Mitch McConnell dropped sanctions on Oleg Deripaska after they offered to investion over $1 billion in an aluminum plant in Kentucky.
many of us who write about Russia professionally, or who are Russian, have struggled to square what we know with the emerging narrative. In this story, Russia waged a sophisticated and audacious operation to subvert American elections and install a President of its choice—it pulled off a coup. Tell that to your average American liberal, and you’ll get a nod of recognition. Tell it to your average Russian liberal (admittedly a much smaller category), and you’ll get uproarious laughter. Russians know that their state lacks the competence to mount a sophisticated sabotage effort, that the Kremlin was even more surprised by Trump’s election than was the candidate himself, and that Russian-American relations are at their most dysfunctional since the height of the Cold War. And yet the indictments keep coming.
.. I mean that I’ve figured out how to think about what we know and not go crazy. The answer lies in the concept of the Mafia state. (And, no, I’m not invoking the Mob because Stone encouraged an associate to behave like a character from “The Godfather Part II,” as detailed in his indictment.)
As journalists who usually cover American politics have connected the dots of the story of Russian interference, those of us who normally write about Russia have cringed. Early on, it was common to point out that Paul Manafort, Trump’s former campaign manager, who is now under arrest, worked for Viktor Yanukovych, who is often characterized as the “pro-Russian President of Ukraine.” In fact, there was no love lost between Putin and Yanukovych. After he was run out of town, during the 2014 Ukrainian revolution, Yanukovych did seek refuge in Russia, but during his tenure as President he was an unreliable partner for Putin at best. Perhaps more to the point, he’s a crook and a brute. He served time for robbery and assault before he became a politician, and he is wanted in Ukraine for treason, mass murder, and embezzlement. A visitor to Ukraine can take a tour of Yanukovych’s palace, famous for its marble, crystal, immense scale, and a life-size solid-gold sculpture of a loaf of bread. Manafort made a career of working for the corrupt and the crooked. That in itself tells us little about Russia or its role in the 2016 campaign.
.. In media coverage, her e-mailing with a lawyer in the Russian prosecutor’s office was portrayed as evidence of a direct line to Putin, suggesting that she met with Trump’s campaign officials as his emissary. To me, it read as a lot of bluster on the part of a minor operator. From all the available evidence, and contrary to her sales pitch, Veselnitskaya did not have any dirt to offer on Hillary Clinton. To the extent that Veselnitskaya had established connections to high-level Russian officials, they were the kind that are necessary for a lawyer to be at all effective in a corrupt system.
.. We cringed at the characterization of the Russian online influence campaign as “sophisticated” and “vast”: Russian reporting on the matter—the best available—convincingly portrayed the troll operation as small-time and ridiculous. It was, it seems, fraudulent in every way imaginable: it perpetrated fraud on American social networks, creating fake accounts and events and spreading falsehoods, but it was also fraudulent in its relationship to whoever was funding it, because surely crudely designed pictures depicting Hillary Clinton as Satan could not deliver anyone’s money’s worth.
What we are observing is not most accurately described as the subversion of American democracy by a hostile power. Instead, it is an attempt at state capture by an international crime syndicate. What unites Yanukovych, Veselnitskaya, Manafort, Stone, WikiLeaks’s Julian Assange, the Russian troll factory, the Trump campaign staffer George Papadopoulos and his partners in crime, the “Professor” (whose academic credentials are in doubt), and the “Female Russian National” (who appears to have fraudulently presented herself as Putin’s niece) is that they are all crooks and frauds. This is not a moral assessment, or an attempt to downplay their importance. It is an attempt to stop talking in terms of states and geopolitics and begin looking at Mafias and profits.
The Hungarian sociologist Bálint Magyar, who created the concept of the “post-Communist mafia state,” has just finished editing a new collection of articles called “Stubborn Structures: Reconceptualizing Post-Communist Regimes” (to be published by C.E.U. Press early this year). In one of his own pieces in the collection, using Russia as an example, Magyar describes the Mafia state as one run by a “patron” and his “court”—put another way, the boss and his clan—who appropriate public resources and the institutions of the state for their private use and profit. When I talked to Magyar on the phone on Monday, he told me that Trump is “like a Mafia boss without a Mafia. Trump cannot transform the United States into a Mafia state, of course, but he still acts like a Mafia boss.” Putin, on the other hand, “is a Mafia boss with a real Mafia, which has turned the whole state into a criminal state.” Still, he said, “the behavior at the top is the same.”
The Mafia state is efficient in its own way. It does not take over all state institutions, but absorbs only the ones necessary for extracting profit. Some structures therefore continue to work as though they were part of a normal state. This may explain why we saw the official Russian foreign-policy establishment preparing, in the lead-up to the 2016 election, for a working relationship with the presumed Hillary Clinton Administration.
