How Russia really works: Bill Browder on surviving Putin | Full interview
What this covers
Bill Browder discusses Putin, Ukraine, the function of Magnitsky Acts, and the nature of corruption.
This interview was recorded in September 2023, at HowTheLightGetsIn London. Book tickets to this year's festival here: https://howthelightgetsin.org/festivals/london?utm_source=YouTube
Was a regime like Putin's the inevitable outcome of Russia's hard transition to capitalism in the 1990s?
Watch Bill debate the rise of BRICS at https://iai.tv/video/redrawing-the-global-order?utm_source=YouTube&utm_medium=description&utm_campaign=bill-browder-on-surviving-putin
With war ravaging Ukraine and Russia exerting its power across the world, the whims of Putin are more valuable to understand than ever. Bill Browder has survived as Putin's number-one enemy ever since the murder of his lawyer Sergei Magnitsky. While dodging Interpol arrest warrants, extradition attempts, and windows in high buildings, Browder has become a world-leading expert on the internal workings of Russia, and activism to hold autocrats to justice.
#russia #putin #ukrainewar
Bill Browder is an American-born British financier and political activist. He is the CEO and co-founder of Hermitage Capital Management, the investment advisor to the Hermitage Fund, which at a time was the largest foreign portfolio investor in Russia.
00:00 Introduction 00:36 Was an autocrat like Putin the inevitable outcome of Russia’s hard transition to capitalism in the 1990s? 03:19 Did Putin embrace the oligarchs out of choice or necessity? 04:47 How would you characterise the economy of Russia today? 05:52 How do Magnitsky Acts work? 08:47 How does sanctioning oligarchs affect Putin’s regime? 11:08 What have sanctions achieved since the war in Ukraine? 12:29 Can the West alone effectively sanction Russian oil? 14:19 How do you see the future of BRICS? 16:16 Could BRICS’ New Development Bank become a major force? 17:06 Why did we allow Russian money to take such a hold of London? 18:49 Can this be reversed through legislation? 20:01 How do you see the future of Russia after Putin? 21:19 Will we manage to toughen up on Russia, or will we slowly lose our resolve? 23:22 If Trump becomes president again, will he cosy up to Putin?
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Putin sent an emissary to Trump Tower in June 2016 before Trump was elected specifically to beg Trump to repeal the Magnitsky Act, indicating it is the Achilles heel of the Putin regime.
“even sent um an emissary to Trump Tower in in June of 2016 before Trump was elected to beg for him to uh repeal the magnit ACT this is something which we we we found the Achilles heal of the Putin regime which is their money”
Trump came close during his presidency to doing a deal with Putin that would have resulted in Browder being handed over to Russian authorities.
“you mentioned MAA in the United States when when Trump was in power he came close to doing a deal with PU over you over giving you over to the Russian authorities”
The pattern of corruption in Russian government may be partly explained by historical experience where Russians have been 'beaten down through any initiative [or] any Goodwill has sent you to the Gulag for generations,' creating cultural learned helplessness and cynicism about trying anything different.
“maybe not to even blame the Russians on it because they've they've been so beaten down through any initiative any Goodwill has has sent you to the Googs for for generations and so um why you know from their perspective why do anything different”
The Magnitsky Act's effectiveness is proven by Putin's extreme reaction when it was passed in the United States, including banning adoption of Russian orphans by American families and making repeal of the Act his single largest foreign policy priority.
“when the magnuski Act was passed in the United States Putin went out of his mind we it was like Battleship and we got a direct hit he banned the adoption of Russian orphans by American families in retaliation he made it his single largest foreign policy priority to repal the magnitsky ACT”
Putin's rise to power was an inevitable outcome of the anger and pent-up demand for backlash created by Boris Yeltsin's deal with 22 oligarchs who controlled over 40% of Russia's GDP while the average Russian lived in abject poverty with male life expectancy at 58 years old.
“he basically had to do a deal with the devil and the deal with the devil was um that he would allow 22 oligarchs um to become fabulously wealthy in exchange for those oligarchs to use all of their assets and media resources to make sure he got elected...you ended up with um 22 oligarchs who controlled more than 40% of the GDP of Russia and the average Russian um was living in abject poverty the um life expectancy for a male at that time was 58 years old and um as a result of that it created such anger um such anger at the oligarchs such anger at democracy such anger at the whole system and such a Poss and such a pent up demand for backlash that Putin stepped in to that backlash”
London has become the home of Russian oligarchs and plutocrats, with Russian money having significant tentacles in London property and assets, and the British establishment welcomed Russian gangsters with open arms while looking the other way on the origin of their wealth.
“London has become the home of all these Russian oligarchs and plutocrats war in Ukraine has exposed even more the fact that Russian money has its sort of tentacles in London property and all sorts of kind of assets...they came here and the British establishment welcomed Russian gangsters and oligarchs with open arms and completely look the other way when it came to where the money came from who these people were”
Sergey Magnitsky uncovered a $230 million government corruption scheme in Russia, testified against those involved, was arrested in retaliation, tortured for 358 days, and was killed in Russian police custody on November 16th, 2009.
