The Russia Conundrum

CHAPTER 19

A BLUNT INSTRUMENT

Despite their nations’ long and recent history of antagonism towards each other, the world was somewhat surprised by the friendship on show between Vladimir Putin and Donald Trump. There were theories about the Kremlin using compromising material to blackmail Trump into acquiescing in Putin’s international scheming, and other suggestions that Trump felt indebted to Putin in helping him win the presidential election. But the real reason for their mutual affinity was that both men are cut from the same cloth.

Donald Trump looked enviously at Putin’s model of autocracy, his regal style, his contempt for civic institutions and his crude populism. It seems to me that he would have liked to enjoy such powers himself, overriding the democratic checks and balances that maintain democratic continuity in the US. But this was not a model on which future East–West stability could be built.

The noxiousness of such a recasting of the US democratic model and its toxicity for world peace was evident from the January 2021 events in Washington, DC. The storming of the US Capitol and the need for thousands of National Guardsmen to ‘protect law- makers from the American people’ played into Putin’s hands. It allowed Russian state media to decry the US political system as riddled with double standards. ‘The problem is that America’s views of its own democracy … are quite different from when they are applied to other countries,’ reported Russian state television. The theme of US hypocrisy trended on Russian social media, including jokes about alleged American involvement in fomenting political revolts in former Soviet states. ‘Because of international travel restrictions,’ one post read, ‘it has been announced that this year the United States of America will be staging a coup at home.’ ‘Why did the Washington coup fail?’ asked another. ‘Because there wasn’t a US embassy on hand to provide tactical support…’

The departure of Donald Trump in 2021 opened the way for change, and a recognition of the benefits that can flow from a reset in East–West relations. But the undermining of Western liberal democracy seemed to have emboldened Putin. Far from engaging with the new administration, he stepped up his campaign of aggression with a series of damaging cyberattacks on key infrastructure targets in North America and Western Europe. In May 2021, ransomware operations carried out by criminals reportedly linked to the Russian Foreign Intelligence Service disrupted the largest fuel pipeline in the United States, leading to shortages across the east coast, the shutdown of fuel stations, panic buying and the cancellation of American Airlines flights. The White House was still debating how to respond to the SolarWinds hack, which stole data from multiple branches of the US federal government, as well as from NATO, Microsoft and the European Parliament, when further cyberattacks in June shut down everything from the Republican National Committee to kindergartens in New Zealand and supermarkets in Sweden.

US Capitol under siege on 6 January 2021

The scale of the onslaught forced the issue to the top of President Joe Biden’s agenda. When he met Putin in Geneva a week later, he gave him a list of 16 areas of critical infrastructure that should be exempt from cyberattacks. Putin nodded, smiled and did nothing. Biden pledged that the Russian attacks would ‘not go unanswered’, but his national security adviser, Jake Sullivan, conceded that options were limited. He hoped a mix of public measures and private cyber- retaliation might force ‘a broad strategic discussion with the Russians’, but acknowledged that stiffer penalties were problematic. Economic sanctions had shown little evidence of success and there were few potentially effective sanctions left to impose. ‘I actually believe that measures that are understood by the Russians, but may not be visible to the broader world, are likely to be the most effective in clarifying what the United States believes is in bounds and out of bounds, and what we are prepared to do in response.’

