Cracking story below on Bill Browder (above) from the WSJ. There’s an interesting local angle to the hedge fund manager turned activist who has been campaigning (successfully) against Putin for a decade and a half.
I met and interviewed the author of bestseller Red Notice in London in September 2018. Browder described SA as “probably my favourite country in the world”, owned a house here and had made it his second home. But stopped coming because fears of fears of being arrested by Zuma on his pal Putin’s orders and deported to Russia.
Some housekeeping, too, this morning.
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More for you to read today:
- Ukraine Seeks to Exploit Shift in Russia’s Military Strategy. A Russian-held town in the northeast is back in Ukrainian hands, says Kyiv, as it seeks to capitalise on Moscow’s pivot to controlling the south and east
- The Riskiest Bets in the Stock Market Are the Most Popular. Market swings have triggered a stampede into exotic exchange-traded products
- On Russia and Ukraine, the Opposition, not the ANC, Speaks for SA. Greg Mills and Ray Hartley of The Brenthurst Foundation ask ‘How can South Africa’s foreign policy credibility be restored?’
- How to Invest Calmly in a Chaotic World. You don’t have to act on your own forecasts about global events. You don’t even have to make any.
Putin foe says Russian’s $200bn wealth motivated “jailyard psychology” Ukraine attack
Bill Browder, the man behind the Magnitsky Act, says he’s surprised and delighted with the strength of the West’s sanctions: ‘I was a lone voice for 10 years.’
By Tunku Varadarajan of The Wall Street Journal
The Russian army’s astonishing underperformance in Ukraine has been attributed to a combination of Ukrainian heroism and rock-bottom morale among Russian soldiers.
Bill Browder points to a third explanation: corruption. “My estimate,” he says, “is that 80% of the military budget is stolen by Russia’s generals, because 80% of all budgets in Russia are stolen by the officials in charge.”
The army has been “gutted by all this corruption.” Money meant to pay soldiers has been 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 does. For more than a decade, he’s been among the world’s most vocal crusaders against Vladimir Putin, whom he calls “the greatest kleptocrat of the modern era.”
The Anglo-American Mr. Browder, 57, was the largest private investor in Russia until his expulsion from that country in 2005.
This was for attempting to investigate the theft from the Russian treasury of $230 million in taxes his company, Hermitage Capital, had paid. After Russia booted Mr. Browder, his Moscow lawyer, Sergei Magnitsky, pursued the investigation and was beaten to death by police in riot gear in a prison cell in 2009.
Mr. Browder has written in detail of these events in “Red Notice” (2015) and a sequel, “Freezing Order,” to be published next month. Mr. Browder’s relentless lobbying over the next decade—driven by grief and anger over Magnitsky’s murder—has led 34 countries to enact laws that impose sanctions on humanrights violators in Russia. The U.S. version is known informally as the Magnitsky Act.
As with many zealous men, there’s a touch of immodesty to Mr. Browder’s righteousness.
“The entire world has joined me,” he says, in the wake of the invasion of Ukraine by Mr. Putin, whose status as a pitiless despot is now undisputed. “I was a lone voice for 10 years. But over a 48-hour period, the entire world has joined me.”
Speaking to me by Zoom from his house in central London, Mr. Browder becomes visibly animated when we talk of Mr. Putin’s personal worth. “It’s north of $200 billion,” he says. “None of the money is in his own name. All of it is in the name of his oligarch trustees.”
He offers a ready reckoner to calculate Mr. Putin’s wealth: Tot up the worth of every oligarch and divide the sum by 2. Half their wealth is “held in trust” for Mr. Putin. “Basically, in order to be rich in Russia, you can only do it at the pleasure of Vladimir Putin. He can take it away from you at any point unless you do things he asks you to do.”
There may be people “who started out as nice individuals,” but they’ve all “effectively given in to his extortion and have become his partners.”
The quantum of Mr. Putin’s ill-gotten wealth, as estimated by Mr. Browder, leads me to ask what the Russian president could conceivably do with all that money. “Well, it’s not about having it for his retirement,” Mr. Browder chuckles. “It’s about power.”
The money, he says, is Mr. Putin’s only so long as he’s ruling Russia. “The moment he’s not in power, none of these handshake deals 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, meanest, richest, everythingest person if you’re going to be the dictator.”
Mr. Browder describes this as “medieval. It’s not civilized.” In America, he points out, “you can be rich and not have any political power, or you can be powerful and not have any money. But in Russia you have to have everything.”
He says Mr. Putin has watched with alarm the political unrest in Belarus, where a democracy movement has weakened Alexander Lukashenko, the local dictator. The Russian ruler has also been spooked by events in Kazakhstan, where the country’s strongman, Nursultan Nazarbayev, was toppled in 2019 in a popular revolt over gasoline prices.
“Putin understands that that’s the kind of thing that could happen to him. Any dictatorship can change on a dime.”
Mr. Browder believes that Mr. Putin felt a comparable shiver of precariousness in 2008, when he invaded Georgia, and 2014, when he barged into eastern Ukraine and annexed Crimea. Again this year, “Putin believed he needed a good war. And so the fundamental motivation for invading Ukraine was about staying in power.”
