Peter L. Berger's Blog, page 151

Simmering Illiberalism in the GOP

The latest Economist/YouGov poll contains grim news about the health of American democracy. Thirty-four percent of Americans favor “permitting the courts to fine news media outlets for publishing or broadcasting stories that are biased or inaccurate,” with just 20 percent opposed. The numbers aren’t much better for permitting courts to “shut down” media outlets for such stories: 28 percent favor and 29 percent opposed.

There is a sharp partisan difference in the results: While Democrats are divided on “fining” media outlets and largely opposed to shutting them down, Republicans overwhelmingly answered in the affirmative on both questions: They support allowing courts to fine media organizations by an astonishing 55-12, and allowing courts to shut them down by a 45-20 margin.

The partisan difference is probably related to GOP voters’ deep distrust of the mainstream media and (accurate) perception that reporters tend to left-liberal direction.

To be sure, courts can sanction media organizations if they are shown to be committing criminal or civil libel. But this is a high bar to meet, and the wording of the question clearly suggests a much broader government authority to crack down on unfavorable publications.

Recent cultural trends, like the attacks on right-wing speakers on college campuses, have tended to pit the liberal-left against free speech while conservatives defended it. A 2015 poll showed that Democrats were much more likely to favor a ban on “hate speech,” which in practice means “controversial speech on issues related to race and gender” and which is protected under the Constitution. The desire to ban “hate speech” is especially pronounced among young people.

The new poll shows that illiberalism of some form or another has protected both parties. Fortunately, the Courts won’t actually be rewriting the First Amendment like this for the foreseeable future. Numbers like these highlight the wisdom  of the Founders’ vision for an independent judiciary insulated from public opinion (whatever other flaws it might have). But open societies can’t survive on the force of laws and courts alone.

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China Sets Sights on the Weapons of the Future

The Chinese have created a new military agency to develop high-tech weaponry, reports Financial Times:

China has launched a military agency to develop state of the art weapons, the latest step in the country’s ambitions to transform its army into a modern fighting force.

The Scientific Research Steering Committee was set up earlier this year but its existence was only reported this week, in a documentary aired by state broadcaster CCTV. It appears to be modelled on the Defence Advanced Research Projects Agency, the US body set up in 1957 to identify and nurture technology with national security applications. […]

Pointing to several advanced military technologies developed in the US, the documentary also noted that “most are Darpa-related” and declared: “If we want to win the military competition, we must undertake greater efforts to promote science and technology.”

The Chinese are clearly making a bid to supplant the U.S. as the world’s top developer of military technology—even while admitting that they can only hope to do so by emulating DARPA, the Pentagon’s innovative R&D agency. DARPA, which has nurtured breakthrough technologies like the internet, precision strike, and stealth since its creation in 1958, has other admirers in Asia too: Japan launched its own version in 2013, as a tense climate in Asia finds all parties seeking to arm up for the 21st century.

Of course, the creation of one bureaucratic agency does not guarantee innovation, and the Chinese military budget still lags behind the United States’. But the new agency will likely streamline China’s development of military technology at a time when Beijing has already been making some impressive gains. This March, for instance, China sent its first homemade stealth fighter, the J-20, into service with the PLA Air Force; it is also developing pump-jet propulsion technology to create ever-more stealthy, silent, and elusive submarines. And China recently announced its intentions to be the global leader in artificial intelligence by 2030: a goal that will surely transform China’s military just as AI is already reshaping behavior on the streets of China.

China’s expansive military ambitions have been on clear display in recent years, from the South China Sea to the Indian Ocean to the deepest reaches of Pakistan. With military authorities now prioritizing high-tech weapons development, it is clear that the military wants state-of-the-art means to match its ever-expanding goals.

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Abbas Rejects Compromise, Calls for Mass Protests

Palestinian President Mahmoud Abbas has refused to recognize Israel’s compromise to remove metal detectors from the Temple Mount and has now called for mass protests this Friday. As The Times of Israel reports:

Palestinian Authority President Mahmoud Abbas is ordering the leaders of the Fatah Tanzim militia to take part in planning mass demonstrations this Friday, and in the days that follow, over the continuing tensions on the Temple Mount.

Meetings are held today between representatives of various Palestinian factions at the office of Fatah deputy chairman Mahmoud al-Aloul. Jabal al-Mheissen, responsible for Tanzim on the Fatah central committee, and former Palestinian intelligence chief Tawfik Tirawi were at the meetings, along with the heads of Fatah’s regional branches in the West Bank.

The assembled leaders call to conduct Friday prayers in public places — not in mosques, in protests at continued security measures at the Temple Mount — as well as general readiness and “escalating” protests “in all of Palestine as an [act of] victory for the blessed Al-Aqsa Mosque.”

As we wrote yesterday, the removal of metal detectors would not in and of itself resolve the crisis without a reasonable response from the Palestinians. Abbas’ answer makes clear that they will not see reason on this issue.

This is an exceptionally dangerous decision on the part of Abbas to push for further escalation. A poll conducted by Israel’s Channel 2 indicates that fully 77% of Israelis think the decision to remove the metal detectors was a form of capitulation. On a matter of basic security, the Israelis are unlikely to be willing to accept further compromises. If Abbas cannot accept the removal of the detectors as a sufficient concession to Palestinian demands then he is accepting a potentially enormous cycle of violence.