When we think about a normal state, Magyar told me, “the assumption is that the state acts in the public interest, and if that doesn’t happen, that’s a deviation.” That is true of how we think about democracies but also, to a large extent, of how we think about dictatorships as well: the dictator positions himself as the arbiter and sole representative of the national interest. A Mafia state, on the other hand, acts only in the personal profit-seeking interests of the clan. “That’s not a deviation,” Magyar said. “It’s a substantive, structural characteristic of the state. The state itself, at the top, works as a criminal organization.”
When members of the American media cover the story of Russian meddling, they implicitly portray Russia as a normal state, and the influence operation as an undertaking of the state aimed at furthering Russia’s national interests. This strikes Russians as absurd. By the measure of national interest, the Trump Presidency has been disappointing for Russia. Most of what Trump has given the Russian state has come through inaction:
- he has barely reacted to continued Russian aggression in Ukraine;
- he has failed to support nato; and
- he has said that the U.S. will withdraw from Syria, although it looks like the withdrawal is unlikely to be fast or total.
At the same time, diplomatic relations between Russia and the U.S. have deteriorated to the point of near-total dysfunction, and, despite considerable foot-dragging by the White House, the U.S. has continued to impose new sanctions on Russia.
By the metrics of a Mafia state, though, the Trump Presidency has yielded great results for Russia. A Mafia boss craves respect, loyalty, and perceived power. Trump’s deference to Putin and the widespread public perception of Putin’s influence over Trump have lifted Putin’s stature beyond what I suspect could have been his wildest dreams. As happens in a Mafia state, most of the benefit accrues to the patron personally. But some of the profit goes to the clan. Over the weekend, we learned that the Treasury Department has lifted sanctions on companies that belong to Oleg Deripaska, a member of Putin’s “court” who once lent millions of dollars to Manafort. If a ragtag team employed by or otherwise connected to the Russian Mafia state tried to aid a similar collection of crooks and frauds to elect Trump—as it increasingly looks like they did—then the Deripaska news helps explain their motivations. The story is not that Putin is masterminding a vast and brilliant attack on Western democracy. The story, it appears, is that the Russian Mafia state is cultivating profit-yielding relationships with the aspiring Mafia boss of the U.S. and his band of crooks, subverting democratic institutions in the process.
BREAKING: Fox News’ Shep Smith and Judge Napolitano just admitted that the Trump campaign did indeed “collude” with the Russians. This is a massive concession and does not bode well for Trump.
Rachel Maddow reports on an avalanche of legal news including details in the Paul Manafort case exposed by a lawyer’s poor redactions, an intriguing new indictment, and another development in the mystery Mueller case.
testified that he knew about what the prosecutors allege is a multiyear tax and bank fraud scheme by Mr. Manafort because “I was the one who helped organize the paperwork.”
.. Mr. Manafort’s allies argue that Mr. Gates can be discredited as a morally bankrupt and untrustworthy narrator who owes his professional career to Mr. Manafort, yet siphoned millions from his accounts. Then, faced with the prospect of prison and huge fines, Mr. Manafort’s allies say, he blamed Mr. Manafort for financial machinations that he himself executed. The defense also signaled Monday that it may allege extramarital affairs by Mr. Gates in a further attempt to attack a man who Mr. Manafort’s friends say took advantage of his boss.
.. “Rick Gates owes everything to Paul. Paul made Rick a lot of money,” said Hector Hoyos, a longtime friend and former business partner of Mr. Manafort’s who remained in contact with him after his indictment. “But Rick is not the strong-valued guy that Paul is. Rick will go wherever the wind takes him, and it just goes to show you that there is no such thing as loyalty and friendship anymore,” Mr. Hoyos said in June
.. The men spent countless hours together traveling the world, and by all accounts got along quite well. But in some ways they are a study in contrasts. Prosecutors have detailed the lavish lifestyle on which Mr. Manafort spent his riches, while Mr. Gates, by contrast, lived less ostentatiously. When he wore a suit, he still carried a backpack.
.. Even as he detailed Mr. Manafort’s financial crimes, Mr. Gates worked in a bit of praise for his former boss.
“Probably one of the most politically brilliant strategists I’ve ever worked with,” he said of Mr. Manafort.
.. While Mr. Gates was the one who demanded accountants give him copies of financial statements in PDF format so he could convert them to Word and alter them, some of the falsified documents bear Mr. Manafort’s signature.
.. Mr. Manafort told the accountants that he had no foreign bank accounts, although prosecutors claim that millions of dollars flowed through his accounts in Cyprus and St. Vincent and the Grenadines
.. Judge T.S. Ellis III of the United States District Court in Alexandria said prosecutors had proved both that Mr. Manafort personally denied that those accounts existed and that he controlled them.
.. Mr. Manafort left the firm the year Mr. Gates arrived. But they continued traveling in the same circles as Mr. Gates impressed remaining partners, whom he occasionally chauffeured between the firm’s Alexandria offices and meetings in Washington.
“Very smart. Good work ethic. He was a guy I thought would go places someday,” said Charlie Black, a co-founder of the firm, who offered Mr. Gates the internship at the recommendation of a friend, and then hired him full-time afterward. “I didn’t know where he would end up, but I always liked him. I still do.”
.. The accountant, Cynthia Laporta, testified that in 2006, Mr. Manafort received a $10 million loan from Oleg V. Deripaska, a Russian oligarch close to President Vladimir V. Putin. Ms. Laporta said she saw no evidence it was ever repaid.
And Mr. Gates testified that Konstantin V. Kilimnik, a Russian who prosecutors claim is tied to Russian intelligence, had signatory authority over some of Mr. Manafort’s accounts in Cyprus.
This week, the Trump administration further eased its pressure on Rusal, Russia’s largest aluminum company, less than four months after sanctions on it and its notorious leader were imposed. Even as the White House seems willing to inflict pain on American farmers and consumers with its trade wars, Russian aluminum workers are apparently worthy of special protection.
.. Rusal is controlled by Oleg Deripaska, a member of Mr. Putin’s inner circle. As the Treasury Department acknowledges, he has been investigated for
- money laundering and accused of
- threatening the lives of business rivals,
- illegally wiretapping a government official and
- taking part in extortion and racketeering.
.. There are also allegations, made public by the Treasury Department’s Office of Foreign Assets Control, that Mr. Deripaska
- bribed a government official,
- ordered the murder of a businessman and
- had links to a Russian organized crime group. During the 2016 presidential campaign,
- Paul Manafort, then Mr. Trump’s campaign manager, tried to offer Mr. Deripaska private briefings about the campaign.
.. Treasury Secretary Steven Mnuchin has said he is considering lifting the sanctions altogether because they are punishing the “hardworking people of Rusal.” But Mr. Mnuchin has it backward. If he was truly concerned about Rusal’s 61,000 employees, he would not relent until the company fully washed its hands of Mr. Deripaska and the corrupt regime the aluminum giant serves.
.. Behind Mr. Deripaska’s estimated fortune of as much as $5.3 billion, there stands a great crime. During the “aluminum wars” of the 1990s, when that economic sector was consolidating in the chaotic privatization that followed the collapse of the Soviet Union, the young metals trader was suspected of ties to gangsters as he seized control of huge Siberian smelters. According to testimony by a gang member in Stuttgart, Germany, part of Mr. Deripaska’s value to the group were his links to Russia’s security services. While his rivals were killed off or fled Russia, Mr. Deripaska somehow emerged as the director general of Rusal, a company that reported revenues last year of nearly $10 billion. But suspicions that the oligarch has had links to organized crime have denied him a visa to enter the United States.
.. they must do its bidding, which in Mr. Deripaska’s case meant spending more than $1 billion, through his holding company, on new infrastructure for the 2014 Winter Olympics in Sochi, Russia
Mr. Deripaska has embraced his role, stating that he does not separate himself from the Russian state.
.. Manafort tried to pitch him a plan for an influence campaign to “greatly benefit the Putin government.”
.. “Rusal’s own website says that it supplied military material to the Russian military that was potentially used in Syria.”
.. Mr. Deripaska’s holding company, hired a $108,500-a-month lobbyist to continue to negotiate with the Treasury Department. The firm he chose, Mercury Public Affairs, is the firm Mr. Manafort paid $1.1 million to lobby members of Congress on behalf of Ukraine and its then-president, Viktor Yanukovych
.. Led by David Vitter, a former Republican senator from Louisiana, Mercury has sought to enlist support from ambassadors of France, Germany and Australia, among others.
.. emanding more time to reduce the oligarch’s ownership stake in En+ from 70 percent to below 50 percent. In a July 24 filing with the Justice Department, Mercury outlined a host of calamities that might be unleashed if sanctions aren’t eased
- The global aluminum market might suffer significant disruptions with “severe collateral damage to United States interests, allies”;
- En+ might have to entertain a potential acquisition by “Chinese and/or other potentially hostile interests”; or
- Mr. Deripaska might just hang on to his majority stake.
.. The specter of a fellow traveler with gangsters dictating terms to the United States government is yet another sign of the Trump administration’s inexplicable capitulation to Russia.
.. July 16 summit in Helsinki, at which President Trump and President Putin met privately for more than two hours.
We don’t know what they discussed, but given the stakes on both sides, there’s a good chance that the discussion touched on the subject of the sanctions the United States has imposed on Russia’s biggest aluminum company.