Sanctions have been the West’s go-to response when the Kremlin transgresses yet another norm of international behaviour, but they are not a perfect solution – and the Kremlin has made a point of thumbing its nose at Western efforts. In the summer of 2015, as a riposte to Western sanctions, Russian state television showed pictures of mountains of French cheese being bulldozed into the ground in Belgorod, near the border with Ukraine. In the village of Gusino, entire legs of smuggled Spanish jamon were burned to a crisp before being thrown into a pit alongside flattened foreign tomatoes, while local officials looked on with satisfied grins usually reserved for the disposal of Class A drugs. That such wanton destruction of high-quality food failed to draw any widespread criticism in a country where pensioners struggle to make ends meet was indicative of the two-edged nature of sanctions as a tool of political pressure. The Kremlin has conditioned domestic public opinion to view Western measures as an affront to Russia’s dignity and a vindictive attack on ordinary Russians; rather than leading to outcries against their president, they tend to strengthen feelings against the West. Putin’s cheese and ham roast was his response to the Western sanctions imposed in the wake of the 2014 Ukraine and Crimea crises. The Russian agriculture minister, Alexander Tkachev, was filmed in a patriotic plea for the nation to ‘do everything in its power to ensure that consignments of [Western] food are … destroyed on the spot’. Mobile incinerators were wheeled into border towns, deployed like Katyusha rocket batteries to protect Russia from this latest foreign menace. The spectacle was intended to appeal to Russian pride, to evoke memories of past conflicts and command a spirit of national unity in the struggle against foreign foes.

The success of the Kremlin’s campaign was a warning to the West not to play into such a damaging narrative. The sanctions imposed in response to Putin’s 2022 invasion of Ukraine are necessary, but after the end of the war and the restoration of Ukraine’s sovereignty, they too have to be carefully calibrated. In the longer term, it is not readily apparent that by making the daily life of ordinary Russians harder, we will make them more quickly realise what rogues they have for leaders. When Russians hear Western politicians speaking in the media about sanctions directed against Russia, they feel humiliated, as though they are being targeted and attacked, and this opens the door for the Kremlin’s propaganda. I want to stress how important it is to be very accurate in your language when talking about Russia. We often hear the words ‘sanctions against Russia’. This is an erroneous approach, because if we talk about the Russia of 144 million people, such broad sanctions against the country as a whole cannot change anything.

The perception of being bullied and humiliated by the West plays into the hands of those nationalists who want Russia to isolate herself from the global community. It allows the Kremlin to frame Western sanctions as punishing the Russian people, rather than the regime, a manifestation of continuing foreign attempts to undermine and contain Russian power. Unrefined sanctions simply make the Russian population look more favourably at their own government and less favourably at the West.

Putin called the wave of sanctions triggered by the invasion of Ukraine ‘a declaration of war’, while Dmitri Medvedev attempted to frame them as an attack on ‘all Russian people’. In his first ever post on Telegram, one of the few social networks still freely accessible in Russia, Medvedev called the sanctions yet more evidence of the ‘West’s frenzied Russophobia’. The West must avoid providing the Kremlin with fuel for this propaganda by making it clear that its sanctions are directed at Putin and his government cronies who launched the Ukraine war. The state machine is run by a relatively small group of people who are responsible for the bad things that are done. Behind them there are more or less two organisations: the presidential administration and the FSB. It is this system that is turning the state into what we know it as today, and it is the men and women who keep this system afloat who need to be the targets of sanctions.

It is well known that sanctions are an imperfect tool. Their impact can be hard to assess and often takes many years to become apparent; but that does not mean they should be discarded entirely. Correctly targeted sanctions are crucial for applying pressure on regimes that flout international law and treat their citizens like slaves. Sanctions can punish unacceptable behaviour and discourage further breaches. But they must be used carefully to be effective. This is because the first people to suffer from unfocused sanctions are the population generally, while the powerful people – the people who run the regime – can find ways of getting around them. Branko Milanovi´c, an international economist at the City University of New York, warned that the first effect of indiscriminate sanctions is to worsen social inequality, because their primary impact is on the people who have the least power and are the most economically vulnerable. ‘Blanket sanctions … are fundamentally wrong. Their objective is ostensibly to change the behaviour of a certain government. But … they punish people who actually don’t have any influence or very small influence on what the government does.’

In his annual telethon in June 2021, Vladimir Putin put a brave face on the ‘sanctions battle’, minimising the suffering of the Russian people and suggesting that the Russian economy had actually benefited. ‘We have not just adapted to the sanctions pressure. In some ways, they even did us good: replacing imported technologies with our own gave us an impetus to production … The world is changing and changing rapidly. No matter what sanctions are applied to Russia, no matter what they frighten us with, Russia is still developing, economic sovereignty is increasing, defence capability has reached a very high level and, in many important parameters, has surpassed many countries of the world, and in some of them, even surpassed the United States.’

