Security

Punish Russia by Going After Its Fat Cats? (Updated)

Ever since Russia invaded Georgia, there have been all kinds of proposals for how the West should respond. To my ears, they all sound too limp (kick Russia out of the G-8) or too blowback-prone (give Stinger missiles to Tblisi). Former Justice Department official David Rivkin suggests a different approach: Skip the diplomatic drama, and […]

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Ever since Russia invaded Georgia, there have been all kinds of proposals for how the West should respond. To my ears, they all sound too limp (kick Russia out of the G-8) or too blowback-prone (give Stinger missiles to Tblisi).

Former Justice Department official David Rivkin suggests a different approach: Skip the diplomatic drama, and the arms sales, and instead go after the "the shady cadre" of "ex-KGB siloviks and wealthy Kremlin-friendly tycoons" that "bankrolled Putin's rise" and really run modern Russia.

These oligarchs have countless billions sunk in the Western financial system, Rivkin and Carlos Ramos-Mrosovsky write in The Washington Post. And many of their enterprises are not exactly on the up and up. Which makes 'em "perfect target[s]" to squeeze.

Whenever they have jurisdiction to do so -- which should be often -- U.S. and E.U. regulators should examine the business transactions of people close to Putin's regime for money laundering or for securities, tax and other economic irregularities. Asset tracing and long statutes of limitation should enable Western authorities to examine years' worth of business activities. The U.S. Justice Department should aggressively prosecute any instances of Kremlin-connected market manipulation, fraud, tax evasion and money laundering that fall within its reach.

Subpoenas, indictments, asset forfeitures, judgments and travel restrictions will hit where even the most callous bullies feel pain: squarely in the wallet.

It's subtle. It's sneaky. And best of all, "[p]ursuing the oligarchs through the courts would not require the United States or Europe to take a single action 'against Russia,'" Rivkin and Ramos-Mrosovsky write. The West just ups its global anti-corruption campaign -- and then "return[s] the ill-gotten gains to the Russian people, [which] should please even the fiercest Russian nationalists."

My question: Would* our* oligarchs allow *their *oligarchs to be targeted? After all, American and U.S. tycoons got pretty cozy with Putin, over the last few years. And Western business interests have been allowed to trump Western security interests over and over again. Just look at how hard it's been to impose economic sanctions on Iran, or how the West genuflects before the Saudis. Can our bankers and businessmen show more spine, in this case?

UPDATE: Max Boot reminds us that pressuring Russia isn't an either/or game. We can use economic leverage, as well as military or diplomatic means. Meanwhile, former Pentagon attorney and Georgetown Law professor David Kolpow cautions Danger Room readers that "a 'creative' approach like Rivkin's poses distinct difficulties:"

1. There are real proof problems in satisfying U.S. courts that “oligarchs” in Russia are guilty of “corruption.” The U.S. system requires admissible proof, beyond a reasonable doubt, that a particular individual has committed a particular criminal violation. To make generic charges about “money laundering” obscures how difficult it would be to make any particular accusation stick.

2. What about “make the punishment fit the crime”? Did the oligarchs themselves invade Georgia? For us to put pressure on person X because of what person Y did is a departure from the general practice of punishing those who committed the actual offense. This is more like a classic “secondary boycott” -- something the U.S. generally (and rightly) resists.

3. We should, in general, look at things with a greater sense of reciprocity -- how would we feel if Putin acted in the same way toward us? What if, in response to Bush’s actions in recognizing Kosovo, Russia had decided to raise taxes on Pepsi bottling operations in Russia, or deny visas to General Motors executives who wanted to cruise the Russian canals or invent criminal charges against former USG officials? Would indirect pressure like that make the United States more sensitive to Moscow’s interests, and more likely to cooperate next time, or would it have the exact opposite effect?

[Photo: Kremlin.ru]

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