UKRAINE: HOW WE GOT HERE, HOW WE BEGIN THE RESET

My latest article published in the Bakersfield Californian yesterday ...

Almost 60 years ago President John F. Kennedy was faced with the Cuban Missile Crisis. Alarmed over the Soviet Union’s placement of nuclear-armed missiles in Cuba, Kennedy imposed a naval blockade around Cuba which ended a crisis many believed would start World War III, or a nuclear exchange.

The Cuban Missile Crisis is instructive today because the U.S. is currently trying to force Russia out of strategically significant Ukraine. While the political players have changed – communist Russians replaced by a kleptocratic dictator – Russia’s objectives are again tied to broader geostrategic concerns. Unfortunately for Russia’s Vladimir Putin, the threats he sees are the product of a dictator’s delusional fantasies.

There’s no Cold War. Ukraine, unlike Cuba in 1962, wants nothing to do with Russian security obsessions. Perhaps more importantly, Vladimir Putin and his billionaire oligarchs have gotten fabulously rich playing in an international community made stable by a remarkably durable post-war world order created by a complex set of U.S.-led political, military, and economic alliances.

Put another way, Putin’s acting like a paranoid strongman from another era, complete with sycophantic oligarchs too self-serving to discourage his geostrategic delusions. The oligarchs inability to reign in Putin is a product of crushing tyranny at home and incremental developments around the globe which has Putin believing he’s smarter than he is.

Among these developments include how Putin’s aggressive political gambles in Georgia (2008), Crimea (2014), and eastern Ukraine (2014) paid off. In each of these instances Putin understood Western allies wouldn’t have the stomach to back up U.S. threats because of how both Presidents Bush and Obama bungled America’s post-9/11 responses in Afghanistan and Iraq. Bush’s war of aggression and Obama’s nation-building failed so miserably their blustering threats over Putin’s land grabs were effectively ignored.

Simply put, America had a credibility gap.

Putin’s also been buoyed by the ascent of the dictators. Kim Jung Un, Xi Jinping, Jair Bolsonaro and Recep Tayyip Erdoğan (among others) have created a sense around the world that democracy’s in trouble. Putin, in turn, believes democracies are too weak to respond to “muscular” policies from the world’s wannabe biker guys.

Perhaps the most disturbing development is what Robert Mueller characterized as Putin’s successful “interference” in America’s 2016 elections. What Putin got in return paid off in spades.

Because Putin’s position is strengthened every time Western alliances are weakened, his global hand was enhanced when Donald Trump applauded Brexit, undermined NATO unity by contemplating leaving the alliance after complaining about “deadbeats” (an untrue characterization), sabotaged the Trans-Pacific Partnership and pulled America out of the Iranian nuclear deal. But Putin really profited when Trump turned Ukrainian policy over to Rudy Giuliani and crafted pro-Russian policies his own national security advisors, Fiona Hill and John Bolton, have made clear undermined America’s security interests.

These geostrategic developments enhanced Russia’s position globally (while diminishing America’s). Putin’s meddling in American politics really paid off when his political avatar, Donald Trump, tried to extort Ukraine’s President Zelensky for already agreed upon weapons by asking for a personal “favor” – an investigation into Joe Biden’s son. For his troubles Trump would secure his first impeachment.

Trump’s national security advisor for Europe and Russia, Fiona Hill, saw through all of this and pointed out trying to extort President Zelensky –as Trump pursued Russian-friendly policies, while lavishly praising Putin – effectively told Russia “Ukraine was [their] playground.”

Putin understood how these developments were augmented by America’s growing political divide domestically, which was inflamed by the attempted overthrow of America’s democracy on January 6^th. Specifically, Putin learned millions of Americans have absolutely no problem abandoning America’s constitutional principles.

America’s growing political divide combined with the GOP’s cult of personality obsession reinforces Putin’s hand on many levels. A divided America – which the “Big Lie” and Trump’s praise for Putin’s Ukrainian invasion contribute to – ensures America’s Ukrainian response will be relatively muted.

This is unfortunate because as Fiona Hill points out, “The polarization of American society has become a national security threat, acting as a barrier to collective action” against legitimate external threats.

The world is now confronted with a genuine crisis in Ukraine that could spin out of control quickly. With Vietnam, Afghanistan, Iraq in America’s shadow, blustering macho buffoonery can no longer carry the moment with our allies. Reckless wars from our past, coupled with a divided America gripped in a toxic cult of personality environment, have created a precarious moment in our time.  

Incredibly, while past failed military engagements and the coup attempt inspired by the “Big Lie” have stained American prestige, know the world is once again looking to the U.S. for leadership. This is a good thing.

With sanctions applying pressure, air space cut off and Russian oligarchs seeing their assets seized around the world, Putin cannot be pleased knowing Ukrainians are preparing for a drawn-out urban warfare scenario – just as supplies begin arriving from Europe. Let’s remember the 13 days in October 1962 ended precisely because alliances, informed negotiations, and diplomatic entreaties – not always on the front pages – worked.

Expect these dynamics, along with the institutional relationships being rebuilt by Western leaders, to have a similar impact. Bet on it.

Mark A. Martinez, Ph.D., is professor and chair of the Department of Political Science at CSU Bakersfield. 

- Mark

MY RUSSIAN FB FRIENDS HAVE RETURNED ... WELCOME BACK, AND За здоровье!

My Russian friends are back.

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A few years ago - specifically, during the 2016 election season - the number of hits that I received on my blog started to surge. I went from an average of 10,000 hits a month to a solid 15,000, then 20,000 and even managed to surpass 40,000 hits one month.