“Sergey magnitsky uncovered a $230 million government corruption scheme um he was a good Patriot he exposed it um testified against the people involved and in retaliation the people involved arrested him uh tortured him for 358 days and killed him in Russian police custody on November 16th 2009”
Putin initially arrested and removed the richest oligarch to signal to the remaining 21 oligarchs that they must negotiate with him, at which point he demanded 50% of their wealth, making himself the richest man in the world and the biggest oligarch rather than dismantling the oligarchic system as promised.
“he basically arrested the richest oligarch which by the way I cheered because I thought okay one down 21 to go um and and then uh but but he did that in order for the oligarchs the rest of them to see um that they had to go do a deal with him and they all said what what's the deal and he said 50% and and that was when Putin became the richest man in the world um and became the biggest oligarch himself”
In Russian government culture, there is a universal pattern where every official from the lowest traffic police officer to the president enters government to enrich themselves, with no expectation of public service or responsibility, unlike the UK and United States where many enter public service to serve the public.
“basically there's not a single person I've ever come across in Russia that doesn't go into government in order to enrich themselves from the lowest traffic police officer to the president of Russia I've never seen it you know here in the UK and in the United States um you know many people go into public service to serve the public and and there's great joy from doing good um there's not there's not an ounce of that in Russia nobody that I've ever met in in government um has any feeling of that responsibility it's just pure it's purely to enrich yourself”
Russia's economy is not capitalism but a single large criminal organization with Putin as the top crime boss and sub-crime bosses below him, where any person who sets up a business either must become part of the criminal organization or face having their assets stolen, going to jail, or dying.
“the economy of Russia is just one big criminal organization that's what it is the top Crime Boss is Putin and then he's got sub crime bosses and it's all organized like a major criminal organization it's not like you can go to Russia set up a business succeed and be allowed to succeed any any person who sets up a business in Russia um has to become part of the criminal organization if you don't you have all your stuff stolen from you you go to jail you might die”
The Magnitsky Act strategy targets individuals rather than countries, based on the insight that corrupt officials take money they earn in Russia and place it in Western financial centers (New York, London, Geneva) where they use wealth for personal benefit while simultaneously committing violent crimes in Russia.
“what I identified was that um the people who killed him and the people who do many similar types of crimes um take the money they do it for money they do it in Russia and then they take the money outside of Russia and they put it in New York or London or Geneva and um and they travel they they um put their wives their children in boarding schools and then and they send their parents to Harley Street doctor and and they enjoy all the great things that that civilized society has to offer in the west and they behave like these murderous Barbarians in Russia”
Freezing assets and banning travel of individuals is much more effective than sanctioning countries because individual sanctions directly impact the lifestyle and wealth of corrupt officials, while country sanctions leave elite populations able to continue lavish lifestyles.
“the best way to stop that is to freeze their assets and ban their travel and it's much much better to go after the individuals than it is to go after the country because if you go after the country they don't care that they're still bringing you know we went after Iran and they put plain loads of caviar and champagne and and Mercedes cars and sent them to the elite um but if you go after the individuals um and leave the people Alone um that has a profound effect”
Putin deliberately does not hold money in his own name because he understands that any bank statement with 'Vladimir Putin' on it could be used for blackmail, as he himself is a blackmailer who uses blackmail, bribery, and threats of death as his primary tools of control.
“Putin doesn't hold any money in his own name he understands that if there was ever a document if there was ever a uh piece of paper a bank statement that said Vladimir Putin on it somebody could come to him and say listen Vladimir I'm going to put this out into the public unless you you um do this this and this for me he you know Putin is a blackmailer this is what he does he he either you know kills black mails or bribes in order to get people to do stuff for him”
There is hope for Russia's democratic future because a few people like Vladimir Kara-Murza and Ilia Yashin are sitting in jail right now for challenging Putin and demanding democracy, and the hunger to live freely is a universal human desire that cannot be permanently suppressed.
“but there is hope there are a few people out there Vladimir caram morza close friend of mine Ilia Yashin these are all people who are sitting in jail right now for challenging Putin for asking for demanding democracy in Russia and um you know we shouldn't underestimate the hunger inside every person to want to live freely um it's it's a demand and a desire of most people and um no matter how much oligarchs and kleptocrats and tyrants try to game the system it goes against human nature”
Despite appearing as tough, chest-thumping alpha males, oligarchs are actually fearful and submissive when in Putin's presence, as evidenced by their body language when Putin appears at events like Davos in Switzerland.
“these oligarchs who most of us if we see them in the world they're like these chest thumping alpha male on steroids you know tough guys but they're just a bunch of little weasy um uh wusses when when they're around Putin and I've seen it in davo Switzerland I was there when Putin show up and all the oligarchs were there and they and and it's just it's unbelievable to watch the body language I mean these guys are like just the the most timid school children in his presence”
Support for Ukraine has become part of the MAGA Republican party ticket to not support Ukraine, and Kevin McCarthy, the Speaker of the House, would not welcome Vladimir Zelensky to address the House of Representatives when he was in Washington.
