Sigrún Davíðsdóttir's Icelog

During the Cold War, both the United States and the Soviet Union used various ways to influence political leaders and decision makers all over the world. Parts of the Soviet power structure, most notably of the KGB, live on in Russia. Three angles are of interest: 1) Vladimir Putin’s Russia has for years sought to influence the West via Nord Stream. 2) Admiration of Putin as the strong man thrives on the far Right in Europe and elsewhere. 3) The evolving saga of US president Donald Trump’s Russian ties might show a new side of Russian influence if it turns out that the Trump empire did receive Russian funds in its hour of need. – In addition, the Magnitsky Act proves to be an intriguing prism on Russian influence in the West.

Nord Stream and Nord Stream 2

The planning of a Russian gas pipeline from Russia to Europe started in the 1990s. It happened in an atmosphere of uncertainty following the collapse of the Soviet Union as to how the Russian relationship with the democratic West could or would develop. Some even thought Russia could join the North Atlantic Treaty Organisation, Nato.

From the beginning, Nord Stream was developed within and closely related to Gazprom, the Russian state-owned natural gas company founded in 1989 and a key factor in the Russian power structure. The first concrete step towards the pipeline was taken in 1997 but in 2005, the year the construction started, Nord Stream AG was incorporated in Zug, Switzerland. Gazprom has had various partners over the years but it still holds 51% of the shares.

In the countries affected by Nord Stream – Poland, the Baltic states, Finland, Sweden, Denmark and Germany – the effect of the pipeline in terms of environmental effect, national security, energy security and political influence has been a hotly debated topic all these years.

The pipeline was ceremoniously inaugurated in 2011 by Russian president Dmitry Medvedev, German Chancellor Angela Merkel and French Prime Minister Francois Fillon. Nord Stream 2 is now being planned.

Nordstream has always been about “Russia’s pipeline power” as Edoardo Saravelle at the Center for a New American Security wrote recently: Russia’s attempt to influence the US reaches far beyond attempting to influence the US presidential elections. “The pipeline is a naked Russian attempt to divide and conquer Europe. What makes the Kremlin so clever, and this effort so insidious, is that Gazprom has engineered an attractive business case for the project for a number of European gas importers,” writes Saravelle.

Due to the geo-political dimension of Nord Stream not only politicians and voters in the affected countries were interested in the Nord Stream development but also US politicians.

The Nord Stream effect

As German Chancellor 1998 to 2005, the social democratic leader Gerhard Schröder showed to begin with little liking for Boris Yeltsin’s Russia. That changed when Vladimir Putin, fluent in German after living there as a KGB agent, rose to power. One sign of Schröder’s strong ties to Russia was his enthusiasm for the Baltic gas pipeline and Nord Stream. One of Schröder’s last acts in office was to agree to a state guarantee of €1bn for part of the Nord Stream construction cost.

Only weeks after stepping down as Chancellor, Schröder accepted the Nord Stream offer to become head of the shareholder group of Nord Stream AG, a post he still holds. Not only Germans were shocked. Washington Post wrote an editorial on what the paper called Schröder’s “Sellout” – Democrat Congressman Tom Lantos, a holocaust survivor who died in 2008, chair of the House of Representatives foreign relations committee said that Schröder’s close ties to the Russian energy sector was “political prostitution.”

Equally, it shocked many Fins in 2008 when their social democratic Prime Minister 1995 to 2003 Paavo Lipponen became a Nord Stream consultant. A year later, Poland blocked Lipponen from being put forward as EU foreign policy chief because of his work for Nord Stream.

The new US sanctions against Russia enjoy a large bipartisan support in spite of Trump’s opposition. The new sanctions threaten to hit European companies working on the Nord Stream 2 joint venture with Russia, a major headache for the EU.

The far Right admiration for Putin

As social democrats and in spite of their ties to Putin’s Russia, both Schröder and Lipponen have been advocates of a strong and united Europe Union. But over the last decade or so, many far Right politicians in Europe and the US have shown great sympathy and even admiration for Putin.

Wholly ignoring the dismal state of the Russian economy under Putin and no matter his decidedly undemocratic and despotic tendencies many on the far Right seem to admire him as a strong leader. They have swallowed Putin’s own portrayal of himself, utterly ignoring that Putin’s iconography is unattached to reality.

The French leader of Front National Marine Le Pen and UKIP’s Nigel Farage are part of the Putin fan club. As is Republican congressman of California, Dana Rohrabacher who met with Putin in the 1990s and is known as one of Putin’s staunchest allies on Capital Hill, according to a May 2017 New York Times article.

This may well be a question of values but it can also be interpreted as flirting with an autocratic rule, characterised by “Constraints on the press, centralisation of power and various elements of nationalism” combined “with a backlash against progressive ideals and globalisation” as Olga Oliker expressed it in an article for International Institute for Strategic Studies, IISS.

Trump: more than a political admirer of Putin?

Donald Trump has shown the same admiration for Putin and autocratic rule as many on the far Right though Trump can in many ways not entirely be defined as a far Right; his vision is too rambling to show a single direction.

During his electoral campaign Donald Trump certainly flirted with ideas of autocratic rule: the idea that the president could do this and that unhampered by the House and the Senate, his many utterances against the media, his nationalistic stance and emphasis on US first, his disdain of international agreement and free trade.

Same tendencies can be found in his words and actions, or attempts to action, as president. And he does not hold back in his admiration for Putin as a person and a leader.

Last year, Republican Congressman and the House majority leader Kevin McCarthy was caught on tape saying: “There’s two people I think Putin pays: Rohrabacher and Trump.” McCarthy now says this was only a poor joke. However, indications of a much more direct Russian Trump connection than only an ideological dallying with anti-democratic ideas have now led to the investigation led by Richard Mueller.

Make Russia great again

Former National Intelligence Director James Clapper recently said that Trump’s actions were “making Russia great again.” – There is a certain irony that a US President who got voted on the slogan Make America Great Again is now being investigated for Russian ties – and one does not need Cold War glasses to understand the severity of the allegations.

But in many ways, Trump is only the icing on a Russian pie, rich of intriguing Russian ties to Washington DC. There is Rohrabacher, as mentioned earlier. Unconnected to Trump and not under investigation as far as is known, Trump’s Commerce Secretary Wilbur Ross has a particular interesting history of Russian relations. Ross led a group of investors recapitalising Bank of Cyprus in 2014, a year after a financial crisis shook the island, a safe haven for Russian money. Ross ousted some Russians from the board, leading to speculations he was not at all a friend of Russia.

However, Viktor Vekselberg, seen as central part of Putin’s financial empire, is now the largest single shareholder in Bank of Cyprus with a representative on the board. Ross appointed Joseph Ackerman, CEO of Deutsche Bank 2002 to 2012, as a chairman of the board of Bank of Cyprus. Deutsche Bank was so active in Russia in the 1990s that one source told me the bank should have been called Russische Bank. In January 2017 Deutsche was fined $630m for having laundered $10bn on behalf of Russians.

As sources indicate that Attorney General Jeff Sessions met Russian officials during the Trump campaign in spite of his earlier categorical denials Sessions is now under renewed pressure to testify again. Then there are the contacts Trump’s son-in-law and advisor Jared Kushner and Trump’s son Donald Junior had with Russians. Paul Manafort and Michael Flynn lost their jobs due to Russian ties. (See here a Washington Post overview over Team Trump and its Russian connections.)

Burt and his network

Richard Burt, a former journalist, US Ambassador in Federal Republic of Germany 1985 to 1989 during the Reagan administration and a known lobbyist for Russian interests, is one of those who have suddenly been swept into the limelight because of the investigation into Trump’s Russian connections.

Burt has confirmed that he was present at two dinners hosted by Jeff Sessions during the 2016 campaign. Sessions had explicitly denied having met any lobbyists working on behalf of the Russians. Burt said to the Guardian that Sessions possibly did not know of his activities though they are widely known in Washington.

It now seems certain that Sessions met Sergey Kislyak, who until recently was the Russian Ambassador to the US, at an event in April 2016 at the Mayflower Hotel, hosted by the magazine The National Interest in Washington. At this event Trump delivered his first major speech on foreign affairs. Burt was an adviser on that speech but has said little from his notes was taken up in the speech.

