How to Identify the Kremlin Ruling Elite and its Agents

Nov 16 2017

The Atlantic Council, a Washington-based think-tank, has proposed a set of criteria as the U.S. government compiles a list of corrupt Russian individuals and businesses with ties to the Kremlin.

The list is set to be published in a U.S. government report to Congress in February 2018, as mandated by a new sanctions law signed by the U.S. President in August. Section 241 of the new sanctions law* requires a report listing “the most significant senior foreign political figures and oligarchs in the Russian Federation, as determined by their closeness to the Russian regime and their net worth”. However, the law does not lay out specific parameters to identify the “closeness” of persons to the Putin regime.

On Tuesday (Nov. 14), in an effort to explore this criterion, the Atlantic Council gathered at the Russell Senate Office Building, bringing together leading experts, including: 

Ambassador Daniel Fried, distinguished fellow at the Atlantic Council and former coordinator on sanctions policy at the U.S. Department of State;

Anders Aslund, senior fellow at the Atlantic Council and professor at Georgetown University;

Andrei Piontkovsky, a visiting fellow at Hudson Institute and a senior adviser for Free Russia Foundation; 

Andrei Illarionov, a senior fellow at Cato Institute and a former chief economic adviser to Vladimir Putin.

Mr. Fried said the report may be one of the most important elements of the new sanctions law. It has raised intense speculation in Moscow on who might be included in it and what that might mean for the Russian political and business elite and for Russia’s standing in the West.

He also said the report may persuade the Russian political and business class that they are better off by distancing themselves from the Putin regime and that it is a mistake to think that President Putin can protect them.

The ambassador also noted the need for clarifying the criteria for assessing ties with the Kremlin.

To this end, Mr. Aslund laid out the Atlantic Council’s proposed guidelines to U.S. authorities:

1) The person named is close to the Russian regime, measured by his or her involvement in planning, ordering, preparing, financing, executing, or otherwise supporting the aggressive, corrupt, or criminal actions noted above; or

2) The person’s fortune has been made through corrupt commercial operations with the Putin regime for the sake of personal gain; or

3) The person has held assets for Putin in what appears to be a corrupt fashion, even if he or she personally is not involved in the actions mentioned above, or his or her known personal fortune is not great enough to be considered of “oligarch” scale.

While the panel didn’t speculate about particular names that might be included on the list, Mr. Aslund discussed categories of people the report could include, such as those organizing mercenary forces in Ukraine and Syria and involved in cyber-warfare and disinformation campaigns. It could also include the oligarchs who profit from business ties with the Kremlin, Putin’s close circle from the 1990s, golden children, among others

Mr. Illarionov noted that Russian aggression has gone beyond the international borders and has become an international problem – therefore needing an international solution. Moreover, he said, the U.S. demands related to corruption and human rights violations are in line with Russia’s own laws.

“The criminal code of the Russian Federation is not too different from the criminal code of the United States,” Illarionov said. “Therefore, the crucial difference between them is not the conduct of criminal code per se, but the actual practice of written and unwritten laws. Too often today in Russia those who are guilty are not punished.”

Mr. Piontkovsky also supported an international response to Russian corruption, saying it could potentially improve U.S.-Russian relations. Piontkovsky explained that while Kremlin aggression often lies beyond the legal jurisdiction of U.S. authorities, the U.S. and European governments still have a powerful tool at their disposal – measures to freeze Kremlin-linked assets.

“Activists and leaders of the Russian opposition call for the U.S. government to hit the most vulnerable point of the Russian kleptocracy – their huge assets in the U.S,” Piontkovsky said.

“We have a classical Al Capone situation. You remember that your famous gangster was tried and sentenced for tax evasion, not for hideous crimes,” he said, adding, “the Russian ruling leadership is a collective Al Capone,  who can be tried here for money-laundering.”

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*Section 241 of the new sanctions law, H.R. 3364, Countering America’s Adversaries Through Sanctions Act, requires the U.S. administration to submit a report (“Report on oligarchs and parastatal entities of the Russian Federation”) listing “the most significant senior foreign political figures and oligarchs in the Russian Federation, as determined by their closeness to the Russian regime and their net worth”. The report is expected to provide details on individuals’ relationships with President Vladimir Putin and other members of the Russian ruling elite, as well as identifying corrupt practices and estimating their net worth. Furthermore, the report must also assess the emergence, leadership structure and beneficial ownership of parastatal entities.

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