A quick check showed that the new audience was driven by clicks from Russia. Whether the clicks were driven by bots (most likely; I'm not that vain) or by the fact that I was writing a good deal about Russia - specifically, I was writing about Russian intrigue in Crimea, the Trump-Putin connection, or the developments surrounding the Russian Oligarchs - was unimportant. I'm not even interested in total clicks for financial reasons because I don't advertise anything (and ignore all requests to post ads).

As a political scientist my interest in the click surge was watching what was happening in real time as we were also learning how sophisticated the Russian social media and cyberwar game had become.

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In very simple terms, I was impressed with what the Russians had put in place, and how effective their cyber intrusions had become (I was/am also a little disappointed in how clueless our electorate has become, and how spineless the GOP has become when it comes to Trump and Russia, but those are stories for another day).

Then the Russians virtually disappeared about a year and half ago. To be sure, I stopped posting as much as I normally did, but the disappearance was noticeable in my overall number of hits.

Today, I'm not so much writing about Russia's foreign policies (Putin's getting what he wants), the Russian oligarchs (they're happy-ish) or the Trump-Putin connection (Putin's abusing him like a government mule) as I am writing about Trump's political free fall. And, it would appear, my Russian FB friends are back to monitor the collapse.

At least that's my take on their return.

In any event, I say welcome back. And while I'm not happy watching our great nation being torn apart by our compromised bumbling buffoon of a president, and his Republican sycophants, speaking as a political scientist, За здоровье!

- Mark

SEEING RED IN COLORADO

GOP billboard seen in Colorado, about sums it up ...

- Mark

Addendum: Let me add a word for those who think the hammer and sickle - a holdover from the Soviet Union days of the past - is inappropriate because Russia is no longer a communist state ...

Because Russia today is an authoritarian state run by a dictator and his oligarchic hooligans, in effect what we have is a biker gang running Russia. In many ways, while the Russian state is not communist or Marxist-Leninist (nor remotely run to benefit the workers) Russia is run very much like the Soviet authoritarian state of the past.

In simpler terms, Russia's run for the benefit of Vladimir Putin and the oligarchs, much like it was run for the benefit of one man and the politburo (the Soviet Union's highest authority making body). In fact, we could probably use the politburo's flag - like the flag replica below - but most people don't understand the history or meaning of the politburo.

 

The hammer & sickle are important reminders of the Russian dictatorship. So, while the hammer & sickle may not convey the heyday of the "worker's state," they're quite appropriate for those who understand Russia's authoritarian DNA.

Addendum, II: For those of you who want to read more about how the GOP's trickle-down economic policies coincide with the Soviet Union's state-led policies you can read, "The Republican Tax Plan is Trickle-Down Economics, Soviet Style" by clicking here.

LET'S DISPENSE WITH THE "DEEP STATE" STUPIDITY ONCE AND FOR ALL

Below is a clip of additional testimony from FBI agent Peter Strzok's congressional hearing. What Agent Strzok's telling the world is that he's not part of some FBI-CIA-NSA coordinated "deep state" conspiracy that many of Trump supporters have embraced.  

Below I've copied and pasted a "deep state" post I wrote this past March. Drawing from the contents of a Foreign Policy article on the "shallow state" I explain why we need to dispense with the distracting and ill-informed conspiratorial "deep state" theories out there. This is necessary if we want to confront the very real ignorance and stupidity that the Trump administration has embraced and ushered into our nation's politics. Enjoy.

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Last year, just as the Trump administration was settling into the White House, David Rothkopf wrote in Foreign Policy about "The Shallow State." The message was clear. We should move past social media-fed Deep State conspiracy theories. We have something far more dangerous in front of us. And it isn't the Deep State monster that right-wing Twitter and blog experts like to speak spookily about because they like to believe they've cracked some kind of mysterious code (which only they could have uncovered, of course).

In fact, let me kill the drama on this one. The Deep State is basically made up of career bureaucrats, doing their job, who essentially keep the trains running on time (as it were). I know, kind of boring, huh? (Let me add, just because you don't understand bureaucracies, or the concept of checks and balances, doesn't mean your conspiracy nightmares and inflated sense of your analytical skills have to be taken seriously.)

So, instead of indulging the tin foil hat crowd, and the many Deep Staters who are part of this group, Foreign Policy's Rothkopf argues convincingly we need to worry about the growing power of an arrogant but ignorant group of people who both disdain expertise they don't understand, and willfully walk away from evidence they don't want to hear. On this, Rothkopf writes that the Shallow State is made up of people who:

... not only actively eschews experience, knowledge, relationships, insight, craft, special skills, tradition, and shared values but [they instead celebrate their] ignorance of and disdain for those things. Donald Trump, champion and avatar of the shallow state, has won power because his supporters are threatened by what they don’t understand, and what they don’t understand is almost everything. Indeed, from evolution to data about our economy to the science of vaccines to the threats we face in the world, they reject vast subjects rooted in fact in order to have reality conform to their worldviews. They don’t dig for truth; they skim the media for anything that makes them feel better about themselves. To many of them, knowledge is not a useful tool but a cunning barrier elites have created to keep power from the average man and woman. The same is true for experience, skills, and know-how. These things require time and work and study and often challenge our systems of belief. Truth is hard; shallowness is easy.

Think about it. In little over a year since Donald Trump took the oath of office, and we see the following political disasters unfolding in front of America's eyes:

* WESTERN ALLIANCE FRAYED: A fractured western alliance, and collapsed confidence in America's capacity to lead around the world. 

* FRACTURED TRADE: America's withdrawal from - and failure to negotiate - commercial agreements, with no talks of replacement. 

* LAW ENFORCEMENT UNDER ATTACK: Both the Trump administration and Republican leaders are attacking the FBI, a national law enforcement icon, for no other reason than to protect their Russian flank. 