It is true that the Kremlin’s embargo on the importation of Western foodstuffs prompted improvements in domestic agricultural production, in particular a broadening of the cheese and dairy sector. But ‘import substitution’ has fallen short of its targets and poor quality knock-offs of European favourites have failed to meet consumer demands. Overall agricultural production has increased, but not sufficiently to counter negative impacts. A 2019 study by researchers from the Russian Presidential Academy of National Economy and Public Administration (RANEPA) and the Centre for Economic and Financial Research (CEFIR) calculated that the Kremlin’s food embargo costs Russians $70 per person per year in higher priced fish, meat, cheese and vegetables, a significant sum in a country where many pensioners survive on little more than $200 a month. ‘Five years after the introduction of counter-sanctions,’ the study noted, ‘Russian consumers continue to pay for them from their own pockets. Although a few industries have experienced a positive impact from the import substitution policy, most of them are not effective enough to change general price dynamics.’ In short, the Kremlin’s ban on food imports has had little impact on the West, but continues to penalise ordinary Russians.

When people suffer, however, it is human nature to look for someone to blame, and this can be a less than rational process. The Kremlin has had success in manipulating people’s emotions, deflecting blame away from itself and pointing the finger instead at the ubiquitous ‘common enemy.’ Putin has created the narrative of a West motivated by irrational hatred of Russia and of the Russian people, and has applied it not only to sanctions, but to any criticism of his regime. Even the most factual critiques are dismissed as ‘Russophobia’. When Kremlin power brokers are targeted for personal sanctions as a result of their actions, they routinely attribute it to Western bigotry. ‘I have not heard anything about any violation of human rights,’ Yevgeny Prigozhin declared in a statement to the BBC when he was added to the sanctions list, ‘and I am sure that this is an absolute lie. My advice to you is to operate with facts, not your Russophobic sentiments.’

The suspension of trade in Russia by Western companies such as Starbucks, popular clothing brands, hotels and restaurants that followed Putin’s invasion of Ukraine, together with the exclusion of Russia from sporting events and Eurovision, had the potential to make ordinary Russians feel they were being victimised and to provide fuel for the Kremlin’s claims of Western Russophobia. The lesson for the West is that, in the longer term, sanctions will need to be finely tuned and their purpose clearly explained; they must target those who profit from the corruption and lawlessness of the Putin regime, while making clear to the Russian people what the aim of the measures truly is.

The West can remove ammunition from the Kremlin spin doctors by differentiating between the crooks in the leadership and Russia as a whole. Be clear who the opponent is; do not use Russia as a scapegoat for the West’s own problems, as has happened in American politics. Yes, the Kremlin sought to meddle in US elections, but its role shouldn’t be exaggerated. Democracy in America is put at risk by the behaviour of its own politicians, by the rise of populism and developments in global social trends, not just by the malevolent force from the East. Superhuman powers should not be assigned to a president who Navalny and many others now refer to as ‘the old man in his bunker’, a leader who makes increasingly rare public appearances and fears the world beyond the Kremlin walls. It’s a mistake to engage with the hysterical polemics promoted by Russian state media, or with the conspiracies propagated by the Russian Ministry of Foreign Affairs. Trying to refute spokesperson Maria Zakharova’s contention that the British state poisoned the Skripals in order to frame Russia, or that Navalny poisoned himself, only plays into their hands. It is best to deal with the realities and the facts, and to avoid playing into the Kremlin blame game. As Professor Daniel Drezner, author of The Sanctions Paradox, points out, when sanctioned regimes fear they are failing to keep their population onside by using the ‘common enemy’ tactic, they will increasingly ‘enact repressive measures’.

