Robert Amsterdam on Putin's Russia: Chaotic lawlessness as a guiding principle

Lawyer Robert Amsterdam (former counsel to the imprisoned Mikhail Khodorkovsky) has published an excellent piece on the lawlessness in Vladimir Putin's mafia state. Amsterdam's point of departure is the continued imprisonment of the female punk rock band Pussy Riot, with one of its members, Nadia Tolonnikova, probably now sent to some of the worst imaginable conditions in the gulag archipelago:

It is difficult to say whether or not the continued arbitrary punishment of this young 23-year-old mother comes down from the top, or rather is the whim of a cowardly prison administrator, but what is certain is that Russia is a very dangerous place for whistleblowers — a system in which the rights of the individual are totally unprotected from the discretionary power of the state.
Whatever hopes may have remained that Putin would release political prisoners before the Sochi Winter Olympic Games are rapidly fading. Even while the world’s eyes are on Russia, it is evidently not a season of forgiveness judging by the Kremlin’s determination to punish the Greenpeace “Arctic 30” with charges of piracy and now, additionally, hooliganism.
Political trials in Putin’s Russia are driven by diverse motives, but united by the same broken system — which Mikhail Khodorkovsky once described as “the conveyor belt of Russian justice.” (Disclosure: I formerly served as counsel to Mr. Khodorkovsky.)
There are economic motives, from the massive theft of Yukos by Rosneft, down to more petty corruption by low level bureaucrats, such as the fraudulent tax rebate that eventually led to the murder of lawyer Sergei Magnitsky. There are geostrategic motives, highlighted by the spectacle being made out of the Greenpeace activists, seen as Russia’s unsubtle message about their expansionist ambitions in the Arctic. And of course, there are political motives, exemplified by the persecution of people like Khodorkovsky, opposition figure Alexei Navalny and the large group of Bolotnaya Square protesters, one of whom has already been subjected to punitive psychiatry for challenging the regime.
When state officials face no consequences for breaking rules, and when there is no predictable process or protections provided within the system, the only organizing principle that remains in the power structure is mutual incrimination. Corruption becomes the grammar of influence, and logic becomes the servant of power instead of reason.
It does not take a great deal of imagination to see how this system works. It is not just one individual who benefits, but a privileged community at the expense of the majority. If Vladimir Putin were to walk away from the presidency before the next election, Russian society would still face tremendous challenges from an entrenched group of clans with overlapping interests who are heavily invested in the country’s lawlessness.
This is perhaps the most important aspect for foreigners to understand about the persecution of the Pussy Riot girls — it does not make sense and the Russian government is even worried about it making sense. The ruling class reaps significant political benefits (at least domestically) by jailing these women and portraying Putin as a guardian of conservative, religious and nationalist values held by a large part of the rural population. It is a calculated and carefully measured sort of chaos that ultimately supports the regime’s aims to maintain the status quo.

The house that Putin built: Decades of low growth in store for Russia

Even Vladimir Putin's own government now admits that the future for the Russian economy is anything but rosy:

Russia's failure to significantly change its energy-dependent economic model under President Vladimir Putin is consigning the country to potentially decades of low growth and eroding its status as a top emerging economy.
The Russian economy ministry on Thursday dramatically confirmed what was obvious to many, by downgrading its estimate of Russia's average growth to 2030 to a paltry 2.5 percent, a far cry from over seven percent rates in the early Putin years.
"The pace of Russia's economic growth will fall behind the global average in the forecast period," admitted Economy Minister Alexei Ulyukayev.
This year even Russia's official forecast puts 2013 growth at just 1.8 percent. But most worrying for the Kremlin is that the weakness cannot just be blamed on external factors but stems from domestic shortcomings.
The Russian economy faces a daunting list of troubles –- a declining population, the re-emergence of the United States as a rival energy superpower due to shale gas, and the government's colossal spending on defence that stretches the budget.
These factors are compounded by Russia's failure to stimulate private enterprise, reform the judicial system, improve labour productivity and turn the Russian economy into more than a lumbering energy producer.
Russia's weakness this year alone can be linked to this failure, which has damaged the investment climate, economists say.
The revisions by the economy ministry were the "clearest signal yet that Moscow believes that economic weakness over the past year has been structural rather than cyclical in nature," said Neil Shearing, Chief Emerging Markets Economist at Capital Economics.
"Without a major shift in policy we suspect that Russia will go from being one of the world's fastest growing economies to one of its biggest underperformers."
The forecasts by his own ministry made Putin's aim of Russia becoming one of the world's top five economies by 2020 look almost laughable and also undermined its credibility as a member of the BRICS groups of supposedly fast-growing emerging markets.