* TARIFF STUPIDITY: Donald Trump wants to childishly impose tariffs, in spite of a wall of history telling him that it's a phenomenally stupid idea. 

* TRADE DEFICITS: The U.S. now has a trade deficit that's more than double what it was before Trump entered office. 

* TRILLION $ BUDGET DEFICITS: We have trillion dollar budget deficits, again, even though there was no national emergency like the 2008 market crash to induce the spending spree. 

* DOMESTIC VIOLENCE: Murders by white supremacists have doubled, while anti-Semitic crimes have also increased. 

* FAILED LEADERSHIP: The U.S. has seen its position eroded in Asia (to China), the Middle East (Syria and Iran are now looking to Moscow,), Eastern Europe (to Mother Russia), Africa (the shithole countries were listening), and Mexico (no explanation necessary here). 

All of these developments, in just one year, require some serious incompetence. But wait, it gets better (or is that worse?).

We now have a president who's doing Vladimir Putin's bidding. Think about it. In Putin's wildest dreams he could never have expected an American president to refuse to impose bipartisan authorized sanctions against Russia, then impose tariffs that drives a wedge between the U.S. and its allies and then, for good measure, continue to say and do things that divide America along racial and class lines.

But with Trump, and his legion of Shallow State supporters, Vladimir Putin has gotten all three. And all for what? Because Trump owes Russian oligarchs a few bucks? Because Putin has incriminating or embarrassing evidence on him? Because our modern GOP is more interested in getting their Ayn Rand (who was a Russian immigrant) inspired agenda accomplished? Pick your poison. Either way, the damage Donald Trump and his Shallow State legion of sycophants is doing is real. Very real.

So let's forget about the conspiracies and what the Deep State is supposed to have done. It's the reality behind the idiots currently running the Shallow State who we should be worried about.

- Mark

THE SHALLOW STATE ... ONE YEAR IN AND IT'S WRECKING AMERICA

Last year, just as the Trump administration was settling into the White House, David Rothkopf wrote in Foreign Policy about "The Shallow State." The message was clear. We should move past social media-fed Deep State conspiracy theories. We have something far more dangerous in front of us. And it isn't the Deep State monster that right-wing Twitter and blog experts like to speak spookily about because they like to believe they've cracked some kind of mysterious code (which only they could have uncovered, of course).

In fact, let me kill the drama on this one. The Deep State is basically made up of career bureaucrats, doing their job, who essentially keep the trains running on time (as it were). I know, kind of boring, huh? (Let me add, just because you don't understand bureaucracies, or the concept of checks and balances, doesn't mean your conspiracy nightmares and inflated sense of your analytical skills have to be taken seriously.)

So, instead of indulging the tin foil hat crowd, and the many Deep Staters who are part of this group, Foreign Policy's Rothkopf argues convincingly we need to worry about the growing power of an arrogant but ignorant group of people who both disdain expertise they don't understand, and willfully walk away from evidence they don't want to hear. On this, Rothkopf writes that the Shallow State is made up of people who:

... not only actively eschews experience, knowledge, relationships, insight, craft, special skills, tradition, and shared values but [they instead celebrate their] ignorance of and disdain for those things. Donald Trump, champion and avatar of the shallow state, has won power because his supporters are threatened by what they don’t understand, and what they don’t understand is almost everything. Indeed, from evolution to data about our economy to the science of vaccines to the threats we face in the world, they reject vast subjects rooted in fact in order to have reality conform to their worldviews. They don’t dig for truth; they skim the media for anything that makes them feel better about themselves. To many of them, knowledge is not a useful tool but a cunning barrier elites have created to keep power from the average man and woman. The same is true for experience, skills, and know-how. These things require time and work and study and often challenge our systems of belief. Truth is hard; shallowness is easy.

Think about it. In little over a year since Donald Trump took the oath of office, and we see the following political disasters unfolding in front of America's eyes:

* WESTERN ALLIANCE FRAYED: A fractured western alliance, and collapsed confidence in America's capacity to lead around the world. 

* FRACTURED TRADE: America's withdrawal from - and failure to negotiate - commercial agreements, with no talks of replacement. 

* LAW ENFORCEMENT UNDER ATTACK: Both the Trump administration and Republican leaders are attacking the FBI, a national law enforcement icon, for no other reason than to protect their Russian flank. 

* TARIFF STUPIDITY: Donald Trump wants to childishly impose tariffs, in spite of a wall of history telling him that it's a phenomenally stupid idea. 

* TRADE DEFICITS: The U.S. now has a trade deficit that's more than double what it was before Trump entered office. 

* TRILLION $ BUDGET DEFICITS: We have trillion dollar budget deficits, again, even though there was no national emergency like the 2008 market crash to induce the spending spree. 

* DOMESTIC VIOLENCE: Murders by white supremacists have doubled, while anti-Semitic crimes have also increased. 

* FAILED LEADERSHIP: The U.S. has seen its position eroded in Asia (to China), the Middle East (Syria and Iran are now looking to Moscow,), Eastern Europe (to Mother Russia), Africa (the shithole countries were listening), and Mexico (no explanation necessary here). 

All of these developments, in just one year, require some serious incompetence. But wait, it gets better (or is that worse?).

We now have a president who's doing Vladimir Putin's bidding. Think about it. In Putin's wildest dreams he could never have expected an American president to refuse to impose bipartisan authorized sanctions against Russia, then impose tariffs that drives a wedge between the U.S. and its allies and then, for good measure, continue to say and do things that divide America along racial and class lines.

But with Trump, and his legion of Shallow State supporters, Vladimir Putin has gotten all three. And all for what? Because Trump owes Russian oligarchs a few bucks? Because Putin has incriminating or embarrassing evidence on him? Because our modern GOP is more interested in getting their Ayn Rand (who was a Russian immigrant) inspired agenda accomplished? Pick your poison. Either way, the damage Donald Trump and his Shallow State legion of sycophants is doing is real. Very real.

So let's forget about the conspiracies and what the Deep State is supposed to have done. It's the reality behind the idiots currently running the Shallow State who we should be worried about.

- Mark

THE REPUBLICAN TAX PLAN IS SOVIET-STYLE TRICKLE DOWN ECONOMICS

The post below is reworked from a post I did six years ago. I've updated it so that it coincides with current political developments.

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Last week our Republican-led House of Representatives took another step towards transferring hundreds of billions of dollars to America's richest class, and denying millions of Americans health care. On Thursday the U.S. Congress passed their version of a tax bill that shifts wealth and resources from the poor and middle-classes to the rich. 

Promising that money and resources will eventually trickle down to those at the bottom if the rich have more money to play with is an old scam. It goes back even farther than when Ronald Reagan proposed the idea in 1980. Indeed, many might be surprised to learn the Soviet Union helped invent the scam when their socialist experiment first revealed itself to be a failure in the 1920s. 

Simply put, Soviet revolutionaries needed the big hand of the Russian state to make their "stateless" communist utopia come to life. Similarly, Republican free marketeers today are using "big government" and favorable legislation to transfer massive amounts of wealth to the already rich. It's the only way their "government bad-free/markets good" dystopia can work.

Somehow, arguing "our free markets can only succeed if we use the state to transfer massive amounts of wealth to those who already have a lot of money" isn't a ringing endorsement for free markets, or entrepreneurialism. Seriously, how does having billions of dollars dumped in your lap through favorable legislation make you an entrepreneur?

A peak into the Soviet Union's failed experience with their version of trickle down economics can help us understand how intellectually and ideologically bankrupt the Republican's "Tax Cuts and Jobs Act" billion dollar wealth transfer really is. 

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THE SETTING
While explaining the logic behind market economics, in my book I discuss how Russia's peasant economies worked after the 1917 October Revolution. The biggest challenge Russia's revolutionaries had was getting peasant farmers to produce.  

While agriculture production increased with the introduction of the New Economic Policy in 1921 - which included incentives for some peasants - the program was eventually abandoned by Josef Stalin. It was replaced with forced labor and collectivization. Not surprisingly, agriculture production slipped. 

To better understand why revolutionary peasants weren't producing surpluses - which were necessary to help fund industrialization - teams of Russian anthropologists were sent to study peasants societies. This was a tremendous undertaking as it meant spending months, and even years, at a time in distant rural communities. 

PEASANT STUDIES & "UNCLE JOE"
Headed by researchers like Aleksander Chayanov, numerous institutes sent teams to study peasant societies throughout Russia. A key finding was peasants would work until they had enough to feed their families, and not much beyond this point, even with favorable market prices. 

Specifically, they learned that subsistence peasant households - those who survive week to week - didn't particularly care about wage or price incentives. Instead, they focused primarily on things they could use immediately rather than what they could exchange for money in a market. 

Producing more than what they needed was viewed as “drudgery.” 

Though the findings of Chayanov and others were instructive, because they helped explain both the culture behind peasant societies and what was wrong with collectivization in the Russian countryside, they didn’t sit well with Stalin. He wanted to know how he could get peasants to produce; not why they didn't produce. 

Because of his paranoia's and twisted world views, Stalin saw the reports emerging from the countryside as an unwarranted defense of Russia's productive peasant farmers (the kulaks). Because the revolutionary state demanded surpluses, and the peasants weren't producing, Stalin saw traitors in his midst. 

The studies done by Chayanov and other anthropologists were virtually ignored by the Soviet state, and many of the institutes were closed. But this was just the beginning. Repression and purges in the early 1930s were followed with large-scale disappearances of "non-revolutionaries." 

in part because of his findings, Chayanov was among those branded a non-revolutionary. He was arrested, tried, and then shot on the same day in 1937 [photo below is not Chayanov]. 

Russian Peasants in detention during the 1930s.

In Stalin's world, the Russian revolution and the worker's paradise would be a success, even if he had to use the levers of the state to spin lies, send misfits to labor camps, or kill his political enemies - both real and imagined. 

This is where it gets interesting. 

TRICKLE DOWN THEORY, SOVIET STYLE ... AMERICAN STYLE
Chayanov's story is instructive for what it tells us about capitalism and peasant economies. It's also significant because of what it tells us about Russian revolutionaries and die-hard Bolsheviks like Stalin. They were so committed to their theories of socialism that they used the state - which was supposed to wither away according to Karl Marx, mind you - to make sure that agriculture surpluses were created and transferred to the more productive industrial sector. 

Increasing productivity required that the state become increasingly repressive as it forced collectivization on peasants, suppressed living standards in the countryside, and then transferred resources from Russia's rural sector to industry and the city. 

The needs of the political and industrial oligarchs in Moscow meant that the needs of the poor and "backward" peasants could be put off. 

Part of the rationale for this line of thinking was Stalin believed peasants would one day benefit from the availability of manufactured goods, agriculture equipment, and other products that would eventually reach the countryside. As Cambridge economist Ha-Joon Chang pointed out, this was Soviet style trickle down economics.

This real life story is important because Congressional Republicans are in the process of conceptually pursuing similar tactics. 

By taking resources (tax dollars, health care subsidies, removing deductions, etc.) from America's poor and working classes, and then transferring that wealth to America's oligarchs, congressional Republicans are subsidizing and guaranteeing the wealth of America's financial elites. The irony here is that congressional Republicans claim to be die-hard capitalists, and free marketeers, but are actively using the big hand of the state to prop up and enrich America's financial titans. 

An orthodox paradox, if there ever was one.