Recent events have demonstrated that a dictatorship has finally been established in Russia. Any hint of decorum has been cast aside. The electoral process has become a smokescreen. Putin’s political opponents are not allowed to run in the elections, criminal cases are fabricated against them; and, finally, in some cases, they are poisoned. As Putin and his stooges become increasingly helpless and desperate, they openly resort to violence to quell dissent.

Since the original imposition of sanctions in 2014, the West has got better at tailoring and explaining its measures, but there is still more work to do. The Americans gradually pivoted to individually targeted sanctions. That was very painful for those named individuals. But here, too, not enough effort was put into explaining why these particular sanctions were being applied to these people. As a result, their effect was lessened, because the Russian authorities told their citizens their own version of the story, that the Americans were punishing Russia for daring to have an independent foreign policy.

Personal sanctions that target specific people for clearly specified reasons have the potential to curb the influence of Putin, his friends and the regime’s sponsors. Sanctions should target the perpetrators of illegal orders and political repression, individuals who distort the workings of a normal state. That includes judges, security officials, prosecutors, intelligence services, as well as the sponsors and asset holders of Putin’s inner circle. The sanctions’ targets should be people and businesses who directly violate, sponsor or facilitate the spread of corruption, disinformation and illegal influence in the West, or promote human rights abuses in Russia.

Who are these people and how are they affected? Oleg Deripaska, the founder of Rusal, until recently the largest aluminium producer in the world, is an example of someone targeted by personal sanctions against members of Putin’s entourage. To remain as rich as Deripaska has in Putin’s Russia means total subservience to the Kremlin. Few of Putin’s oligarchs are more influential and loyal than Deripaska, as the Mueller Report amply demonstrated. In 2018, the United States Treasury nominated Deripaska for sanctions as a result of his ‘having acted or purported to act for or on behalf of, directly or indirectly, a senior official of the Government of the Russian Federation’, as well as his ‘claims to have represented the Russian government in other countries’. This had a staggering impact on Russia’s main share index, which slumped by 11 per cent when the sanctions came into effect.

Deripaska’s public pronouncements suggest quite strongly that targeted sanctions can work. In late 2020, he complained that the measures against him were part of a ‘war’ against Russia, ‘no better than a bombing raid on our cities or direct attacks on our borders’. Deripaska’s words reflect the extent of the disconnect between the ruling elite and the people of Russia. ‘Those who directly or indirectly provoke sanctions against [us],’ he added, ‘should logically be considered to have betrayed the country and suffer the corresponding judicial consequences.’ I responded to Deripaska at the time: ‘So, [the West] preventing people from spending millions abroad while they are nominally employed as civil servants in Russia, or refusing to allow into their countries those people who go unpunished for torture and murder in Russia, amounts to a hybrid war? To me this is actually just basic morality.’

Alongside Deripaska, the US Treasury Department in 2018 targeted a number of people close to Putin: oil, gas and mineral tycoons Vladimir Bogdanov, Suleiman Kerimov, Viktor Vekselberg and Igor Rotenberg; Putin’s former son-in-law Kirill Shamalov; former prime minister Mikhail Fradkov; head of the Security Council Nikolai Patrushev; Gazprom CEO Alexey Miller; and Viktor Zolotov, head of Putin’s Praetorian Guard, the Rosgvardiya. It was a warning to the corrupt officials of the Kremlin and a signal to the Russian business community that has for so long propped up this authoritarian junta that they are not safe, and Putin cannot protect them forever.

Paradoxically, the Kremlin criminals who accuse their critics of being ‘Russophobes’ and ‘foreign agents’ have nearly all stashed their cash in Western countries, via shell companies or under the names of family and friends who live abroad. They do so because they know that keeping their money in Russia exposes it to the ravages of a predatory state, renowned for its arbitrary confiscation of private property. The existential paradox of any kleptocratic system is that those who have stolen money do not trust the regime that has let them steal it. They seek to hide this dirty money where it cannot be taken from them. It is estimated that well over $1 trillion of private Russian money is in foreign banks, and, while some of it is perfectly legitimate, a very large amount of it is not. Capital outflows have increased markedly in recent times, much to Putin’s displeasure.