It’s worth asking what is motivating Abbas to accept those consequences. In recent weeks and months, the unprecedented level of cooperation between Israel and the Gulf Arab states has become increasingly obvious. That cooperation is predicated in large part on the willingness of the Arab states to ignore the Palestinian issue. To the extent that they are still engaged, it has been to Abbas’ detriment. Egypt and the UAE have backed a deal between Abbas’ rival Mohammed Dahlan and Hamas that could set up Dahlan as Abbas’ logical successor as leader of the Palestinian Authority. It’s possible then that the key to getting Abbas to back down may lie in Cairo or Abu Dhabi, rather than in Jerusalem.

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Russia’s Loss, Whose Gain?

Everyone Loses: The Ukraine Crisis and the Ruinous Contest for Post-Soviet Eurasia

Samuel Charap & Timothy J. Colton

Routledge, 2017, 212 pp., $21.95

A recent book by Samuel Charap and Timothy Colton—two outstanding Russia experts of two distinctly different generations—will probably not go unnoticed given its grandly pessimistic title. Their topic, of course, is timely, since tensions between the West and Russia are clearly on the rise, and their recommendations for avoiding catastrophe are reasonable if not earth-shattering. Both parties must “make painful compromises” since “insuring a new Cold War would be the height of policy negligence.” A fresh standoff would bring only losses and difficulties for everyone involved. The authors are for peace and against war, for a win-win strategy and against a lose-lose one, for all that is good and against any sort of evil.

Platitudes aside, there are things to admire in the book. Its most impressive feature is a deep and detailed historical picture of the evolution of the post-Cold War world. Charap and Colton direct their readers’ attention to developments that are rarely addressed, making their volume indispensable for anyone who wants to understand the emergence of contemporary Russia and its current policies. But while the narrative and some of their attendant explanations are worthy, the “ideology” underlying their effort deserves some scrutiny.

The authors proceed from the assumption that Russia was, and presumably still is, on the defensive against the West that humiliated it during the transition from the Cold War to the “Cold Peace,” spurning its request to be more deeply integrated into Euro-Atlantic structures such as NATO and the European Union and destroying its self-confidence by supporting a series of “color” revolutions. I strongly agree with the thesis that the West missed its chance to integrate Russia into the Free World during the first decade after the dissolution of the Soviet Union, holding out instead for a transformation that could never happen. To presume Russia could become a “normal country,” able to combat its legacy of imperialism and transform itself into a liberal democracy, was as naive as the hope that Germany would embrace democracy and tolerance after its defeat in World War I. Indeed, Russia has never agreed to withdraw from any significant part of post-Soviet Eurasia (a continuity in Russian policy from Yeltsin to Putin).1 But from here the authors head in a disturbingly wrong direction.

The “understanding” of Russia that the authors exhibit quickly turns into what might be called a “soft vindication.” To them, Russia and its neighbors have produced “a unique post-imperial landscape” in which “the former empire is arrayed around the ex-metropole physically,” giving Russia “immense advantages in dealing with its neighbors.” Even though Russia relies on “soft coercion” rather than “soft power” while dealing with these new nations, the authors suggest that it should be granted “special privileges” in the region: “Is it realistic to think that Russia, an order of magnitude weightier than the states at its doorstep, would have no influence upon them?” While they acknowledge the sovereignty of those post-Soviet states they call “in-betweens,” Charap and Colton note that “Ukraine, Georgia, and Moldova cannot count on restoring their territorial integrity so long as Moscow considers that allowing them to do so would facilitate their membership in Euro-Atlantic institutions.” In other words, a “realistic” approach should be based on the assumption that the sovereignty of Russia’s neighbors is in fact conditional, and the very fate of the “in-betweens” must be subject to consent between Russia and the West.

The authors distinguish between two groups of “in-betweens”: The first group, the “lucky” one, was “appropriated” by the West in the 1990s before Russia’s resurgence, while the second, less-privileged group became the object of conflict. These latter nations should take into consideration all of Russia’s “concerns” and be happy that, as Charap and Colton put it, “Moscow does not have an authoritarian-promotion agenda, analogous to EU and U.S. democracy promotion.” In other words, the West should “understand” Russia and have realistic goals. It should try to improve the current situation rather than radically favor the “in-betweens.” This advice sounds very practical, but not very encouraging.

In explaining why they advocate such an approach, the authors reveal the weakness of the analysis behind it. Charap and Colton believe that the main troubles in today’s world stem from the mutual attempts of Russia and the West to prevail against each other.” These “zero-sum” policies create a constant rivalry on many fronts—geopolitical, geo-economical and even “geo-ideological,” as the authors put it—that is playing out in all of the post-Soviet states in Europe. It is a confrontation between the two blocs in Eurasia: the well-established EU and the newly born EEU.

Russia exercises pressure on the “in-betweens” and will continue to do so as long as the in-betweens hope to become incorporated into the Western bloc. In describing Moscow’s policies toward Ukraine, the authors remind us that Putin, presumably a person of great decency and politeness, “had run through all the standard plays in Russia’s foreign-policy playbook…by the time he decided to use the Russian military” in Crimea. In other words, Russia will rely on pure force if the West continues its claims; therefore, “zero-sum policies…produce negative-sum results [and it is no surprise that] all major players are worse off today that they were when the crisis began.”

The authors call for reconciliation between the West and Russia—for avoiding a new Cold War and for preventing the conflict from jumping to other regions (as happened in Syria). But two major questions arise here, each connected with the negative effects that, according to Charap and Colton, might befall all the countries involved into the current showdown.

In speaking about a “negative-sum game,” the authors should detail the “negative” effects on West, specifically Europe and the United States. Yet they say only that there is no longer any “peace dividend” and that the United States was forced to allocate around $4 billion to expand its military presence in East and Central Europe in 2016 and 2017. But that’s about 40 times less than the cost of the “war on terror” for both 2016 and 2017—hardly a major reason for avoiding the confrontation. Moreover, Europe’s deteriorating trade and investment relations with Russia arise more from Russia’s internal economic problems due to falling oil prices than from the sanctions levied by the parties on one another.

Therefore, the main argument—that the West damages itself quite significantly by engaging into confrontation with Russia—seems unproven. The situation instead resembles the Cold War years, when the West defeated the Soviet Union in economic competition without exhausting itself, even while spending a much greater share of its gross domestic product on military personnel and technologies than it spends today.

Meanwhile, the impact on Russia and even on Ukraine is not straightforwardly negative. Of course, both countries have suffered in recent years—but their leaders appear to be even better off than before. Putin doesn’t care about ordinary Russians’ woes; the war in Ukraine raised his approval ratings and consolidated his grip on the nation. Even for the Ukrainian political elite the war has become a source of personal enrichment (their trade with the occupied territories of Crimea and Donbas has been brisk, and the military suppliers especially profit greatly), restoring the country’s corruption to previous levels. While the fortunes of democratic nations and those of their leaders tend to rise and fall together, it’s deeply misguided to assume the same of states that are effectively “captured” by kleptocrats. In these states a loss for the people can be a win for the top officials—in which case Charap and Colton’s thesis simply makes no sense. They argue that the Kremlin should consider Russia’s recent losses to be unbearable—but in fact Moscow’s rulers count these as distinctive wins that keep Russia running in the direction they desire.

In sum, Charap and Colton provide us with a brilliant historical analysis of the time before the Cold War, fumble in their interpretation of what happened after, and tell us surprisingly little about how to move further. The reconciliation they suggest, in which the West takes the first step, seems unpromising, and will certainly be unproductive if it comes at the expense of the poor “in-betweens.” Any hope that Russia will change its course due to its losses is simply misplaced, because the country’s leadership profits from the current state of affairs. One should remember the words of Alexander Haig, Jr., during his Senate confirmation hearings in 1981: “There are more important things than peace.” The “Cold Peace” in particular, I would add.

1Vladislav Inozemtsev, “Vernarrt in die Vergangenheit: Die Wurzeln des Putinismus reichen bis in die neunziger Jahre zurück” Internationale Politik (January/February 2017), pp. 74–83.

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A Party Threat to Shinzo Abe?

A series of scandals and missteps—plus a shocking defeat in local Tokyo elections—is creating some uncertainty over the political future of Japanese Prime Minister Shinzo Abe. And according to new polling, his rival Shigeru Ishiba could be the one to pick up the pieces. Japan Times:

Former Defense Minister Shigeru Ishiba overtook scandal-hit Prime Minister Shinzo Abe as the best person to lead Japan, an opinion poll showed Tuesday.

Ishiba was seen as the most appropriate choice for prime minister by 20.4 percent of respondents to the poll conducted by the Sankei newspaper and FNN TV network, while 19.7 percent picked Abe. […]

With support for Abe’s Cabinet nose-diving amid a series of gaffes and scandals, Ishiba has emerged in recent weeks as one of the strongest critics of the prime minister within the ruling Liberal Democratic Party. He told Fuji TV after the LDP suffered a heavy defeat in a Tokyo election this month that the party was in crisis, and he has questioned Abe’s haste in pushing to revise the 70-year-old pacifist Constitution.

Ishiba has lately been hinting that he will challenge Abe for the LDP presidency next September. If he does, it won’t be the first time: Ishiba narrowly lost to Abe in a leadership battle before the LDP regained its majority in the Diet in 2012. Like Abe, Ishiba is a conservative nationalist who looks to strengthen Japan as a military power in the face of rising threats from China and North Korea. And he has an impressive resume, having served as Defense Minister from 2007 to 2008, and subsequently as the Secretary General of the LDP and as minister for regional economies under Abe.

All this could make Ishiba a formidable challenger to the Prime Minister, who is currently feeling the heat from the Kake Gakuen scandal that has embroiled him in charges of cronyism. But Abe is a canny politician, and it would be a mistake to count him out just yet. Moreover, the fact that his chief LDP rival shares Abe’s nationalist outlook suggests that the foreign policy choices Abe has made have deep roots in Japanese politics. Barring a collapse in support for the LDP overall, those choices are likely to last, no matter who takes the party leadership next year.

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NATO(-member) in Name Only?

Several developments this week demonstrate the continued deterioration of Turkey’s relationships with traditional Western allies. The most shocking of the stories began to unfold when the state-owned Anadolu News Agency disclosed classified information about the whereabouts of soldiers from the United States and Europe who are fighting ISIS. As Al-Monitor noted:

The report revealed crucial information on some of the US bases and on French and American soldiers in the region. The article and a detailed map appeared in AA’s English version on July 18. On July 19, the leak spread to international media outlets. The US military told the press that publishing such sensitive informationwas “professionally irresponsible.”

Although President Recep Tayyip Erdoğan’s chief foreign policy advisor, Ibrahim Kalin, denied any government involvement in the revelations about secret bases, the unwillingness of the president to remove the story from the webpages his ministries control speaks volumes. The Turkish state has indirectly sanctioned the dispersal of highly sensitive information that endangers the lives of American and European soldiers.