Think about it. The state bailed out Wall Street after their reckless gambling and financial stupidity collapsed the economy in 2008. 

In fact, since 2008 repressive hand of "the state" has dumped almost $5 trillion into the same corrupt financial sector that collapsed the American economy.

At the same time, by using the state to pursue union-busting trade agreements, winking at weak immigration laws (which helps suppress prices and wages), and then ignoring collapsing middle-class wage and living standards, our Republican-led Congress is acting very much like Stalin's Politburo. Both use the heavy hand of the state to transfer resources and make sure their market ideas "work." 

Hooray for Ayn Rand, and Karl Marx.

Today, once again, our Republican-led Congress is promising that by deregulating and transferring wealth to the America's oligarchs the benefits will eventually reach those at the bottom. They've been making this promise for the better part of 37 years now, in spite of a very robust history of spectacular market failure (2008), record budget deficits, and a national debt that now stands at $20.5 trillion.  

CONCLUDING THOUGHTS

Like Stalin's planning authorities, our Republican-led Congress - and the willing private sector recipients of bailouts, money dumps, cover ups and favorable legislation (like today's GOP tax legislation) - understand the importance of using the state to transfer wealth from one sector of the economy to another. It's the meat behind Wall Street's raging bull market today. 

With almost $5 trillion disbursed since Wall Street collapsed the economy in 2008 - and an additional $13.8 trillion in tax payer backed dollars committed to our next collapse - you can be sure of this. 

By using the state to transfer wealth to achieve market results, and guarantee new levels of "profitability," America’s bailed out and subsidized market players are on no firmer intellectual ground than the Soviet Union's Vladimir Lenin and Joseph Stalin. Pushing for and accepting government favors, while speaking admiringly of the wonders of the market, imposes an Alice in Wonderland character on modern markets in America. 

The 2017 Republican-led tax plan along with the 2008 market bailout are glaring examples of how market players in America depend on the state for both their market "successes," and need big government to cover up for their spectacular market failures. 

The Republican tax plan is Soviet-Style trickle down economics, plain and simple. And, yes, many in our GOP-led Congress would have been very comfortable in Stalin's Politburo. 

- Mark

IS VLADIMIR PUTIN'S RUSSIA A CRIMINAL ENTERPRISE? FIVE DEVELOPMENTS - ACCORDING TO BILL BROWDER'S SENATE TESTIMONY - SAY "YES"

While everyone was busy watching Survivor White House this past week, financier Bill Browder gave what can only be called bombshell testimony in front of the Senate Judiciary Committee on July 26th. Below are five developments that, pieced together by Browder, make it clear Donald Trump is in over his head.

For those who see the many moving pieces, Browder's testimony also goes a long way to explain why President Trump wants sanctions against Russia lifted, and why America may have its first Manchurian president.

* THE RUSSIA STATE IS A CRIMINAL ENTERPRISE: Browder effectively described Russia's government as a criminal enterprise that "operates in the shadows using corruption, blackmail, torture and murder - all led by Vladimir Putin" adding, "Effectively the moment that you enter into their world, you become theirs." The Mikhail Khodorkovsky story below is especially chilling.


* THE STATE PROTECTS PUTIN'S INTERESTS: Browder was a successful businessman in Russia, until he and his lawyer, Sergei Magnitsky, uncovered evidence of a huge $230 million corruption scandal. When he and his attorney, Magnitsky, reported the theft to the Russian authorities they "waited for the good guys to get the bad guys," only to learn "that in Putin’s Russia, there are no good guys." They also learned, eventually, that Putin and his network were the source of the corruption.


* BLACKMAIL & MURDER ARE TOOLS OF THE STATE:  After reporting the $230 million corruption scandal, instead of seeing an investigation Browder was accused of tax evasion and barred from reentering Russia. His attorney, Sergei Magnitsky was jailed, and is believed to have been beaten to death in 2009.

* THE MAGNITSKY ACT INFURIATES PUTIN: The Magnitsky case illustrated how corrupt and immune from retaliation the Putin network were/are. After passing in the House of Representatives (364-43) and the Senate (92-4), the Magnitsky Act was signed into law by President Obama in 2012. The Magnitsky Act freezes assets and bans visas for those who participated in the murder of Sergei Magnitsky, as well as other Russians involved in human rights abuse cases. Putin was infuriated.


 * THE ROOTS OF PUTIN'S IRE: Vladimir Putin responded to the Magnitsky Act in several ways. First he put a stop to the adoption of Russian children by U.S. citizens. But it wasn't babies that Putin cared about. It was the threats to his position and power that worried him. With much of his ill-gotten gains in western banks and financial institutions (because the rule of law is still respected and maintained), the Magnitsky Act meant that Putin's assets could be frozen. What really upset Putin, according to Browder, is that the Magnitsky Act meant that his network abroad could no longer operate with the impunity and freedom that Putin promised. His global playground now has restrictions, which he wants Donald Trump to remove.

The full text of Bill Browder's July 26th testimony to the Senate Judiciary Committee is attached below. Grab a cup of coffee, and get something to eat. This reads like the heart of a spy novel.

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Chairman Grassley, Ranking Member Feinstein, and members of the committee, thank you for giving me the opportunity to testify today on the Russian government’s attempts to repeal the Magnitsky Act in Washington in 2016, and the enablers who conducted this campaign in violation of the Foreign Agents Registration Act, by not disclosing their roles as agents for foreign interests.

Before I get into the actions of the agents who conducted the anti-Magnitsky campaign in Washington for the benefit of the Russian state, let me share a bit of background about Sergei Magnitsky and myself.I am the founder and CEO of Hermitage Capital Management. I grew up in Chicago, but for the last 28 years I’ve lived in Moscow and London, and am now a British citizen. From 1996 to 2005, my firm, Hermitage Capital, was one of the largest investment advisers in Russia with more than $4 billion invested in Russian stocks.

Russia has a well-known reputation for corruption; unfortunately, I discovered that it was far worse than many had thought. While working in Moscow I learned that Russian oligarchs stole from shareholders, which included the fund I advised. Consequently, I had an interest in fighting this endemic corruption, so my firm started doing detailed research on exactly how the oligarchs stole the vast amounts of money that they did. When we were finished with our research we would share it with the domestic and international media.

For a time, this naming and shaming campaign worked remarkably well and led to less corruption and increased share prices in the companies we invested in. Why? Because President Vladimir Putin and I shared the same set of enemies. When Putin was first elected in 2000, he found that the oligarchs had misappropriated much of the president’s power as well. They stole power from him while stealing money from my investors. In Russia, your enemy’s enemy is your friend, and even though I’ve never met Putin, he would often step into my battles with the oligarchs and crack down on them.

That all changed in July 2003, when Putin arrested Russia’s biggest oligarch and richest man, Mikhail Khodorkovsky. Putin grabbed Khodorkovsky off his private jet, took him back to Moscow, put him on trial, and allowed television cameras to film Khodorkovsky sitting in a cage right in the middle of the courtroom. That image was extremely powerful, because none of the other oligarchs wanted to be in the same position. After Khodorkovsky’s conviction, the other oligarchs went to Putin and asked him what they needed to do to avoid sitting in the same cage as Khodorkovsky. From what followed, it appeared that Putin’s answer was, “Fifty percent.” He wasn’t saying 50 percent for the Russian government or the presidential administration of Russia, but 50 percent for Vladimir Putin personally. From that moment on, Putin became the biggest oligarch in Russia and the richest man in the world, and my anti-corruption activities would no longer be tolerated.

The results of this change came very quickly. On November 13, 2005, as I was flying into Moscow from a weekend away, I was stopped at Sheremetyevo airport, detained for 15 hours, deported, and declared a threat to national security.

Eighteen months after my expulsion a pair of simultaneous raids took place in Moscow. Over 25 Interior Ministry officials barged into my Moscow office and the office of the American law firm that represented me. The officials seized all the corporate documents connected to the investment holding companies of the funds that I advised. I didn’t know the purpose of these raids so I hired the smartest Russian lawyer I knew, a 35-year-old named Sergei Magnitsky. I asked Sergei to investigate the purpose of the raids and try to stop whatever illegal plans these officials had.

Sergei went out and investigated. He came back with the most astounding conclusion of corporate identity theft: The documents seized by the Interior Ministry were used to fraudulently re-register our Russian investment holding companies to a man named Viktor Markelov, a known criminal convicted of manslaughter.

After more digging, Sergei discovered that the stolen companies were used by the perpetrators to misappropriate $230 million of taxes that our companies had paid to the Russian government in the previous year.I had always thought Putin was a nationalist. It seemed inconceivable that he would approve of his officials stealing $230 million from the Russian state. Sergei and I were sure that this was a rogue operation and if we just brought it to the attention of the Russian authorities, the “good guys” would get the “bad guys” and that would be the end of the story.

We filed criminal complaints with every law enforcement agency in Russia, and Sergei gave sworn testimony to the Russian State Investigative Committee (Russia’s FBI) about the involvement of officials in this crime.

However, instead of arresting the people who committed the crime, Sergei was arrested. Who took him? The same officials he had testified against. On November 24, 2008, they came to his home, handcuffed him in front of his family, and threw him into pre-trial detention.

Sergei’s captors immediately started putting pressure on him to withdraw his testimony. They put him in cells with 14 inmates and eight beds, leaving the lights on 24 hours a day to impose sleep deprivation. They put him in cells with no heat and no windowpanes, and he nearly froze to death. They put him in cells with no toilet, just a hole in the floor and sewage bubbling up. They moved him from cell to cell in the middle of the night without any warning. During his 358 days in detention he was forcibly moved multiple times.They did all of this because they wanted him to withdraw his testimony against the corrupt Interior Ministry officials, and to sign a false statement that he was the one who stole the $230 million—and that he had done so on my instruction.

Sergei refused.

In spite of the grave pain they inflicted upon him, he would not perjure himself or bear false witness.After six months of this mistreatment, Sergei’s health seriously deteriorated. He developed severe abdominal pains, he lost 40 pounds, and he was diagnosed with pancreatitis and gallstones and prescribed an operation for August 2009. However, the operation never occurred. A week before he was due to have surgery, he was moved to a maximum security prison called Butyrka, which is considered to be one of the harshest prisons in Russia. Most significantly for Sergei, there were no medical facilities there to treat his medical conditions.

At Butyrka, his health completely broke down. He was in agonizing pain. He and his lawyers wrote 20 desperate requests for medical attention, filing them with every branch of the Russian criminal justice system. All of those requests were either ignored or explicitly denied in writing.

After more than three months of untreated pancreatitis and gallstones, Sergei Magnitsky went into critical condition. The Butyrka authorities did not want to have responsibility for him, so they put him in an ambulance and sent him to another prison that had medical facilities. But when he arrived there, instead of putting him in the emergency room, they put him in an isolation cell, chained him to a bed, and eight riot guards came in and beat him with rubber batons.That night he was found dead on the cell floor.Sergei Magnitsky died on November 16, 2009, at the age of 37, leaving a wife and two children.

I received the news of his death early the next morning. It was by far the most shocking, heart-breaking, and life-changing news I’ve ever received.Sergei Magnitsky was murdered as my proxy. If Sergei had not been my lawyer, he would still be alive today.