Read the entire article here

Russia today: Government-organized crime and state corruption

Ashot Yegiazaryan, who has served as deputy from the Liberal Democratic Party in the State Duma since 1999, describes the absence of rule of law in Russia in an article in the Moscow Times:

Perverting the judicial system to abuse private property rights is, of course, not uncommon in countries with weak rule of law. But in Russia, it has been raised to an art form through a heavily centralized political system and a fusion of business and state interests clouded within an opaque environment. The loss of a distinction between personal interests and state interests at such a high level makes corporate raiding more efficient and devastating.
In a seminal 2008 article, “Criminal Corporate Raiding in Russia,” Thomas Firestone, legal adviser for the U.S. Justice Department at the U.S. Embassy in Moscow, writes that Russia’s raiding relies on “criminal methods such as fraud, blackmail, obstruction of justice and actual and threatened physical violence.” He notes that the raiders “rely on court orders, resolutions of shareholders and boards of directors, lawsuits, bankruptcy proceedings and other ostensibly ‘legal’ means as a cover for their criminal activity.”
Firestone defines the typical corporate raid in Russia:

• the acquisition by the raiding company of a substantial portion of the target company’s debts;
• the corrupt acquisition of control over the target company by falsifying internal corporate documents;
• the filing of civil suits and “contracted” criminal cases against the target company;
• the use of siloviki, including the police, private security forces, court bailiffs and hired thugs;
• the transfer of illegally seized assets to a “good faith purchaser”’ using shell companies;
• “black PR” involving the distribution of false information about the target through the media.

These tools will be sharpened and applied with greater vigor if the target tries to resist. After I started to fight back against the scheme to steal my assets, the authorities opened a criminal case against me, heightened physical threats against me and my family and initiated a vicious PR campaign branding me as a criminal.
It is a tragedy that Russia has created a business environment that is so open to abuse, one that has ruined the country’s investment climate.
This model of government-organized crimeis doomed, and the efforts to modernize Russia are a sham used to mask the status quo of rampant state corruption. To create a genuine basis for development, Russia urgently needs to separate business from executive power.

It is becoming more and more evident that corruption and the lack of rule of law is keeping international investors away from Russia:

Ikea, the world’s biggest home-furnishings retailer, is just the type of investor Russia needs — and isn’t getting — to overcome the lowest foreign investment rate among leading emerging-market economies. The Swedish company says it won’t build more stores outside the Moscow region until local officials stop withholding permission for two outlets in the central cities of Samara and Ufa. After investing $4bn in Russia over 10 years, Ikea placed a freeze on expansion in June 2009.

The reason the stores aren’t opening is that Ikea is refusing to pay bribes to safety inspectors, said Kirill Kabanov, head of the non-governmental National Anti-Corruption Committee in Moscow. “We have a zero tolerance on corruption and we have a very clear policy, and then things must take the time they take,” Ikea Russia Managing Director Per Wendschlag said in an interview. He said he had no specific complaint on the delay in permits in the two cities.

At stake is Russian President Dmitry Medvedev’s goal, expressed in a January 26 interview with Bloomberg Television, to match the economic growth rates of other BRIC nations. With barely more than one-tenth the population of China and India, Russia needs to attract non-energy investors to grow and diversify. Corruption has “penetrated all branches of power,” Medvedev said in the interview.

The president’s credibility as a graft-busting former lawyer working to improve the business environment was tarnished in December when a Moscow court handed a new jail sentence to Mikhail Khodorkovsky, the former Yukos Oil billionaire, said James Beadle, a Britain-based consultant for investors in Russia. Lack of progress risks harming Medvedev’s prospects a year ahead of presidential elections.

Foreign companies have repeatedly faced difficulties in Russia. Royal Dutch Shell, Europe’s largest oil company, in 2006 ceded control to state-run OAO Gazprom of its biggest project in the country, the $22bn Sakhalin-2 oil and gas development, amid threats by regulators to revoke the permits on environmental grounds. Russian health officials last year warned Nestle, the world’s largest food company, that it was violating safety rules at its Russian plants. A spokesman confirmed the warning last month. It was a move to favor local rivals or extort money, according to the anti-corruption committee’s Kabanov.

Read the entire arcticle here.

Kristiina Ojuland, Member of the European Parliament and foreign minister of Estonia from 2002 through 2005., has been very outspoken about the lack of human rights, rule of law and corruption in Russia. However, due to its energy dependence, the European Union has regrettably not been in the forefront in the fight against the rotten Russian system: