Nationalizing The Elite: The Kremlin's New Plan To Quash Dissent
Vladimir Putin is genuinely convinced that protests against his rule are fomented abroad
MOSCOW - In February 2010, there was an article published in the Russian newspaperVedomosti that investigated allegations of corruption against Elena Skrinnik, then the Agriculture Minister.
That article could have easily provided the basis for a criminal investigation, but Skrinnik continued working for the government until May 2012, and the government didn’t really take an interest in the corruption allegations until last November. Now Skrinnik is being brought in for interrogation, as are many other former ministers and government officials.
Compare that to the case of Vladimir Pekhtin, a member of the ruling party and head of Parliament's ethics committee. A blogger revealed he has an undeclared property in Miami, and Pekhtin stepped down almost immediately.
Even a year ago, this would have been impossible. Government agencies weren’t paying attention to the media, especially not blogs. But the rules of the game have changed, say representatives of the government and business elite.
Signs of a massive crackdown on the country’s elite began last year, a few months after new laws were passed to restrict street protests and create strict controls on non-profits. Last August, the government began considering a bill to ban civil servants and elected officials from having a foreign bank account or owning foreign property.
A law on foreign bank accounts was passed – but went almost unnoticed. Under the new rules, Russians and permanent residents in Russia are required to do all their transactions through Russian bank accounts. That means, for example, that if someone is paid into a foreign bank account, that money must be transferred to a Russian account – the only exception being for Russian citizens who live abroad and do not come back to Russia even once a year.
“This rule makes it possible to catch almost everyone. Most middle-class people have foreign bank accounts – people use them to pay for studies, medical care and to keep their money somewhere reliable, where privacy is respected,” explained an accountant who helps people set up foreign accounts. “Of course, they don’t tell the government or tax service about these accounts. Now this is illegal, although in effect, the tax service does not have the resources to find all Russians and their foreign accounts. But the real danger is that if you are in trouble for some other reason, they will come after your foreign accounts and confiscate it all.”
Nationalizing the elite
In October, the government started a new program of “nationalization of the elite.” That’s a term that was thought up by Konstantin Kostin, an advisor to President Vladimir Putin. Kostin says the Kremlin is aiming to change the mentality of many elite Russian business people, who see Russia as a country to exploit, but who end up going to live elsewhere.
Other sources close to the Kremlin agreed that there was another motivation for these laws. They said that this “nationalization of the elite” was a direct response to the mass protests last year demanding honest elections in Russia.
“The government is convinced that there are foreign governments behind these protest movements,” said one source.
That source added that when Putin said that Hillary Clinton might be behind the protests, he was not simply playing to the public – he really believed it. “At that point, Putin realized that a huge number of civil servants, elected officials and businesspeople depend on the West – because of children who live there, real estate they bought in London and bank accounts in Switzerland. That’s when he got the idea to try to bring all of that back to Russia, so that the West wouldn’t have such an influence.”
One Russian official remembers a diplomatic meeting with the United States regarding the U.S. rocket defense shield. One of the U.S. negotiators told Russia to stop threatening to attack European cities with their missiles, saying bluntly to the Russian delegation: “You really think we are going to believe that you are going to attack a city where your children are studying and you keep your money? We have your number.” The members of the Russian delegation thought long and hard about that comment.
Restricting international travel
According to people close to the Kremlin, these laws are instruments to allow the government to control the elite. And there is yet another instrument at their disposal: restricting international travel. There is already a pilot project at the FSB (the successor agency to the KGB). Employees have to turn in their passports and can only get them back with their boss’s authorization. In addition, according to currently laws, an unpaid speeding ticket could be a reason to deny authorization to leave the country.
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Russian passport - Photo: paukrus
The number of Russian government employees, at all levels, who own property abroad is quite high. For some, the new rules will mean that they leave government service – particularly for elected officials who came from business backgrounds.
But owning property abroad does not mean that someone is independently wealthy, and for many it will mean choosing between a life-long career and cherished vacation properties. It also means that the government will be losing a fairly large number of employees who decide that working in the government is not worth the restrictions. It will also mean that today’s business people will never get involved in politics.
According to Kommersant’s interviews, more and more civil servants are looking to move out of the public sector, including the police and other agencies who helped get these new laws passed. According to one source in Russian law enforcement, everyone is looking for ways to get private sector jobs. These people might not have luxurious apartments in Miami, but they might have money in Latvia or a modest apartment in Bulgaria.
According to Mikhail Prokhov, the Russian billionaire whose overseas assets include the Brooklyn Nets basketball team, the government is trying to accomplish two mutually exclusive tasks – pleasing voters while restricting actual talk about corruption. “The Kremlin has a choice – either it can start taking corruption seriously, which means adopting rules that apply to everyone equally, or it can put the brakes on this whole topic.”
As it is, the only thing that is clear is that the old rules of the game no longer apply, and the new rules make it hard to know exactly what will be allowed and whose transgressions will be overlooked. That uncertainly has had one clear effect: the Russian elite are getting very nervous.