That morning I made a vow to Sergei’s memory, to his family, and to myself that I would seek justice and create consequences for the people who murdered him. For the last seven and a half years, I’ve devoted my life to this cause.

Even though this case was characterized by injustice all the way through, the circumstances of Sergei’s torture and death were so extreme that I was sure some people would be prosecuted. Unlike other deaths in Russian prisons, which are largely undocumented, Sergei had written everything down. In his 358 days in detention, Sergei wrote over 400 complaints detailing his abuse. In those complaints he described who did what to him, as well as where, how, when, and why. He was able to pass his hand-written complaints to his lawyers, who dutifully filed them with the Russian authorities. Although his complaints were either ignored or rejected, copies of them were retained. As a result, we have the most well-documented case of human rights abuse coming out of Russia in the last 35 years.

When I began the campaign for justice with this evidence, I thought that the Russian authorities would have no choice but to prosecute at least some of the officials involved in Sergei Magnitsky’s torture and murder. It turns out I could not have been more wrong. Instead of prosecuting, the Russian authorities circled the wagons and exonerated everybody involved. They even went so far as to offer promotions and state honors to those most complicit in Sergei’s persecution.

It became obvious that if I was going to get any justice for Sergei Magnitsky, I was going to have to find it outside of Russia.

But how does one get justice in the West for a murder that took place in Russia? Criminal justice is based on jurisdiction: One cannot prosecute someone in New York for a murder committed in Moscow. As I thought about it, the murder of Sergei Magnitsky was done to cover up the theft of $230 million from the Russian Treasury. I knew that the people who stole that money wouldn’t keep it in Russia. As easily as they stole the money, it could be stolen from them. These people keep their ill-gotten gains in the West, where property rights and rule of law exist. This led to the idea of freezing their assets and banning their visas here in the West. It would not be true justice but it would be much better than the total impunity they enjoyed.In 2010, I traveled to Washington and told Sergei Magnitsky’s story to Senators Benjamin Cardin and John McCain. They were both shocked and appalled and proposed a new piece of legislation called The Sergei Magnitsky Rule of Law Accountability Act. This would freeze assets and ban visas for those who killed Sergei as well as other Russians involved in serious human rights abuse.

Despite the White House’s desire to reset relations with Russia at the time, this case shined a bright light on the criminality and impunity of the Putin regime and persuaded Congress that something needed to be done. In November 2012 the Magnitsky Act passed the House of Representatives by 364 to 43 votes and later the Senate 92 to 4 votes. On December 14, 2012, President Obama signed the Sergei Magnitsky Act into law.

Putin was furious. Looking for ways to retaliate against American interests, he settled on the most sadistic and evil option of all: banning the adoption of Russian orphans by American families.

This was particularly heinous because of the effect it had on the orphans. Russia did not allow the adoption of healthy children, just sick ones. In spite of this, American families came with big hearts and open arms, taking in children with HIV, Down syndrome, Spina Bifida and other serious ailments. They brought them to America, nursed them, cared for them and loved them. Since the Russian orphanage system did not have the resources to look after these children, many of those unlucky enough to remain in Russia would die before their 18th birthday. In practical terms, this meant that Vladimir Putin sentenced his own, most vulnerable and sick Russian orphans to death in order to protect corrupt officials in his regime.

Why did Vladimir Putin take such a drastic and malicious step?For two reasons.

First, since 2012 it’s emerged that Vladimir Putin was a beneficiary of the stolen $230 million that Sergei Magnitsky exposed. Recent revelations from the Panama Papers have shown that Putin’s closest childhood friend, Sergei Roldugin, a famous cellist, received $2 billion of funds from Russian oligarchs and the Russian state. It’s commonly understood that Mr. Roldugin received this money as an agent of Vladimir Putin. Information from the Panama Papers also links some money from the crime that Sergei Magnitsky discovered and exposed to Sergei Roldugin. Based on the language of the Magnitsky Act, this would make Putin personally subject to Magnitsky sanctions.

This is particularly worrying for Putin, because he is one of the richest men in the world. I estimate that he has accumulated $200 billion of ill-gotten gains from these types of operations over his 17 years in power. He keeps his money in the West and all of his money in the West is potentially exposed to asset freezes and confiscation. Therefore, he has a significant and very personal interest in finding a way to get rid of the Magnitsky sanctions.

The second reason why Putin reacted so badly to the passage of the Magnitsky Act is that it destroys the promise of impunity he’s given to all of his corrupt officials.

There are approximately ten thousand officials in Russia working for Putin who are given instructions to kill, torture, kidnap, extort money from people, and seize their property. Before the Magnitsky Act, Putin could guarantee them impunity and this system of illegal wealth accumulation worked smoothly. However, after the passage of the Magnitsky Act, Putin’s guarantee disappeared. The Magnitsky Act created real consequences outside of Russia and this created a real problem for Putin and his system of kleptocracy.

For these reasons, Putin has stated publicly that it was among his top foreign policy priorities to repeal the Magnitsky Act and to prevent it from spreading to other countries. Since its passage in 2012, the Putin regime has gone after everybody who has been advocating for the Magnitsky Act.

One of my main partners in this effort was Boris Nemtsov. Boris testified in front of the U.S. Congress, the European Parliament, the Canadian Parliament, and others to make the point that the Magnitsky Act was a “pro-Russian” piece of legislation because it narrowly targeted corrupt officials and not the Russian people. In 2015, Boris Nemtsov was murdered on the bridge in front of the Kremlin.Boris Nemtsov’s protégé, Vladimir Kara-Murza, also traveled to law-making bodies around the world to make a similar case. After Alexander Bastrykin, the head of the Russian Investigative Committee, was added to the Magnitsky List in December of 2016, Vladimir was poisoned. He suffered multiple organ failure, went into a coma and barely survived.

