The astonishing underperformance of the Russian military in Ukraine has been attributed to a combination of Ukrainian heroism and low morale among Russian soldiers. Bill Browder points to a third explanation: corruption. “My estimate,” he said, “is that 80% of the military budget is stolen by Russian generals, because 80% of all budgets in Russia are stolen by those in charge.”
The army has been “ripped open by all this corruption”. The money intended to pay the soldiers was stolen. The grunts, Mr. Browder says, survive by selling gasoline from the tanks they drive. And that was before the war in Ukraine.
Few people know corruption in Russia as intimately as Mr. Browder. For more than a decade, he has been among the world’s most vocal crusaders against Vladimir Putin, whom he calls “the greatest kleptocrat of the modern age.” British-American Mr Browder, 57, was the biggest private investor in Russia until his expulsion from that country in 2005. It was for trying to investigate the theft from the Russian Treasury of 230 million dollars in taxes his company, Hermitage Capital, had paid. After Russia deported Mr. Browder, his lawyer in Moscow, Sergei Magnitsky, continued the investigation and was beaten to death by police in riot gear in a prison cell in 2009. Mr. Browder wrote detail about these events in ‘Red Notice’ (2015) and a sequel, ‘Freezing Order’, to be released next month.
Mr. Browder’s relentless lobbying over the next decade, motivated by grief and anger over Magnitsky’s murder, led 34 countries to enact laws imposing penalties on perpetrators of human rights abuses in Russia. The American version is informally known as the Magnitsky Act.
As with many zealous men, there is a touch of shamelessness in Mr. Browder’s righteousness. “The whole world has joined me,” he says, the day after Mr Putin invaded Ukraine, whose status as a ruthless despot is now undisputed. “I was a lonely voice for 10 years. But in 48 hours, the whole world joined me.
Speaking to me via Zoom from his central London home, Mr Browder visibly comes alive when we talk about Mr Putin’s personal worth. “It’s north of $200 billion,” he says. “No money is in his name. It’s all in the name of his oligarch administrators. He offers a ready-made calculator to calculate Mr. Putin’s wealth: total the value of each oligarch and divide the sum by 2. Half of their wealth is “held in trust” for Mr. Putin. “Basically, to be rich in Russia, you can only do it at the whim of Vladimir Putin. He can take it away from you at any time, unless you don’t do what he asks you to do. There may be people “who started out as nice people”, but they all “effectively gave in to his extortion and became his partners”.
The amount of Mr. Putin’s ill-gotten wealth, as estimated by Mr. Browder, leads me to ask what the Russian President could possibly do with all that money. “Well, it’s not about having it for retirement,” laughs Mr. Browder. “It’s a question of power.”
The money, he says, only belongs to Mr. Putin as long as he leads Russia. “As soon as he is out of power, none of these handshakes with the oligarchs will be respected.” Mr Putin has all this wealth “because you can’t be the most powerful person in Russia without being the richest person. It’s an alpha-male society on steroids, so you have to be the biggest, baddest, richest, most versatile person if you want to be the dictator.
Mr. Browder describes it as “medieval. It’s not civilized. In America, he points out, “you can be rich and have no political power, or you can be powerful and have no money. But in Russia, you have to have it all.
He says Mr Putin has watched with concern the political unrest in Belarus, where a democratic movement has weakened Alexander Lukashenko, the local dictator. The Russian leader has also been spooked by events in Kazakhstan, where the country’s strongman Nursultan Nazarbayev was toppled in 2019 during a popular uprising over fuel prices. “Putin understands that this is the kind of thing that could happen to him. Any dictatorship can change in no time.
Mr Browder believes Mr Putin felt a comparable thrill of insecurity in 2008, when he invaded Georgia, and in 2014, when he stormed into eastern Ukraine and annexed Crimea. This year again, “Putin believed he needed a good war. And so the basic motivation for invading Ukraine was to stay in power.
The invasion might turn out to be a miscalculation for the ages. The United States, the United Kingdom and the European Union surprised Mr. Putin with the severity of their sanctions, and surprised Mr. Browder as well. “We have surpassed our own history in the most spectacular way,” he says. It lists Mr Putin’s past transgressions that have gone unpunished or brought insufficient punishment: the 2008 and 2014 invasions, the downing of Malaysia Airlines Flight 17 in 2014 and the nerve agent poisoning of two Russian citizens in the British city of Salisbury in 2018. .
“Putin was looking at the West and saying, ‘I don’t think anything serious is going to happen this time.’ And then all of a sudden, something quite serious happened, which is a total economic blockade of Russia. It’s “even more extreme than I could have ever imagined, that I could have even asked them to do based on my own thoughts on what the West was capable of”.
