Thursday

28th Jul 2016

Opinion

EU should target Russia's big spenders

  • London - Russia's elite love to spend their money in EU capitals (Photo: doug88888)

Vladimir Putin has succeeded in returning to the Russian presidency despite several tumultuous months of anti-regime protests, but his rule is likely to be entering its final phase.

Many of those who view Putin's regime as illegitimate do so because of electoral fraud and rampant corruption, and the protest movement has demanded a more European Russia: clean elections, an end to the Putinist monopoly on power and a halt to rampant graft.

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There is, however, next to nothing the West can do to play politics inside Russia. In fact, bombastic comments from American officials have only helped Putin frame the movement as Western-funded to a nation deeply suspicious of foreign meddling.

But with Putin far weaker than in his previous presidential incarnation, the European Union can exercise real influence in Moscow, thanks to its role as Russia's largest trading partner and hydrocarbon consumer, cultural magnet, and the destination of much of the proceeds of Russian corruption.

Putin has promised reform to protesters and investors, but his weakened authority will make him more reliant on corrupt oligarch allies in the system and less likely to undercut their rent-seeking and with it his power base.

It appears on the surface the European Union can do nothing, but that is until we face up to the contradiction of Russian corruption: the vast sums stolen, embezzled or crookedly made often end up far away from Moscow, tucked safely away inside the EU.

This gives the EU enormous hidden power over the seemingly impregnable Kremlin elite. Oligarchs and officials invest their money in Luxemburg, send their children to study in Britain, own property along the French Riviera and prize Schengen visas and, above all, a European residency permit.

Most protestors want the EU to act on anti-corruption practices and visa bans. So why is the EU not clamping down on clearly embezzled money and imposing tighter graft laws on itself that could change the behaviour of what the protestors call "the party of crooks and thieves" ruling Russia?

Why has the EU not carried through on the European Parliament resolution to impose a visa ban and asset freeze on those involved in the killing of Russian lawyer Sergei Magnitsky? The opposition is astounded by this lack of activity. It is clear to them that anti-corruption and visa bans are one of the few things that terrify crooked officials in the Putin system.

The failure to implement tough anti-corruption practices and carry through with the threat to implement the Magnitsky list has led the Russian government and opposition to share a similar low opinion of the Europeans: they are a cynical, selfish power in decline, best exemplified in the behavior of Gerhard Schroder, who now works on one of Putin's pipeline projects, Silvio Berlusconi who has befriended Putin, or Tony Blair who now advises the Putin-friendly and Putin-esque Kazakh leader, Nursultan Nazerbayev.

A generation ago Western soft-power was so strong in Russia that it helped bring down the Soviet Union. Today, the most striking thing about the mass rallies demanding clean elections is that while the crowd may be Westernised, there is little discussion of the West and precious few see it as an alliance to be joined or really emulated.

Talking to the crowds massed on rally days about what Europe can do, they usually answer: "Nothing. Change your own anti-corruption laws instead so our elite can't relax on our stolen money in the EU."

Europeans can reverse Russia's recession in respect for us. First, the EU should begin engaging with the Russian opposition, Russian anti-corruption activists and regime reformists on what measures the EU needs to take to tighten its own laws to change behavior in Russia. Secondly, it should invite these leaders to Brussels and national capitals to pitch these ideas directly.

This EU-Russia anti-corruption dialogue would give a political format to get to know rising Russian political stars.

Whilst the EU begins a process of drawing up new laws in partnership with Russians to limit corruption, it needs to stop European companies, including the large number of Russian-owned companies registered as EU companies, from engaging in embezzlement.

The EU should pass a pan-European anti-bribery act modelled on Britain’s 2010 Anti-Bribery Act, which would change business practices by EU companies in Russia.

Europeans also need to follow through on the Magnitsky list and ban his murderers from entering the Union.

By making it clear that such a blacklist is a precedent in the event of violent tactics being used by a weakening Putin regime to cling to power, the EU can show itself to be a principled actor in Russian affairs: willing to establish red lines to dissuade the Kremlin elite from violence, willing to change its own laws and to engage an emerging force tired of the mafia state and tales of its luxury lifestyles in EU capitals.

If Europeans really want to reform "the party of crooks and thieves," it should stop making life so easy for them inside the Union.

Ben Judah is an analyst at the European Council on Foreign Relations think tank

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