U.S. support for the Syrian Kurds remains the proximate reason for this tit for tat undertaken by the Turkish side. But there are more fundamental factors is Erdoğan’s turn against the West. His government’s once cavalier interest in pursuing EU membership has turned to outright hostility; he has revived “neo-Ottoman” foreign policy goals that turn Turkey to the east and the Islamic world; and he has domestically discredited Kemalism as a governing philosophy.

These large trends portend difficulties for the functioning of Europe’s web of alliances. As Article 10 of the North Atlantic Treaty notes “the Parties may by unanimous agreement, invite any other European State…to accede…” Turkey will not in the near future play ball on a controversial enlargement. This reality lends credence to President Trump’s often crude avowal that NATO has in some important respects become obsolete. Meanwhile a new, assertive, but not very capable power is freelancing around the already fragmented Middle East and the Caucasus. The EU, having failed to bring Turkey into the fold when it was willing, must now learn to live with a hostile and aggressive new power on its fragile southeastern frontier.

Meanwhile, in the latest development of the ongoing saga of acrimony between Germany and Turkey, NATO itself has decided to step in and de-escalate things between its two feuding member states. The current dispute, which began a week ago with the arbitrary detention of a German human rights activist in Turkey, has snowballed with astonishing speed. Reuters reports:

The mediation offer by NATO chief Jens Stoltenberg, announced on Monday, came as Ankara itself sought to limit the economic fallout from the damaging row with Berlin, dropping a request for Germany to help it investigate hundreds of German companies it said could have links to terrorism.

Readers may need to fight the urge to rub their eyes at that sentence. An argument over a single German detainee has caused a cascade of disputes, with the German Finance Minister Wolfgang Schauble threatening to curtail investment in Turkey, and Ankara returning the favor by submitting to Interpol a list of 700 German companies Turkish authorities supposedly suspect of financing terrorism. Then came the further retaliatory action taken by Turkey with regard to Germany’s military. The same Reuters article notes:

Adding to tensions is Turkey’s refusal to let German members of parliament visit soldiers stationed at two air bases […]

This has already led Germany to move troops involved in the campaign against Islamic State from Turkey’s Incirlik base to Jordan. The risk of further decampments has sparked deep concern in NATO and now prompted it to intervene.

Yes, Germany is willing to move its troops out of NATO due to an inter-member political conflict which it cannot resolve. It would prefer to keep them in Jordan, a country which, on the whole, has shown itself to be a much more dependable ally in the fight against ISIS than the mercurial and self-serving Turkey. What more damming signal could there be for a defense alliance in distress than the inability of its members to coöperate with each other on mutual defense?

After a few days of these increased tensions, Turkey capitulated in part, caving to economic pressure by retracting its list of terrorism-supporting companies. (It went even further to try to save face, saying the submission of the list to Interpol had arose from a simple “communications problem.”)

This suggests that Europe may still hold some leverage over Turkey, despite its President’s growing unpredictability. Whatever Erdoğan’s self-serving geopolitical machinations lead him to do, he cannot change the fact of his country’s economic interdependence with Europe. Yet the days when NATO could command the loyalty of its members, necessitating that they handle disputes with co-parties discreetly, are long past. Its ranks may continue to fill with members in name only.

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EIA Says US Will Set Oil Record Next Year

2017 has already been a banner year for American oil production. U.S. shale producers have gotten their feet underneath them once again, adapting to the low oil price environment by cutting costs and improving efficiencies en route to turning a profit at $50 crude, and we’ve seen output surge accordingly. Since last October, U.S. oil production has increased more than 900,000 barrels per day, but according to the Energy Information Administration (EIA), the party’s just getting started—it expects American producers to break a 47 year old record for production in 2018. The EIA reports:

In EIA’s latest Short-Term Energy Outlook (STEO), total U.S. crude oil production is forecast to average 9.3 million barrels per day (b/d) in 2017, up 0.5 million b/d from 2016. In 2018, EIA expects crude oil production to reach an average of 9.9 million b/d, which would surpass the previous record of 9.6 million b/d set in 1970. EIA forecasts that most of the growth in U.S. crude oil production through the end of 2018 will come from tight rock formations within the Permian region in Texas and from the Federal Gulf of Mexico.

The United States is already the world’s biggest producer of oil and gas, thanks to a recent surge in production of hydrocarbons trapped in shale. Fracking has catapulted the U.S. to the front of the energy producing pack, so to speak, and now it’s going to hurtle us past another important milestone, into uncharted territory.

Policymakers and the public are both still playing catch-up to this extraordinary transformation. For decades, the U.S. energy debate was framed in terms of scarcity, as the legacy of the Arab oil embargo of the 1970s loomed large in American minds. We’ve moved far, far beyond that, as next year’s projected milestone shows, into a new era of energy abundance.

And just as we once transitioned from a discussion of achieving energy “independence” (a farcical idea) to shoring up energy “security,” we might now shift again to discussing how to achieve American energy “dominance,” as the Trump Administration has described it. Thanks to the shale boom, that doesn’t seem so far fetched an idea.

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All The Dots, Connected

Both Donald Trump, Jr., and Natalia Veselnitskaya, the Russian lawyer with whom he met in June 2016, have tried to portray their meeting at Trump Tower as nothing more than a lobbying effort aimed at lifting a discrete set of sanctions known as the Magnitsky Act. The implication is that Veselnitskaya, as well as Rinat Akhmetshin (who was only later revealed to have been at the meeting), were nothing more than lobbyists doing the bidding of private paymasters directly affected by the aforementioned bill. And when U.S. journalists mention President Trump’s Azeri associates, Aras Agalarov and his son Emin, they often refer to them as billionaire developers, as if they were merely entrepreneurs and businessmen.

