Tuesday, December 20, 2005

For A Few Rubles More

Garry Kasparov, on the Schroeder/Gazprom scandal:
One small step for Vladimir Putin, one giant leap for corruption in the West. Just days after being pushed out of office as chancellor of Germany, Gerhard Schröder made sure he wouldn't add to the high rate of unemployment he left behind. Last week he accepted a top post with Russian energy giant Gazprom, the company in charge of a controversial gas pipeline project that he actively supported as chancellor.

The dubious ethicality of this move and the speed with which it was made lead to many obvious questions about whether or not Mr. Schröder abused his office to set up this deal, especially as he was trailing badly in the polls for most of the campaign against Angela Merkel. But the groundwork for his new job was laid out in advance as part of a well-organized operation that brought in capital before personnel.

Mathias Warnig, as head of Russian operations for Dresdner Bank, first brought in a deal to purchase 33% of Gazprombank in August. (Dresdner also helped the Kremlin pick the bones of the Yukos oil company headed by Mikhail Khodorkovsky, now in a Siberian jail.) Accordingly, Mr. Warnig was given a top position at the North European Gas Pipeline Company. Finally everything was ready for the arrival of Mr. Schröder.

The deal keeps everything in the family as Mr. Warnig was a spy for the East German secret police, the Stasi, at the same time Mr. Putin was running agents for the KGB in Dresden. As Mr. Putin himself has said, there is no such thing as a former KGB agent.

In reality this is the lesser story -- that Germany's most powerful politicians and businessmen can be purchased the way a Russian oligarch might buy an aristocratic Bavarian estate to gain entry to high society.

The larger picture is of how Mr. Putin has made the nation's energy resources the center of his ruling clique that has erased the lines between public and private power and assets. Does the state run Gazprom or does Gazprom run the state? Mr. Putin has made a priority of further tightening the unholy bond between his regime's internal and external goals and the company that provides most of the natural gas to Central and Eastern Europe. They are not state-run companies; they are the state.

Gazprom's chairman Dmitry Medvedev was recently named first deputy prime minister while deputy chief of staff Igor Sechin heads the other energy goliath, Rosneft. That's not the only reason Rosneft is unlikely to be investigated for its takeover of Yukos's prime asset Yuganskneftegas in a bogus auction one year ago. Taking La Famiglia literally, Mr. Sechin's daughter is married to Attorney General Vladimir Ustinov's son. Mr. Schröder is not joining a company; he is joining the Putin administration.

Mr. Schröder's country and his Social Democrat Party must censure him for dragging them through the mud on his way to work. For Mr. Schröder's price, Gazprom and Mr. Putin's regime are buying legitimacy in the eyes of the West. By putting the company on the market and stocking its board with prominent foreigners, he is also creating a backup plan in case things don't work out on the home front. After years of dirty dealing, Mr. Putin and his cronies can hardly afford to lose control and risk having their abuses brought to light. So they are attempting to spread both assets and culpability. While they proclaim the need to shield Russia from the evils of Western influence, the KGB are themselves comfortable with capitalist tricks -- in times of uncertainty, diversify your portfolio.

These deals also provide the Kremlin with priceless propaganda fodder. They trumpet their coup abroad and at the same time the state-controlled media will present it as an example of how the West is only after money and oil. Totalitarian regimes everywhere love to tell their citizens that, for all their professed interest in democracy and human rights, Americans and Western Europeans are just as corrupt as their own leaders. It does tremendous damage to the pro-democracy cause in Russia when the former leader of the world's third-largest industrial nation enthusiastically allies himself with authoritarian thugs.

Using energy as a political weapon is a tried and tested tactic, and with big Western names out front Gazprom will act with even more impunity. Having failed to install another Kremlin flunky in Ukraine, Gazprom has now quadrupled gas prices to Russia's neighbor. The latest threat is to cut off winter gas supplies entirely if the Ukrainian administration doesn't bow down to Russia's will. Georgia and the Baltic states are receiving similar treatment: Toe the Kremlin's political line or get ready for a long, chilly winter. Call it the new "cold" war.

While Mr. Schröder's leap was causing small outbursts of indignation, another supplicant headed to Moscow for a job interview. The Russian press is full of rumors that Donald Evans, former U.S. commerce secretary and an old and dear friend of George W. Bush, was offered the position of chairman of Rosneft during recent meetings with Mr. Putin. They are looking to cover their tracks with a big IPO in 2006 and are shopping around for a prestigious front man to calm Western fears. Mr. Evans would formally put the Bush administration's heretofore unspoken presidential seal of approval on the Kremlin's dirty dealings.

This is the latest Kremlin strategy -- to co-opt and hush the Western nations by making them complicit in its crimes. When everyone is guilty, no one is guilty, goes the logic. We have seen the price paid for these see-no-evil policies on civil liberties and in Chechnya. Now Western leaders will also have to resist the calls of their bank accounts, not merely the calls of their conscience.

Oil, gas, politics, intimidation and repression, all are mixed together while one hand seeks to soap the other clean. When Mr. Putin and his friends are swept out and independent courts are established in Russia, Mr. Schröder and other foreigners trying to make a quick ruble may find that oil leaves stains that are terribly difficult to remove. Out, damned spot!
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