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Is Russia Un-Losing the Cold War?

Three decades of weaponized corruption have degraded the West.
October 6, 2021
Is Russia Un-Losing the Cold War?
Russia's President Vladimir Putin (C) attends the main stage of the Zapad 2021 joint Russian-Belarusian military exercises at the Mulino training range. (Photo by Sergei SavostyanovTASS via Getty Images)

There’s no ignoring it now: For 30 years, if not longer, the KGB and its successor agencies, affiliates, and allies have been actively and surreptitiously working to destabilize, disintegrate, and corrupt Western societies, economies, institutions, and governments. The recently uncovered Pandora Papers detailing the gobsmacking wealth of some of Putin’s closest friends add yet more to the pile of evidence of weaponized corruption. For those searching for details, two sources are incomparable. In Putin’s People, Reuters special correspondent Catherine Belton chronicles the system of strategic corruption begun under Yuri Andropov and consummated under Putin. A recent report by the Free Russia Foundation, “The Kremlin’s Malign Influence Inside The U.S.,” explores how Russia is exploiting the weaknesses of America’s open society.

The KGB has long been described as a “state within a state.” Behind the Iron Curtain, the Communist Party of the Soviet Union controlled all the levers of power, and the KGB controlled the Communist party. Sensing the weakness of the U.S.S.R. in the 1980s, the KGB began a systematic effort to offshore as much of its money as possible. That effort, of which the then-KGB colonel Vladimir Putin was probably aware, continued after the KGB was formally dismantled in 1991. But, as Belton details, the process of offshoring black money continued through the Yeltsin years, entangling itself in the rise of the oligarchs and Russian organized crime worldwide.

But the money-moving operations weren’t merely defensive—at least, not for long. The Free Russia Foundation report explores how Russia is exploiting the weaknesses of America’s open society, specifically the energy sector, critical infrastructure, non-profits, far-right political groups, and social media, especially Twitter. The expertise behind it is impressive: The chapters on energy and critical infrastructure were written by Vladimir Milov, who served as deputy minister of energy in the early Putin years before becoming a leading critic of the regime. Transnational corruption expert Casey Michel assesses the Kremlin’s use of “philanthropic” and political donations to both respectable, establishment U.S. institutions and far-right groups—a two-step dance familiar to Kremlin watchers. A data scientist and a political scientist conclude with the extent of Russia’s success in weaponizing Twitter.

Both works seek to reveal how opaque corporate governance helps the Kremlin hide its hands. As a case study, the Free Russia Foundation report details how American Ethane, a multi-billion-dollar shale company, is controlled by a network of Russian companies and oligarchs, such as the Houston-based Amshale LLC. One of the individual shareholders, Konstantin Nikolaev, has been a financier of Maria Butina, the Kremlin operative who infiltrated right-wing political groups and was imprisoned briefly in the United States and later released and deported. Another one of those oligarchs is Roman Abramovich, famous for owning the London-based Chelsea Football Club and who is trying to silence Ms. Belton through a libel lawsuit. Such arrangements are common—not that anyone bothers to look most of the time.

Belton gives the example of Irakli Kaveladze, a Russian “illegal” (deep-cover spy) who worked with the FSB, the main successor agency to the KGB, “as the vehicle for transferring more than $1.4 billion in Russian and East European black cash into US bank accounts . . . . Kaveladze also registered about two thousand corporations in Delaware for Russian clients he claimed to know little about—not even their true identities.”

The detail and research behind both reports is manifest, and yet some important points go unelucidated. Like any secret police organization—or any organized criminal group, for that matter—the organizing principle of Russian influence and weaponized corruption is unjust, unaccountable, unpredictable violence. Inconvenient people who blow the whistle, want too much for themselves, or otherwise get in the way are arrested if they’re lucky, murdered quickly by a bomb or a bullet or poison or defenestration if they’re slightly less lucky, or, in the worst case, die by slow torture. Belton mentions a number of these victims—Anna Politkovskaya, Boris Berezovsky, Alexander Litvinenko, Sergei Magnitskiy—but almost in passing.

Yet, it’s hard to read these works without a sense of guilt bordering on shame. As Russia analyst Mark Galeotti has commented, “weaponized corruption” isn’t just something Putin’s KGB men have done to us, but something we in open, democratic societies have done to ourselves. Surprisingly, one of the clearest enunciations of this point comes from Mikhail Khodorkovsky, who went from Russia’s richest man to its highest-profile prisoner for daring to criticize Putin. Belton quotes him:

It was a strategic mistake of some Western institutions to think they could live without principles. They thought it was great—“We will work with Putin, because we can make money from this.” But it turned out to be not such a good idea. This lack of principles has brought the West to the consequences it is experiencing now.