These thieves must not be allowed to continue hiding their money in the West, using the financial centres of London and New York to launder cash stolen from the Russian people. If the West wishes to combat the criminals in the Kremlin, it must agree to be more transparent and more decisive in its actions. During the election campaign of 2020, then President-elect Biden pledged that he would ‘issue a presidential policy directive that establishes combating corruption as a core national security interest and democratic responsibility’. He undertook to ‘lead efforts internationally to bring transparency to the global financial system, go after illicit tax havens, seize stolen assets, and make it more difficult for leaders who steal from their people to hide behind anonymous front companies’. The strengthened sanctions announced by Washington, Brussels and London in March 2022 suggest that the West is finally getting serious about ending the old practices of financial secrecy for Putin and his criminal associates. While the war in Ukraine continues to rage, while the Putin regime is killing people en masse, no sanctions can be considered too harsh. Western governments might even be criticised for leaving obvious loopholes and opportunities for circumventing them. What I am talking about is the medium-term and the longer-term future.

The Magnitsky Act is another proven tool to push back against Russian human rights abusers, and it is right to extend its application to those people involved in persecuting, poisoning and arresting Alexei Navalny. It is not a question of new laws, but of enforcing existing legislation, as the United States did when it designated the GRU and two of its specific officers, the FSB, three research institutes and five Russian government officials linked to the use of a chemical weapon in contravention of international law for the nerve agent attacks on Navalny and the Skripals. These attacks have brought home to some Western leaders that they, too, are under threat. One German politician told me plainly, that ‘it’s only the door of my house that separates me from Putin’s assassins. No one is protecting me.’

When respected Western politicians sat on the boards of Putin’s companies, notorious for their corrupt schemes and for pilfering from the Russian budget, it made it harder to go after these organisations. Most prominent among them was the former German chancellor, Gerhard Schröder. At the end of his term in office in 2005, Schröder agreed to become head of the shareholders’ committee of the Nord Stream consortium, the natural gas pipeline project linking Russia to Germany, which he had helped launch a matter of weeks earlier. Schröder later became chairman of the board of Nord Stream AG, as well as chairman of the board of Rosneft when the company was already under sanctions for its role in the conflict in Ukraine. The purpose of Nord Stream was to bypass traditional transit countries, such as Ukraine and Poland, to funnel Russian Arctic gas supplies under the Baltic Sea directly to Germany. The project was controversial from the outset, notably for the central role played by long-term Putin ally and former Stasi agent, Matthias Warnig. Critics warned that the pipeline would open the door for Putin to threaten the curtailment of gas supplies to Ukraine and Poland without endangering supplies in the West, a particularly vindictive means of coercion. So, the decision in the wake of the Ukraine invasion to block Nord Stream marked a substantial turning point.

I have long felt there is a dearth of strong Western leadership. But the recent decisions to freeze assets, not just of those Russians who take part in operations directly against the United States, but also those who fight the free press, who violate human rights and take part in corruption, will have a real impact. Enforcing sanctions is crucial, but it is vital to apply them alongside developmental goals, supporting the people within Russia who are seeking to make a positive difference. The Kremlin’s attempt to insulate the Russian people from the truth about the war in Ukraine risks turning Russia into another North Korea, with a population hermetically sealed from the outside world. This must not be allowed to happen. Cultural and scientific exchanges, assistance in education and the raising of the new generation must be maintained where possible, as only this will help to build the civil society of the future. No matter how well intentioned those who suggested imposing sanctions in the fields of culture, education and science might have been, this is not sensible in the longer term; once the war is over and Ukrainian sovereignty has been guaranteed, it will be vital to restore cultural ties between Russia, Europe and the broader West in the future. If this does not happen, the West will struggle to show itself to be an ally of the Russian people, rather than simply a force determined to topple its government.