know, a lot of them whom have left the country, those who are in the country are just terrified. And even interestingly, even the people who are part of the system now are starting to get scared because it’s like Stalin. He was killing all of his own people at any point if he thought they were being disloyal. And Putin has the same kind of paranoid mentality that Stalin had and so nobody feels safe there and it’s really turned into a really evil dictatorship, where anything can happen to anybody and everyone’s just terrified of that knock on the door in the middle the night.
Jeff: Why in your view do we see so much of this in Russian history, political history, cultural history, you make the comparison to Stalin and it’s a good one, why do we see so much of this inherent in the political culture of Russia?
Bill: Well, you know, it’s a very good question, and a lot of people have different theories about it. And some people are very ungenerous to the Russians and say, “Well, you know, they asked for it. The Russian people are asking for these types of leaders.” And I don’t really believe that. They had a really rough ride as you say. They had Genghis Khan. They had Ivan the Terrible. They had the Czars. They had Stalin. They have Putin. I don’t believe this is inherently a Russian thing where they’re asking for it. I think that this is, that there’s certain psychology in Russia, which is it’s been such a brutal lifestyle for everybody from the earliest moments that anytime anyone gets into power they just brutalize anyone who’s not in power, because it’s sort of the haves and have-nots. The brutilizers and the brutalizees. And I think that the cycle can all be broken with just one good leader and so far they’ve just not been lucky enough to have that. They just have one these brutal people just sort of stepping in and saying, “I’m going to take everything I can get because, you know, it’s been so unfair to me that I just had my moment and I grabbed it.” But that doesn’t mean it has to happen that way.
Jeff: One of the things that we’re seeing now, particularly with Putin though, is the way the politics and the economics really come together, the nexus between the two, that Putin is as interested in raw political power as he is interested in becoming as you say, one of the richest men in the world.
Bill: I think actually that the whole thing was driven by his desire to steal money. For the first 14 years, or 12 years, I should say of his power, of his reign, he stole vast, vast amounts of money. And I think that he understood eventually that you can’t have yourself and a thousand people stealing all the money of a country and then have 140 million people live there and suffer the consequences. And the people really suffer the consequences. There’s no proper healthcare. The schools don’t run properly. The roads aren’t being built. All of the money is being stolen, and so, it just doesn’t work on a long-term basis, not a sustainable system if one person or a thousand people steal all the money and everyone else doesn’t. And so eventually, and Putin has always been playing very sort of short-term, tactically, as opposed to strategic, and so eventually people started getting angry, saying, “You can’t steal this money.” And people were demonstrating out in the street in Moscow a couple of years ago. And we’re not talking about small numbers, hundred, a hundred thousand or more. And Putin understood that his days were going to be numbered if he didn’t come up with something big to distract everybody. And he particularly became terrified when Viktor Yanukovich – who was the president of Ukraine, who was what I would describe as a junior varsity version of Putin – got kicked out by his own people for doing the same thing. And Putin understood that this was not Tunisia or Egypt. This was Ukraine, just down the road. And so he came up with a strategy which was a massive whipping up people into a nationalist frenzy. And the way he did that was they started running propaganda 24 hours a day on all television stations convincing the Russian people that Ukrainians were Nazi fascists, and that they were going to go out and ethnically cleanse all the Russian speakers in eastern Ukraine. And therefore it was absolutely necessary for Russia to protect those people, those neighbors, or brother Slavic… Russian-speaking brothers and sisters in Ukraine. And then they went in and invaded Crimea and then eastern Ukraine, and it worked perfectly in terms of getting people’s attention away from his kleptocracy, his stealing. And all of a sudden his approval ratings rose from 55 to 88%. He was now a war president and anybody who was against him was not a patriot. And that worked pretty well, but the only problem with that was that once he convinced everybody that there was this, these enemies, these foreign enemies, he couldn’t just back down. And so he’s got to keep on going, he’s got to keep on doing this this international, what I call “fake protection of Russian minorities abroad.” And they’re not just Russian minorities in Ukraine. There’s Russian minorities in Estonia and Latvia, and Lithuania, and Kazakhstan, and various other places. And so I think that for the indefinite future, as long as Putin is in power we’re going to see him playing around these games of keeping, what I call… not even war games, but real wars to keep himself in power by distracting the people away from all of his money stealing.