The truth is, there is no such thing as an independent billionaire in Russia. The line between “the state” and “private” enterprise is more than just blurry; in many cases, it doesn’t exist at all. The security services are not just responsible for intelligence gathering; they also run extortion rackets and take cuts of everything from the illicit drug trade to cross-border financial transactions. Every larger business needs a krysha (literally “roof”, or protection) from someone in power. As Russian corruption-fighter and opposition politician Alexey Navalny’s most recent exposé showed, the extravagant looting has directly benefited the second most powerful man in Russia, former Western darling Dmitry Medvedev. Estimates of Putin’s own take vary, but it is no longer much in dispute that the Russian President is the King of the Kleptocrats. Of course businesses and companies exist in Russia, but the larger they get, the more their corporate structure becomes nothing but a thin veneer of legitimacy over corrupt patronage schemes that flaunt both the spirit and the letter of the law.

The passage of the Magnitsky Act in 2012 seriously upset a large subset of the Russian mafia state, including Putin himself. To those unfamiliar with how Russia works, this might seem puzzling at first. Why all the drama over sanctions on a few oligarchs? But to those more attuned with Russia’s inner workings, it’s much less perplexing. As American financier Bill Browder, whose wildly successful asset management company Hermitage Capital had been the target of a state-backed raid and takeover attempt in the 2000s, explained to us last week when we caught up with him, Putin and his subordinates live by a kind of Faustian deal.

“[Putin] allows people to get rich off the proceeds of government service,” Browder said, “and then he asks them to do services he’s interested in for the state.” In the process, Putin takes a cut for himself, and of course jealously guards his loot. But there is also a larger contract being observed that forces Putin to act forthrightly. “He asks [his subordinates] to do very terrible things—to torture people, to kill people, to kidnap people, in order for the government to seize people’s properties. And in return he offers them impunity. If all of a sudden…he can’t promise them foreign impunity, that messes up everything for him.”

Digging through the murky networks connecting the people who attended that mysterious meeting at Trump Tower last year won’t provide the definitive “smoking gun” that so many in Washington are desperate for, tying the President’s campaign to some fanciful plot hatched inside the Kremlin to subvert American democracy. But at the same time, it casts serious doubts on arguments that there is nothing to see in the meeting itself. On the contrary, there is plenty to see. Looking at these networks recasts both our understanding of the real nature of Russian involvement in the 2016 election, and of what having a purely transactionally minded businessman for a President might mean for the United States—whether there was “collusion” or not.

So let’s have a look. Bear with us, as this gets a little dense.

Pyotr and Denis Katsyv

The now-notorious Natalia Veselnitskaya is an employee of one Pyotr Katsyv, who was Transport Minister and then Vice Governor of Moscow Oblast (the region surrounding, but not including, Moscow City, roughly the size of France). He is now Vice President of Russian Railways, perhaps the second most prominent state-owned company in Russia after Gazprom, and is one of the most powerful and well-connected men in the entire region.

Katsyv was born in Khmelnitsky Oblast in Ukraine, in a small Jewish town, in 1953. He may have been recruited by the KGB to watch over his community (the Fifth Directorate had a special Jewish Department for keeping an eye on Jewish dissidents), and gained his earliest connections that way. Vladimir Yakunin, who was Katsyv’s boss at Russian Railways, is also widely believed to have been a KGB man.

According to reporting by the OCCRP, Pyotr’s son Denis appears to have profited from an elaborate tax fraud scheme in Russia worth some $230 million. The person who discovered the fraud, a young lawyer named Sergey Magnitsky, was jailed for his trouble, appears to have been denied medical care in prison, and may have even been beaten to death while in custody. Bill Browder, the man who hired the young Magnitsky to investigate the fraud, was outraged by what had happened to him. In what can only be described as a Herculean lobbying effort, Browder managed to convince U.S. lawmakers to push through a sanctions bill—the aforementioned Magnitsky Act—directly targeting the individuals who colluded in and profited from the above-mentioned tax scam. To date, 44 individuals, some of them not yet publicly revealed, have been put on the sanctions list since the Act’s passage in 2012.

Interestingly enough, Denis Katsyv’s name does not appear among the publicly named individuals targeted by the Magnitsky Act, but he has faced legal problems in a U.S. case related to the fraud. His name first appeared in U.S. media when the U.S. Attorney for the Southern District of New York, Preet Bharara, opened a case against Prevezon Holdings, Ltd., Katsyv’s shell company in Cyprus that was allegedly involved in laundering the proceeds of the Magnitsky tax fraud. Prevezon was accused of using $600,000 of these Magnitsky fraud funds towards the purchase of real estate in Manhattan worth some $15 million. Natalia Veselnitskaya was sent to help manage the Prevezon case, and was in charge of hiring lawyers for Denis Katsyv. Katsyv is said to have spent between $30 to $40 million on his defense. Bharara was fired by President Trump in March of this year, and the case was subsequently settled in May for close to $6 million.

It’s important to remember that the underlying crime that provoked the Magnitsky Act, beyond the likely murder of Magnitsky himself in prison, is brazen fraud: a theft of hundreds of millions of dollars from Russian state coffers. It’s striking the extent to which the Kremlin has gone to defend and protect those alleged to have profited from those crimes. But in Putin’s Russia, not all tax frauds are created equal. One of Pyotr Katsyv’s associates, Alexey Kuznetsov, the former Finance Minister of Moscow Oblast, was accused by Russian authorities in 2011 of defrauding the state of 14 billion rubles ($320 million). Kuznetsov fled to France, where he is currently awaiting a French court’s decision on whether to honor an extradition request. According to Russian investigative reports, Katsyv appears to have been involved in helping Kuznetsov launder his money. Nevertheless, unlike his former colleague, he remains unmolested by authorities.