The lawyer who represented Sergei Magnitsky’s mother, Nikolai Gorokhov, has spent the last six years fighting for justice. This spring, the night before he was due in court to testify about the state cover up of Sergei Magnitsky’s murder, he was thrown off the fourth floor of his apartment building. Thankfully he survived and has carried on in the fight for justice.

I’ve received many death threats from Russia. The most notable one came from Russian Prime Minister Dmitry Medvedev at the World Economic Forum in Davos, Switzerland, in 2013. When asked by a group of journalists about the death of Sergei Magnitsky, Medvedev replied, “It’s too bad that Sergei Magnitsky is dead and Bill Browder is still alive and free.” I’ve received numerous other death threats from Russian sources through text messages, emails, and voicemails. U.S. government sources have warned me about a planned Russian rendition against me. These threats were in addition to numerous unsuccessful attempts that the Russian government has made to arrest me using Interpol or other formal legal assistance channels.

The Russian government has also used its resources and assets to try to repeal the Magnitsky Act. One of the most shocking attempts took place in the spring and summer of last year when a group of Russians went on a lobbying campaign in Washington to try to repeal the Magnitsky Act by changing the narrative of what had happened to Sergei. According to them, Sergei wasn’t murdered and he wasn’t a whistle-blower, and the Magnitsky Act was based on a false set of facts. They used this story to try to have Sergei’s name taken off of the Global Magnitsky Act that passed in December 2016. They were unsuccessful.Who was this group of Russians acting on behalf of the Russian state? Two men named Pyotr and Denis Katsyv, a woman named Natalia Veselnitskaya, and a large group of American lobbyists, all of whom are described below.

Pyotr Katsyv, father to Denis Katsyv, is a senior Russian government official and well-placed member of the Putin regime; Denis Katsyv was caught by U.S. law enforcement using proceeds from the crime that Sergei Magnitsky uncovered to purchase high-end Manhattan real estate (the case recently settled with the Katsyv’s paying $6 million to the U.S. government). Natalia Veselnitskaya was their lawyer.

In addition to working on the Katsyv’ s money laundering defense, Ms. Veselnitskaya also headed the aforementioned lobbying campaign to repeal the Magnitsky Act. She hired a number of lobbyists, public relations executives, lawyers, and investigators to assist her in this task.Her first step was to set up a fake NGO that would ostensibly promote Russian adoptions, although it quickly became clear that the NGO’s sole purpose was to repeal the Magnitsky Act. This NGO was called the Human Rights Accountability Global Initiative Foundation (HRAGI). It was registered as a corporation in Delaware with two employees on February 18, 2016. HRAGI was used to pay Washington lobbyists and other agents for the anti-Magnitsky campaign. (HRAGI now seems to be defunct, with taxes due.)

Through HRAGI, Rinat Akhmetshin, a former Soviet intelligence officer naturalised as an American citizen, was hired to lead the Magnitsky repeal effort. Mr. Akhmetshin has been involved in a number of similar campaigns where he’s been accused of various unethical and potentially illegal actions like computer hacking.

Veselnitskaya also instructed U.S. law firm Baker Hostetler and their Washington, D.C.-based partner Marc Cymrot to lobby members of Congress to support an amendment taking Sergei Magnitsky’s name off the Global Magnitsky Act. Mr. Cymrot was in contact with Paul Behrends, a congressional staffer on the House Foreign Affairs Committee at the time, as part of the anti-Magnitsky lobbying campaign.

Veselnitskaya, through Baker Hostetler, hired Glenn Simpson of the firm Fusion GPS to conduct a smear campaign against me and Sergei Magnitsky in advance of congressional hearings on the Global Magnitsky Act. He contacted a number of major newspapers and other publications to spread false information that Sergei Magnitsky was not murdered, was not a whistle-blower, and was instead a criminal. They also spread false information that my presentations to lawmakers around the world were untrue.

As part of Veselnitskaya’s lobbying, a former Wall Street Journal reporter, Chris Cooper of the Potomac Group, was hired to organize the Washington, D.C.-based premiere of a fake documentary about Sergei Magnitsky and myself. This was one the best examples of Putin’s propaganda.

They hired Howard Schweitzer of Cozzen O’Connor Public Strategies and former Congressman Ronald Dellums to lobby members of Congress on Capitol Hill to repeal the Magnitsky Act and to remove Sergei’s name from the Global Magnitsky bill.

On June 13, 2016, they funded a major event at the Newseum to show their fake documentary, inviting representatives of Congress and the State Department to attend. While they were conducting these operations in Washington, D.C., at no time did they indicate that they were acting on behalf of Russian government interests, nor did they file disclosures under the Foreign Agent Registration Act.

United States law is very explicit that those acting on behalf of foreign governments and their interests must register under FARA so that there is transparency about their interests and their motives. Since none of these people registered, my firm wrote to the Department of Justice in July 2016 and presented the facts.

I hope that my story will help you understand the methods of Russian operatives in Washington and how they use U.S. enablers to achieve major foreign policy goals without disclosing those interests. I also hope that this story and others like it may lead to a change in the FARA enforcement regime in the future.Thank you.

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While Browder's testimony reads like a great spy novel it also helps explain why, as I pointed out last year, President Trump doesn't want to release his tax returns. Because western financial institutions won't lend to the bankruptcy-riddled Trump, he has to go elsewhere to get the money he needs. He knows that his tax returns will reveal how deep he is into the Russian oligarchs.

They just might also show how compromised he is to Russians, and Vladimir Putin. 

Worse, the tax returns might even tell us why Donald Trump ran for president in the first place: to keep the Russians from closing in on him, and his debt-driven financial empire.

So, yeah, contrary to what many of his supporters want to claim, this has always been about Trump, and not service to America.

- Mark