Jeff: Bill, talk about the personal contacts, the personal lens through which you view this as somebody that grew up as the grandchild of one of the leaders of the Communist Party in the U.S., and set out to become a good capitalist in response to that. How do you view all of this in that context?
Bill: As you said, my grandfather was the head of the Communist Party of America, and my teenage rebellion was to put on a business suit and tie and become a capitalist. And I went out to Russia, when the Berlin Wall came down, I came up with this great idea after finishing business school that I was going to – if my grandfather was the biggest communist in America, I was going to become the biggest capitalist in Eastern Europe. And I went there, I went to Eastern Europe and to Russia with wide eyes and optimism and I thought that it was all going to be a sort of nice steady ride from horrible to bad, to okay, to good as everything normalized out there. And I thought I could participate in it financially and morally, and it would all be one great way to spend one’s life and career. And for a while it was working. It started in a chaotic moment when Yeltsin was president, and the oligarchs were ruling, and then things could start getting a little bit better. It even got a little bit better during Putin’s first few years when he wasn’t completely off the rails. Eventually, I would say it went from horrible to bad, and maybe towards okay, but then Putin developed this whole sort of international criminal enterprise way of running the country where he was trying to steal all the money he could and everybody else was stealing money along with him at the top of his regime. And when that happened then it went from bad, back to horrible. People sometimes say, “Do you feel that this was all capitalism’s fault.” And I think no, no this has nothing to do with capitalism or communism. This has to do with criminality. There’s no ideology connected with what Putin’s doing, it’s just pure criminality, stealing and abusing power to steal money.
Jeff: What is the biggest miscalculation that you think Putin could make going forward? What do you think would be the Achilles’ heel for him?
Bill: Well, I think he’s already made the biggest miscalculation which was going into Ukraine has set off an economic crisis. It set off this economic crisis on the basis of sectoral sanctions, where Western banks can no longer lend Russian companies. And because of that there is now more than $600 billion of debt that needs to be refinanced or repaid from Russian companies. And the Central Bank of Russia only has about 375 billion of hard currency reserves, and companies can’t borrow any money in the West, and so either they have to refinance in Russia using central bank reserves or they go bankrupt. And so I think in the next two years Russia’s going to run out of money. And as they run out of money, Putin’s got to make a bunch of hard choices. He’s going to either have to keep on doing all this military stuff to keep people distracted, or he’s going to have to share money with them. And I’m sure he’s not going to share money with the people and so you’re going to have a bunch of angry Russians who are earning less money, who are getting laid off from their jobs, who are suffering from inflation, who are suffering from devaluation. And Putin, he could control small numbers of people, the way we discussed, through this symbolism of arresting one person or killing one person. But, he can’t control the whole population if they’re disgruntled and angry and hungry. And he’s never dealt with that before and I don’t think he has the apparatus to deal with that. And I think it’s going to spin wildly out of his control and nobody knows when, how, where, and why it’s going happen. It’s going to happen at some point because that’s how these things work. That’s why in North Africa with all that, the Arab Spring, it was because of money and of economics, that people eventually overthrew their government. I think the same will happen to him.
Jeff: And will the oligarchs turn against him?
Bill: The oligarchs would be glad to turn against him if they weren’t so terrified, but he’s proven that anyone who has the power to arrest anybody in Russia, is the most powerful person in the country. And he has the power to arrest the oligarchs and take away their money overnight. He’s proven that he could do that and he will do that. And so the oligarchs are all just sitting there terrified, and just again, waiting for that knock on the door in the middle of the night, just hoping and praying that if they keep their head down, they’ll be able to keep whatever money they have left after this economic crisis. But I don’t think you’re going to see them, either one to take over.
Jeff: Bill Browder. Bill, thanks much for being with us on WhoWhatWhy.org
Bill: Yeah, my pleasure. Thank you.
Jeff: Thank you. You can read more about Bill’s amazing story in his new book, Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice. And join us next week for our next podcast here on WhoWhatWhy.org
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