Lev Leviev

It’s not clear how Pyotr Katsyv first met the successful Russian-Israeli billionaire businessman Lev Leviev, the so-called “King of Diamonds”. Their two families appear to have started doing business together as early as 2003, when Denis became the CEO of Irostratos Ltd., a Cyprus offshore that was at the time a part of the Leviev’s LL International Holdings BV.

By 2008, AFI Europe NV, one of Leviev’s companies in the Netherlands, sold 30 percent of its four subsidiaries to the above-mentioned Prevezon Holdings for €3 million. The deal was closed on the eve of Denis Katsyv’s becoming the sole shareholder of Prevezon. These four subsidiary companies in turn owned major stakes in 35 properties in Germany, including 20 in Berlin. AFI Europe NV had previously estimated its assets at €105 million, which would have valued the subsidiaries sold to Prevezon at around €20 million. The fact that they were transferred to Prevezon at a fraction of their appraised value suggested the deal was a sham, and that Katsyv and Leviev were more than mere partners. When AFI tried to return the €3 million back to Prevezon in January 2014, Dutch authorities intercepted and froze the transfer at the behest of U.S. authorities investigating the Prevezon case.

And it was another Leviev company, AFI USA, that sold the Manhattan real estate properties (at 20 Pine Street) to Prevezon—the properties at the heart of Preet Bharara’s ill-fated case against Katsyv.

Eagle-eyed readers might remember Leviev’s name from a minor and somewhat scattershot Politico story from a few months back, a story that documented both Donald Trump’s and Jared Kushner’s personal links to various Russian Jewish figures through the Chabad-Lubavitch movement. In 1999, Putin asked his friends Lev Leviev and mega-oligarch Roman Abramovich to found the Federation of Jewish Communities of Russia as a counterweight to a rival Russian Jewish organization led by rival oligarch Vladimir Gusinsky. Leviev and Abramovich installed Chabad rabbi Berel Lazar at the new organization’s head, and then proceeded to become very involved in Chabad’s charitable activities and programs across the world. It was through Chabad’s networks that the two eventually met the Trumps.

Leviev may have first encountered The Donald through their mutual friend Tamir Sapir, a Georgian emigré (with possible KGB connections) who built a billion-dollar fortune in the 1980s by investing the earnings from a barter trade in oil and fertilizer with the Soviet Union into Manhattan real estate. Leviev and Trump appear to have first had an official meeting in May 2008 in New York, where they reportedly discussed working on a possible project together in Moscow. Meanwhile, Abramovich, and especially his wife Dasha Zhukova, appear to have become very close to Jared Kushner and his wife Ivanka through the years. How Kushner met Leviev is less clear, but he did end up buying several floors of the old New York Times building from him in 2015 for $295 million. The deal, and a subsequent refinancing loan worth $285 million received from Deutsche Bank against the property, are said to be of interest to the Mueller investigation.

Aras and Emin Agalarov, and Mr. Chaika Too

Rounding out the dense web of connections represented at the Trump, Jr. meeting is the Agalarov clan—the so-called “pop star” Emin and his “businessman” father Aras—both of whom are said to have gotten to know Donald Trump through the staging of the Miss Universe pageant in Moscow in 2013. But neither is Emin just some Azeri singer, nor is Aras just some developer. These are well-connected people.

The Agalarovs own the Crocus Group, one of the larger real estate development firms in Russia. Emin has been intimately involved in running the firm for several years before he got serious about music. Until recently, Emin was married to Leyla Aliyeva, daughter of the President of Azerbaijan Ilham Aliyev (who happens to be a close personal friend of Vladimir Putin). One of the Agalarov’s main properties, the Crocus City Hall, was built in Moscow Oblast right around the time that Pyotr Katsyv was coming up in the region’s bureaucracy. In 2014, the Crocus Group was explicitly written into a bilateral deal with Kyrgyzstan to be the exclusive provider of services to help the Central Asian country integrate into Putin’s Eurasian Economic Union. And in 2015, the Agalarovs received a state contract to build sections of Moscow’s Central Ring Road, a juicy infrastructure project with plenty of opportunities for various cost overruns and similar shenanigans familiar to graft-happy developers the world over. Needless to say, in Russia, building this kind of “fortune” has nothing to do with luck.

Finally, the man who pulled the Veselnitskaya meetings together, Emin’s publicist Rob Goldstone, made reference to Russia’s “Crown prosecutor” in his email to Trump, Jr.: “The Crown prosecutor of Russia met with his father Aras this morning and in their meeting offered to provide the Trump campaign with some official documents and information that would incriminate Hillary and her dealings with Russia and would be very useful to your father.” As most reporting has pointed out, this is a completely unambiguous reference to Yury Chaika, the Prosecutor General of Russia, a man close to Agalarov and loyal to Putin.

Chaika gained some international notoriety a year and a half ago when Alexey Navalny released a popular 40 minute video detailing the property empire and mafia ties of the prosecutor’s two sons. Chaika was furious, and accused Bill Browder of having financed the investigation. Aras Agalarov at the time wrote an open letter defending his friend Chaika and comparing Navalny to Nazi propagandist Joseph Goebbels.