The invasion could turn out to be a miscalculation for the ages.
The US, UK and European Union have surprised Mr. Putin with the severity of their sanctions—and surprised Mr. Browder, too. “We’ve outperformed our own history in a most dramatic way,” he says.
He lists Mr. Putin’s past transgressions that went unpunished or provoked insufficient sanctions: the 2008 and 2014 invasions, the 2014 shooting down of Malaysia Airlines Flight 17, and the poisoning by a nerve agent of two Russian citizens in the British town of Salisbury in 2018.
“Putin was looking at the West and saying, ‘I don’t think that anything serious will happen this time around.’ And then all of a sudden, something pretty damned serious happened, which is a total economic blockade of Russia.”
This is “even more extreme than I could have ever imagined, that I might have even asked them to do based on my own thoughts about what the West was capable of.”
He’s particularly surprised—and delighted—that the West is going after Russia’s oligarchs “on a major basis.” He had “been screaming from the rooftops for the last 10 years that if you want to hit Putin, go after his money. And if you want to go after his money, go after the oligarchs.”
In the past, the West has always imposed sanctions on government officials “or some nobody who didn’t matter. “We’re hitting people on the Forbes list, all the way down. That really impresses me.”
When Mr. Putin invaded Georgia, he cited provocations by 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 the UK shared their intel “on the nightly news, in every country, with every government.”
So when Mr. Putin “tried to do his plausible-deniability thing, saying there was a provocation, that it was the Ukrainians’ fault, everybody had a common set of facts to react to. And anyone who was even mildly predisposed toward appeasement of Putin couldn’t justify it, because it just wasn’t true.”
Yet the sanctions against Russia have a way to go before they would truly satisfy Mr. Browder. “What’s been done so far? We’ve frozen the assets of the Central Bank of Russia, so they have no access to their dollars, sterling, euros, yen, Swiss francs and Canadian dollars.” That’s about $350 billion—“pretty impressive because that was Putin’s war chest.”
The West has also disconnected “about 70%” of Russia’s banks from the Swift financial system. But that leaves a third of Russian banks within Swift, including Sberbank, the largest.
“What’s the logical thing to do? If you can’t make international payments with one set of banks then you move them over to the other set of banks.” Until the West disconnects all Russian banks from Swift, Mr. Browder says, that’s an “incomplete sanction.”
He also wants the oligarchs hit as hard and as widely as possible. “The central bank is where the internal money of the government is kept—the war chest. But the oligarchs have the external money—Putin’s money—in amounts even larger than the central-bank reserves.”
So far, he says, only about a dozen oligarchs have been subject to sanctions. “We’ve gotten some good ones— Roman Abramovich and Oleg Deripaska and Igor Sechin. The problem is that there are 100 oligarchs. To do this properly, we need to sanction another 88.”
Mr. Browder is also impatient that the West continues to buy oil and gas from Russia. He acknowledges that will be “hard to stop,” given the total reliance on Russian energy of countries like Italy and Austria and Germany’s dependence on Russia for 40% of its energy.
“All that generates between half a billion and a billion dollars a day for the Russians”—for Mr. Putin to fund his war. The West also needs to lean hard on China “to not become Putin’s lender of last resort,” Mr. Browder says. “If we do that, he’s fully economically surrounded.”
The Chinese have had a “rude awakening as they watch what’s happened to Putin,” and that will push them toward secretiveness in helping Mr. Putin: “They can’t do it in a big way without being caught.”
What helps the West is that the Chinese are “mercantilist,” and thus loath to lose markets to sanctions. Years of grappling with Mr. Putin have taught Mr. Browder that the Russian president has a “prison-yard psychology. He absolutely cannot allow anyone to disrespect him.” Someone who does, has to be attacked, “not just a little bit, but eviscerated.”
In a broad way, Mr. Browder says, Ukraine disrespected Mr. Putin. “He wanted Ukraine to be a subservient country 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 a 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 appear quiescent, perhaps unaware of the true nature of the war in Ukraine being fought in their name.
Mr. Putin’s information blockade, Mr. Browder says, is “one of the hardest nuts to crack.” He’s shut down all real sources of information and “bombarded the Russian people with an outright lie.”
Yet information is trickling through. “Arnold Schwarzenegger’s video message went viral on Russian [social] media networks.” The former California governor addresses the Russian people directly for nine minutes and speaks of “the terrible things that you should know about” that the Russian army is doing in Ukraine.
And there’s one thing Mr. Putin can’t block: “Whatever information blockade he puts up can’t prevent mothers from grieving for their dead sons. And for every dead son, there are family, friends, parents, siblings, who will feel that pain.”
Ukrainian sources estimate Russia has lost as many troops in the first month of the invasion as the Soviet Union lost in Afghanistan.
“There may not be an oligarch uprising, but there may be an uprising of mothers.”
* Mr. Varadarajan, a Journal contributor, is a fellow at the American Enterprise Institute and at NYU Law School’s Classical Liberal Institute.
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