An article in April this year in The National Interest, published by the think tank Center for the National Interest where Burt is on the board, gives an idea of Burt’s view on Russia. In “A Grand Strategy for Trump” Burt advocates that a US military build-up could incentivise Russia “to seek a more productive relationship with the West.” Other steps would be “finding a settlement in Ukraine, examining ways to cooperate in fighting ISIS, and addressing a new agenda of military threats and non-proliferation.”

The problem, according to Burt, is the “current Russiagate mania” “a partisan and increasingly hysterical debate in Washington over what, if anything, the Trump campaign did to assist Russian hackers in intervening in the 2016 elections.” Quoting Henry Kissinger that “demonizing Putin is not a strategy” Burt then asks: “if the United States gave up, at least for now, its twenty-five-year-old policy of turning Russia into a Western-style democracy, but instead focused on the external threats it poses, would a more politically secure Kremlin be prepared to respond positively?”

Burt is a managing director at McLarty Associates, previously part of Kissinger McLarty Associates. In his role at McLarty he has been a lobbyist for Nord Stream II. In addition he is on the board of Deutsche Bank closed-end funds. He has also been an adviser for Alfa Capital Partners, the investment arm of Alfa Bank, operating in Russia, the Netherlands, UK, Belarus, Ukraine and Kazakhstan.

The Group’s largest investor, holding 32.8%, is Mikhail Fridman, the Ukrainian oligarch who over the years has managed to distance himself from Russia and Kremlin with his wealth intact in spite of some skirmishes: Fridman was forced to sell his stake in the oil company TNK-BP, the Russian joint venture with the BP, to the Kremlin controlled Rosneft but he apparently got a full price in cash at the top of the cycle, according to a Forbes in November 2016, written when Alfa had become part of … yes, the Trump story.

Incidentally, Gerhard Schröder sat for a while on the board of the TNK-BP. And Deutsche Bank has over the years been the largest lender to the Trump empire.

The Magnitsky prism: what does it mean talking about adoption?

“It was not a long conversation, but it was, you know, could be 15 minutes. Just talked about — things. Actually, it was very interesting, we talked about adoption… We talked about Russian adoption. Yeah. I always found that interesting. Because, you know, he (Putin) ended that years ago. And I actually talked about Russian adoption with him, which is interesting because it was a part of the conversation that Don [Jr., Mr. Trump’s son] had in that meeting.” – This is how Trump described his tête-à-tête with Putin at the G20 dinner in July in a New York Times interview.

Talking about adoption sounds very innocent – except the context is less so: Putin put an end to Americans adopting Russian children in retaliation to the Sergei Magnitsky Rule of Law Accountability Act, passed in the US in 2012. Only now is a similar act finding its way into UK law in the Criminal Finance Bill. Similar law is being passed in Canada, Estonia has already its Magnitsky Act and it has been discussed in the EU.

The hedge fund manager Bill Browder hired Magnitsky as his lawyer but after exposing $230m tax fraud enriching Putin and his cohort, Magnitsky was imprisoned in Moscow in autumn 2008 and died from torture in prison a year later. Browder’s book “Red Notice” (2015) is a horrifying exposé of the whole fraud saga leading to Magnitsky’s death.

As Browder explained in a recent interview, Kremlin pays the lawyer Natalia Veselnitskaya and others millions to lobby against the Magnitsky Act. In addition to being Browder’s nemesis in fighting the Magnitsky Act she has represented Russians, with ties to Kremlin, who had their assets frozen by the US Department of Justice frozen due to the Act.

In general, corrupt politicians and officials need to get their funds abroad in order to be able to make use of these funds to pay bribes, invest etc. An essential part of corruption is of course that it is hidden and those who operate by corrupt means operate through others. With funds abroad they can promise the helpers impunity and payment abroad.

Putin, often estimated to be the richest man in the world, is no exception: if the flow of funds abroad is hindered his power is seriously diminished. The Magnitsky Act hits this flow and has exposed Putin’s Achilles heal.

Trump’s interest in adoption relates directly to the campaign against the Magnitsky Act, exposes the Russian enablers and the extensive Russian attempts to influence US politics, ultimately a serious threat to the security of the West and rule of law and democracy.

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