Browder, for his part, had previously accused Chaika of having stymied official investigations into the causes of Magnitsky’s death. Late last week, Browder’s firm filed a complaint with the U.S. Treasury’s Office of Foreign Assets Control, alleging that Representative Dana Rohrabacher (R-CA) and his staff director Paul Behrends had met with Chaika’s deputy Viktor Grin, a man sanctioned under Magnitsky, in Moscow in April 2016, and had received a dossier of materials for lobbying against the Magnitsky Act. The meeting ultimately led to the screening of a revisionist film meant to muddy the waters surrounding the circumstances of Magnistky’s death at the Newseum in Washington, DC, around the same time that Trump, Jr., was meeting Veselnitskaya in Manhattan.

Putin Himself

One of the most striking elements of the effort to repeal the Magnitsky Act is how it has involved the entirety of the Russian government apparatus, all the way up to Vladimir Putin. The outraged reaction on the part of the Kremlin has ranged from a reciprocal set of travel bans on U.S. officials to a grotesque prohibition on U.S. adoptions of Russian orphans. Veselnitskaya, acting at the behest of Denis Katsyv and Prevezon, helped set up a lobbying group in 2016—the creatively-named Human Rights Accountability Global Initiative Foundation—that cynically tries to leverage the adoption prohibition in order to build support for repealing the Magnitsky Act. The organization claims on its website to be “dedicated to overturning the Russian adoption ban”—a ban that exists only because the Magnitsky Act is in place.

It’s a bit of ideological juijitsu worthy of Putin himself. This was the pitch Veselnitskaya allegedly used on Trump, Jr., during their meeting. And indeed, as Donald Trump revealed in a free-ranging interview with the New York Times, Putin brought up “adoptions” in the course of their undocumented, hour-long conversation at a G20 dinner in Hamburg the other week as well.

Why would Putin personally intercede to overturn a bill that sanctions people seemingly only tangentially related to him? “He received some of the proceeds of the crime that Sergey Magnitsky had exposed,” Bill Browder told us when we spoke to him last week, pointing to funds received by Sergey Roldugin, Putin’s famous cellist buddy and suspected bag man exposed during the Panama Papers leaks of last year. And more than the inconvenience of having a couple hundred million dollars taken away, Putin appears rattled by the very precedent of the Magnitsky Act. “Putin, one of the wealthiest men in the world, with many many billions sitting in offshore bank accounts, could have all his money frozen and seized,” Browder went on. “And therefore, he sees that all the hard work he has done in the past seventeen years—stealing money and killing people—would be for naught if all that money gets taken away by the West.”

Just Doing Business With the Bear

It’s easy to get lost in this kaleidoscope of colorful characters. Disoriented, one is tempted to conclude one of two things: Either that—as both Trump, Jr., and Veselnitskaya, each in their own way, have tried to argue—this was “just” lobbying, and that since nothing seems to have come of it, there is nothing to see. Or that the layers upon layers of proxy actors is evidence of a brilliant sinister plot, hatched deep in the bowels of the Kremlin, to install a patsy in the White House.

Given what we know so far, neither appears to be strictly true.

Yes, Veselnitskaya was lobbying on behalf of her paymasters Pyotr and Denis Katsyv to overturn the Magnitsky Act. But as we have tried to show, Pyotr and Denis are no mere businessmen trying to overturn a law for only their own ends. Rather, they appear to be some kind of fixers or conduits for a network of former KGB men informally connected to Putin himself, and they have clearly received the full backing of the Russian state, up to and including the intercession of the Russian President himself on behalf of their “cause” with a sitting President of the United States at the G20. This is not “just” lobbying—it is the pursuit of an important foreign policy objective of the Russian Federation.

This points to something that American pundits rarely appreciate about Putin’s Russia: Foreign policy objectives are frequently suborned to the simple goal of personal enrichment. Putin doesn’t “hate democracy” as much as he sees it as a pesky impediment to him keeping the plum position at the feeding trough. His Russia, though displaying the trappings of a modern society, is rooted in an older social arrangement that uses personalized patronage networks to distribute wealth and maintain order. Westerners can have trouble coming to terms with how profound the difference is between the way things things are done in a place like Russia compared to how things are done back home. Nominally impartial bureaucracies exist in Russia, and while they can be as maddeningly slow and grinding as their Western counterparts, they wear their pretense to impartiality much more lightly.

Understanding this, it becomes much less difficult to imagine that Russia’s meddling in our elections last year was first and foremost motivated by the rapacious greed of a cadre of highly connected “businessmen”, including Putin himself. When it became clear that Trump would be the Republican nominee, this network checked its rolodex, saw that it had links to Trumpworld, and made its pitch to help, with the ask implicit. By the time Putin was directly involved, some broader considerations (such as bloodying and getting revenge on Hillary Clinton, whom the Russians thought was going to easily win) may have come into play as well. But the initial, and primary, driver was likely the economic self-interest of Putin’s elites.

The network’s rolodex had at least two vectors for its approach. The Katsyvs were associates of Lev Leviev, who had sold several floors of the Times building in New York City to Jared Kushner. The Agalarovs, also close to the Kremlin’s commanding heights, did a deal with Trump through his involvement in the Miss Universe pageant. From what has been revealed thus far, neither of those transactions appear to have been in any way illegitimate or illegal. (Though, to be fair, without a clear audit of all of the President related ventures, we have little to go on but news reports.)

