Shocker: U.S. Knows About Corruption in Russia.
Dmitry Peskov, President Vladimir Putin's spokesman, complained Friday about the "active use of the Russian theme and the subject of Putin in the U.S. domestic electoral game." To any observer of the U.S. election campaign from this week's Ground Zero, Iowa, the statement appears absurd: Few people here care about Russia one way or the other. Nonetheless, it's clear that the last vestiges of diplomatic politeness are fast disappearing from U.S.-Russia relations.
On the campaign trail, I've only heard Russia mentioned in passing: Iowans care much more about issues such as clean water, ethanol production, student loans and jobs. One can hear praise for Putin from some Donald Trump supporters, but it's rare. The presidential candidate who has weighed in most surprisingly on Russia is Ben Carson, the retired neurosurgeon who has struggled to establish any foreign policy credentials and has slipped in the polls. His most recent blunders include the incorrect suggestion that at least a few U.S. armored brigades are stationed in the Baltic states and that Ukraine is protected by the North Atlantic Treaty Organization.
Peskov, however, isn't worried about Carson or any other presidential candidate. His problem is with recent statements by U.S. officials on the touchy subject of whether Putin is corrupt.
The first of these statements was aired earlier this week in a BBC documentary entitled "Putin's Secret Riches." It purports to be an investigation into the president's personal fortune, though it mainly pulls together bits and pieces already published elsewhere, along with speculation from Putin's opponents who know little or nothing about his finances. That in itself wouldn't worry the Kremlin too much. Yet both ordinary Russian viewers and officials noticed a segment in which Adam Szubin, director of the Treasury Department's Office of Foreign Assets Control, said the U.S. government had known for "many many years" that Putin is corrupt:
We've seen him enriching his friends, his close allies, and marginalizing those who he doesn't view as friends using state assets. Whether that's Russia's energy wealth, whether it's other state contracts, he directs those to whom he believes will serve him and excludes those who don't. To me, that is a picture of corruption.
That wasn't news, either. It has been known for years that lucrative government contracts are going to Putin's friends, and that other cronies are in charge of vast state companies, which gives them many opportunities for personal enrichment. It's not as if Szubin, who is responsible for U.S. economic sanctions, revealed some secret documents showing that Putin is a billionaire. In fact, his office made a more specific -- and therefore, in theory, more damaging -- statement in March 2014, when it claimed that Putin could be benefiting from Gunvor, an oil trading company set up by an old friend, Gennady Timchenko. "Putin has investments in Gunvor and may have access to Gunvor funds," Treasury said then.
Peskov dismissed the Szubin statement as "pure fiction," and that could have been the end of it. Yet on Thursday, White House spokesman Josh Earnest was asked whether Szubin's words reflected the Obama administration's official position, and he replied that they did:
Well, the assessment of the Treasury Department I think is the one that is the one that best reflects the administration view.
That enraged both the Kremlin and the Russian Foreign Ministry. Peskov railed against "our so-called partners" resorting to "personal insults" because they are powerless to do anything about Moscow's "consistent stand on Ukrainian and Syrian affairs." He mentioned the U.S. election campaign and the Russian presidential election, scheduled for 2018. The U.S., he said, is trying to smear Putin without even knowing whether he intends to run for president again.
Foreign Minister Sergei Lavrov called Secretary of State John Kerry to tell him the accusations amounted to "purposely stepping up tensions" between the two nations.
I have written before that I don't believe Putin has amassed a vast personal fortune that can be tracked to him. He doesn't need one, precisely because he has the power to enrich or impoverish anyone in Russia. Once he retires, he will be able to convert his friendships into a more than comfortable life.
Some of these ties are very close. Kirill Shamalov, the son of a long-time Putin associate, is reportedly married to Putin's daughter Katerina, and he received a big loan from a bank controlled by another Putin crony to buy a 17 percent share in Sibur, Russia's biggest petrochemical company.
Owning any assets in his own name, even through shell companies, would be an unnecessary burden for Putin, creating opportunities for blackmail and scandal that would undermine his popularity in Russia. The U.S. government probably would have released specific data about his involvement with Gunvor if it had such data.
The absence of a personal fortune, however, doesn't make Putin any less corrupt. Szubin is right: crony capitalism is a corrupt system, and so, necessarily, is the man sitting atop it.
That logic seems clear to Russian officials, too. They are not trying to convince the Obama administration that Putin is not corrupt. They just want the U.S. to adhere to diplomatic decorum and refrain from mentioning that the Russian system is rotten top to bottom. In their minds, a lack of official recognition of the corruption equals acquiescence. The statements by Szubin and Earnest are insulting because they signify contempt, a refusal to see the Kremlin as an equal partner.
The lame duck Obama administration can afford to show contempt, though. It's up to the next U.S. president to go back to a more respectful tone -- or pick up where Obama left off, placing Putin "in his little box," as Carson suggested in a debate of Republican candidates on Thursday.
It's unimaginable that U.S. officials have come up with plans for thwarting Putin in the 2018 election -- he himself is doing a pretty convincing job of ruining the Russian economy -- or, as some Putin opponents hope, officially charge him with corruption, turning him into an international pariah. They are just having fun telling the obvious truth: The leader of a country that is No. 119 out of 167 in Transparency International's most recent corruption perceptions ranking must have a role in the rot.
It would be nice, however, if the U.S. could be as open about more friendly regimes. Two years after its "Revolution of Dignity," Ukraine is still No. 130 on that list, but no one in Washington has officially leveled corruption accusations against President Petro Poroshenko or Prime Minister Arseniy Yatsenyuk.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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