Khodorkovsky knows of what he speaks. After his politically motivated imprisonment, one of the international oil companies eager to cozy up to the Kremlin by buying shares of his expropriated company, Yukos, was BP:

BP had made no secret of the fact that it was seeking to use the offering to buy its way into the Kremlin’s favour, that it was an exercise in “relationship-building.” “We think it’s a good strategic investment for our position in Russia and our relationship with the Russian oil industry and with the Russian authorities,” said a spokesman for the company.

There are plenty more examples of Western self-corruption. American Ethane, the shell shale company owned by Russian oligarchs, has been represented by prominent lobbying firms such as BGR Group, founded by former Mississippi Governor, Republican National Committee chairman, and White House aide Haley Barbour. Tenam Corporation Uranium One, the American subsidiary of the Russian national atomic energy company ROSATOM, has benefited from the lobbying services of BGR and the Podesta Group, founded by John Podesta, former chief of staff and counselor to Presidents Bill Clinton and Barack Obama, founding president and current chair of the Center for American Progress, and an influential figure in the Biden administration.

Gazprom, the state gas monopoly, and Rosneft, the state oil company, have both been represented by former Secretary of State James Baker and his firm, Baker Botts.

Baker Botts’s backing for the Kremlin, and for its energy giants Gazprom and Rosneft, followed a model it had already honed in many of the world’s autocratic regimes, where for decades it had been a supporter of major U.S. oil company interests. . . Baker had been introduced to Alexei Miller, the close Putin ally who served as Gazprom’s chief executive. . . “I told him Khodorkovsky was a murderer,” said one of the Western intermediaries involved in the process. “Baker is very sophisticated.” He’d immediately understood. A bit of moral relativism had helped win the Texan law firm over.

Russians have also infiltrated the debates over U.S. policy. For instance, the Columbia University’s School of International and Public Administration (SIPA) houses a think tank, Center for Global Energy Policy (CEPG). Two of its scholars are sponsored by Russian oil oligarchs, and they have published research making the economic and environmentalist arguments for policies that will favor the Russian energy sector over American competitors. The Atlantic Council, a D.C. think tank dedicated to better trans-Atlantic relations, recently accepted hundreds of thousands of dollars from Victor Pinchuk, a pro-Russia Ukrainian oligarch who has carried Putin’s water and been credibly accused of helping with the coverup of the murder of Georgiy Gongadze, a Ukrainian journalist. The Clinton Foundation also took Pinchuk’s money. Other major D.C.-based think tanks that received donations from oligarchs include the Brookings Institution, the Council on Foreign Relations, and the Wilson Center (which continue to produce scholarship critical of the Putin regime).

Of course, Russian influence isn’t limited to left-leaning think tanks, but extends to organizations such as the NRA and right-wing and/or white nationalist Texas and California secessionists. But a key insight of the report is how the Kremlin exacerbates already existing divides in America by inflaming racial sensitivities—hence the Internet Research Agency’s use of both the @TenGOP (i.e. Tennessee Republican party) and @blackstagram Twitter handles.

And then there is the issue of investments in American critical infrastructure. The beneficiaries include household names like Uber, Lyft, and Zoom but also lesser known, yet important, Silicon Valley firms, private equity firms, and—wait for it—cybersecurity firms. What could go wrong?

And then there are the cultural and religious donations. The Kennedy Center, New York’s Jewish Museum, Lincoln Center, the Met, the National Gallery of Art, Carnegie Hall, the Guggenheim, and the New Museum have all held and promoted Russian art and culture in return for generous gifts. Andrew Foxall, a Russia expert cited in the Free Russia Foundation report, explains this phenomenon: “When Western publics think about Russia, Putin wants them to think about Pushkin, Tolstoy, Tchaikovsky. What he does not want Western publics to think about is the actions of his regime that goes to war with its near neighbors.” Cultural exchange is great—but not when it’s paid for with stolen money and bought as a cover-up for world-historic crimes.

Belton’s book is eye-opening, even for those who followed the squalid details of the Trump-Russia connections with rapt attention. A key insight is that the KGB Russian nationalists, who remain in charge, never walked away from their anti-Westernism. Though they gave up on communism, they adopted state-capitalism as a new way to defeat the West. The Free Russia Foundation report is equally illuminating and contains policy proposals that deserve consideration if not immediate implementation. Reading both, it’s impossible not to be reminded of Lenin’s famous ethos: Who whom?Though it might be time to add a corollary: Who themselves?

Shay Khatiri

Shay Khatiri studied Strategic Studies at the Johns Hopkins University School of Advanced International Studies. He’s an immigrant from Iran and writes the Substack newsletter The Russia-Iran File.