He is particularly surprised – and delighted – that the West is going after Russian oligarchs “on a major basis”. He had been “shouting from the rooftops for the past 10 years that if you want his Poutine, chase his money. And if you want to run after his money, go after the oligarchs. In the past, the West has always imposed sanctions on government officials “or someone who didn’t matter. “We hit people on the Forbes list, all the way down. It really impresses me.
When Mr. Putin invaded Georgia, he cited provocations from Tbilisi. “Putin played these games of plausible deniability,” Mr. Browder says. “We had the intelligence that told us exactly what happened, but we kept it to ourselves.” This time, for a month before the invasion, the US and UK shared their information “on the evening news, in every country, with every government”. So when Mr Putin “tried to do his plausible deniability thing, saying there had been a provocation, it was the fault of the Ukrainians, everyone had a common set of facts to react to. And anyone even mildly predisposed to appease Putin couldn’t justify it, because it simply wasn’t true.
Yet sanctions against Russia still have a long way to go before they really satisfy Mr. Browder. “What has been done so far? We have frozen the assets of the Central Bank of Russia, so they have no access to their dollars, pounds, euros, yen, Swiss francs and Canadian dollars. That’s about $350 billion – “pretty impressive because it was Putin’s war chest”.
The West has also disconnected “around 70%” of Russian banks from the Swift financial system. But that leaves a third of Russian banks within Swift, including Sberbank,
the largest. “What is the logical thing to do? If you cannot make international payments with one set of banks, you transfer them to the other set of banks. Until the West disconnects all Russian banks from Swift, Mr Browder says, it’s an “incomplete sanction”.
He also wants the oligarchs to be hit as hard and broadly as possible. “The central bank is where the government’s internal money is kept – the war chest. But the oligarchs have outside money – Putin’s money – in even larger quantities than central bank reserves. So far, he says, only a dozen oligarchs have faced sanctions. “We had some good ones – Roman Abramovich and Oleg Deripaska and Igor Sechin. The problem is that there are 100 oligarchs. To do it right, we need to sanction 88 more.
Mr. Browder is also eager for the West to continue buying oil and gas from Russia. He acknowledges that it will be “difficult to stop”, given the total dependence on Russian energy of countries like Italy and Austria and Germany’s dependence on Russia for 40% of its energy. “All this generates between half a billion and a billion dollars a day for the Russians” – for Mr Putin to finance his war.
The West must also rely heavily on China “not to become Putin’s lender of last resort”, says Mr. Browder. “If we do that, he is fully surrounded economically.” The Chinese have had a “rude awakening watching what happened to Putin”, and it will push them to keep it a secret to help Mr. Putin: “They can’t do it big without getting caught”. What helps the West is that the Chinese are “mercantilist” and therefore loath to lose business to sanctions.
Years of wrestling with Mr. Putin have taught Mr. Browder that the Russian president has a “prison court psychology. He absolutely cannot allow anyone to disrespect him. Anyone who does must be attacked, “not just a little, but gutted”. Generally speaking, says Mr. Browder, Ukraine has been disrespectful to Mr. Putin. “He wanted Ukraine to be a country subject to Russia and they didn’t want to do that.” They wanted to be part of the EU and the North Atlantic Treaty Organization. “They wanted to be a democracy, not part of Russia. And so the only answer to that is just absolute annihilation in his mind.
Russians have undertaken small but notable acts of individual and collective protest. But too many of them seem inactive, perhaps unaware of the true nature of the war in Ukraine being waged in their name. Mr Putin’s information blockade, Mr Browder says, is “one of the most difficult problems to solve”. He shut down all real sources of information and “bombarded the Russian people with a shameless lie”. However, the information circulates. “Arnold Schwarzenegger
video message went viral on Russian [social] media networks. The former California governor speaks directly to the Russian people for nine minutes and talks about the “terrible things you should know” the Russian military is doing in Ukraine.
And there is one thing Mr. Putin cannot block: “No matter what information blockage he puts in place, it cannot stop mothers from mourning their dead sons. And for every dead son, there are family, friends, parents, siblings who will feel that pain. Ukrainian sources estimate that Russia lost as many troops in the first month of the invasion as the Soviet Union lost in Afghanistan.
“There may not be an uprising of oligarchs, but there may be an uprising of mothers.”
Mr. Varadarajan, a Journal contributor, is a Fellow of the American Enterprise Institute and the Classical Liberal Institute at NYU Law School.
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8