Both vectors were tried, but thus far at least, they have not yielded any results for Moscow. Yes, the President has an unnerving and enduring sympathy for strongmen leaders like Putin and Erdogan, and has for decades advocated for improving relations with Russia. Nevertheless, President Trump has publicly expressed strong support for the Magnitsky Act, and has made no overt efforts to repeal it. And beyond Magnitsky, the White House has now pledged (perhaps reluctantly, but still) to sign into law a new raft of sanctions on Russia in response to their election meddling, scheduled to be passed by Congress today. Was any quid pro quo arrangement discussed with Russian acquaintances eager to help? We simply don’t know. But even if it had been discussed, and the Russians lived up to their end of the bargain, they haven’t yet gotten much in return.

Associating with Russian oligarchs is of course not a crime. But President Trump’s reaction to the fact that his son didn’t bat an eye at meeting with Russians openly offering the services of their state—“everybody would do that”—suggests that even without a deal, we have as a country regressed a fair bit. Trump viscerally likes Putin and Erdogan because he recognizes them, sees in them a way of governing that is instantly familiar. Power emanates from the individual, states are personalized, government is the business of putting trusted cronies in a hierarchy below you to do your bidding, and economics is tied to a spoils system where friends are rewarded and enemies are punished. All of these are anathema to a modern state, which though it never completely transcends the patrimonial cronyism of its less-developed brethren, at least aspires to.

Cynics (including such people as Putin and his circle) scoff that modern states’ frequent inability to fully live up to their impartial ideal shows that they are rotten and hypocritical to the core. That’s one reason why Russia tends to give cover to anti-establishment candidates of the right and left who say that the system is rigged and the rule of law is a sham.

But this view misses the point: the ideal of impartiality, even if never fully attained, helps grow economies, expand opportunities, and limit political violence. A transparent decision-making process, even if not perfectly reliable, allows individuals in a society to plan more effectively, and thus begin to pursue the economic opportunities afforded them by the post-industrial era. A belief in the possibility of fairness allows societies to strive to more fully reform themselves to the ideal. Without this inevitable hypocrisy, on the other hand, there is nothing preventing societies from devolving into an ever-more corrupt and clientelistic arrangement, which in today’s world has reached a kind of apotheosis in Putin’s Russia.

Thankfully, our institutions have thus far held up and appear to be checking the President’s worst instincts. Still, there’s little to celebrate—and not just because of President Trump’s clear affinity for a more personalistic brand of politics. It’s hard to re-embrace ideals once they have started to seem hollow to both a substantial segment of the electorate, and the man they have chosen to lead them.

Democratic lawmakers cried foul at the decision, demanding to know if the Department of Justice had inappropriately intervened in the case after Bharara’s firing. Sources from the prosecutor’s office denied these charges, telling The Daily Beast that the decision to settle was made because the case was far from a “slam dunk”, and that there had been no improper interference from the DoJ.

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The Grim Lessons of Charlie Gard

A U.K. death panel has forced parents to abandon hope for their baby’s life. The Wall Street Journal reports:

The parents of Charlie Gard abandoned their legal fight to take the terminally ill 11-month-old abroad for experimental therapy, ending a challenge to British doctors who want to switch off his ventilator and give him end-of-life care.

Saying they were prepared to spend their “last precious moments” with their son, Chris Gard and Connie Yates told the U.K. High Court on Monday that it was too late for a possible treatment because his muscles were irreversibly damaged by the advance of his rare mitochondrial disorder.

Conscience is a flexible thing, so the authorities who blocked a desperate parental bid to risk an untested therapy that just might have helped their child are presumably sleeping soundly with no bad dreams.

But it was a wicked abuse of the state’s coercive power to prevent the parents from trying their best for their child, and it should strengthen the determination of everyone who cares about human liberty to fight the inexorable, gratuitous growth of states that fail at the most basic jobs (like educating children in public schools) but who endlessly seek to expand their ‘competencies’ into new and more challenging fields.

We need states that stick to their knitting: that perform a few core functions efficiently and well, rather than the current set up of slovenly, meddlesome government that fails at basic tasks (like keeping the drinking water safe in Flint) while interfering mindlessly in the most intimate dramas of family life.

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China Tells Spanish to Stop Drilling in South China Sea

The Spanish oil major Repsol has been collaborating with Vietnam to drill for oil in disputed waters of the South China Sea, and predictably that has gotten China’s goat. As Reuters reports, Beijing is now calling for Repsol to halt operations in a part of the region that both Vietnam and China lay claim to:

Drilling began in mid-June in Vietnam’s Block 136/3, which is licensed to Vietnam’s state oil firm, Spain’s Repsol and Mubadala Development Co of the United Arab Emirates. The block lies inside the U-shaped ‘nine-dash line’ that marks the vast area that China claims in the sea and overlaps what it says are its own oil concessions.

“China urges the relevant party to cease the relevant unilateral infringing activities and with practical actions safeguard the hard-earned positive situation in the South China Sea,” [Foreign Ministry spokesman Lu Kang] said at a regular briefing, when asked if China had pressured Vietnam or the Spanish company to stop drilling.

He did not elaborate.

There is a significant amount of natural resources at stake behind these territorial disputes. Repsol was drilling for oil, though the Energy Information Administration (EIA) points out that the real energy wealth in the South China Sea is likely to come in the form of natural gas. It’s been a while since the EIA updated its brief of the region, but its last estimates say the South China Sea contains “approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas.” That’s a non-negligible resource reserve.

That said, the EIA follows those estimates up with a note that these hydrocarbons “mostly reside in undisputed territory.” More work needs to be done to fully understand what exactly lies under these waters, but in the end, oil and gas aren’t the only reasons China is pushing the envelope in the South China Sea: control over a vital global shipping corridor for global trade is at least as important for Beijing.

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