“the second the uh the what I see as a trend towards um not supporting Ukraine in uh in the United States um it's become part of the uh Maga Republican party ticket to not support Ukraine um the uh uh Kevin McCarthy the the Speaker of the House of Representatives wouldn't welcome Vladimir zalinsky to address the House of Representatives this week uh while he was in Washington”
A leading presidential candidate in Slovakia is now saying no more weapons for Ukraine, with undertones and murmurs of this position becoming mainstream in Western politics.
“the Slovak president is now or I should say the the leading candidate for president is now saying no more weapons for Ukraine there's a lot of murmur and undertone of that”
The Western claim that oil embargo is impossible due to energy needs is false because the US and other Western powers have leverage over oil-producing countries like Saudi Arabia, which they could use to increase production, eliminating the energy shortage argument.
“the argument is there's other people who produce oil um who we have leverage over the United States provides a military shield for Saudi Arabia Saudi Arabia could easily um increase the production of oil and allow us um not to have that problem why are we not using that leverage”
The West can pressure India not to buy Russian oil by threatening to cut off Indian exports to Europe—a threat Browder believes India would immediately capitulate to because it has huge disincentives to lose European markets versus small incentives to buy Russian oil.
“we could tell the Indians if you want to buy Russian oil that's great but don't don't expect to export any Goods to Europe and you know what the Indians would fold in in a flick of a of an eye I mean there the there is absolutely no I mean there's a small incentive for a huge disincentive”
A Saudi Arabian person was recently sentenced to death in Saudi Arabia simply for retweeting tweets critical of the government, illustrating the severity of human rights abuses occurring in countries whose money is welcomed in London.
“the Saudis are here no problem and they're they're committing terrible crimes in Saudi Arabia there's a person just um sentenced to death for retweeting some tweets critical of the government”
Sanctions are causing great pain to Russia in the same way Ukrainian missiles are causing pain, and the proper way to stop the war is to embargo the sale of Russian oil to both the West and the East, cutting off Russia's daily revenue of 500 million to 1 billion dollars.
“they're causing great pain um in the same way as as Ukrainian missiles are causing great pain and it's our job to cause Putin as much pain as possible now we can't blame sanctions for for not working when we haven't done the sanctions to the full extent that we should be doing them um if we really wanted to stop this war um we should embargo the sale of Russian oil to the west and to the east if Russia no longer generated money from the sale of oil um then they would have to look to their savings and their savings are frozen the Central Bank Reserves are frozen and the oligarchs money is Frozen then they'd have to look for can we borrow the money and guess what that's also Frozen the capital markets are cut off from Russia but at the moment every day Russia generates between half a billion and a billion dollars in terms of revenues from oil”
You can tell which countries are succeeding by analyzing immigration patterns—millions of people try to leave China and enter the UK, US, and Canada, demonstrating through revealed preference where people believe economic opportunity exists.
“it's not as if there's millions of people on boats trying to get into China youve got people trying to leave China to get into the United Kingdom in the United States and Canada and various other places there you can you can just tell by by where the immigration is Flowing who's doing what and where where people want to be”
Browder experienced a decade-long personal conflict with Putin over the murder of Sergey Magnitsky, and his biggest fear was that Bill Browder fatigue would cause people to stop caring about Magnitsky and his cause.
“I've been through my own you know microcosm of this conflict for for many years more than decade I've been in conflict with Putin over the murder of Sergey magnitsky and my biggest fear was that there would be Bill Browder fatigue that people would stop caring about Sergey magnitsky and my cause and what I was doing”
Russian money in London is being undone because of the atrocities committed in Ukraine and because the British public no longer tolerates it, though the British government, law enforcement agencies, and establishment rules are not fit for purpose in dealing with dirty money generally.
“I think the Russian stuff is being undone because of the atrocities committed in Ukraine and and it's unacceptable and the British public no longer allows you know just can't tolerate that the British public has been really good on on these the Ukraine conflict really good but the establishment the rules the government the law enforcement agencies are not um fit for purpose when it comes to dealing with dirty money”
There is a 90% probability that post-Putin Russia will see more of the same oligarchic corruption and kleptocracy, and even if Putin dies, the most likely scenario is that another kleptocrat-type character would step in rather than genuine democratic reform.
“I think there's a 90% chance it's more of the same and probably more of the same with Putin I mean all this rumors about his health are probably wishful thinking uh I think the most likely base case scenario is that um you know 5 10 years from now we're still dealing with Putin unfortunately um if he's not to be in power um the most likely scenario is another kleptocrat type of character would step in”
Trump has a tendency to want to side with Putin for reasons that nobody quite understands, and if Trump becomes president, US support for Ukraine will stop the next day.
“Trump is Trump if Trump was President um I think the the US support for Ukraine will stop the next day um I think that Putin will have F he will succeed Inn winning not just in Ukraine but all of a sudden uh other places will be at risk I think it's probably the most dangerous thing that could happen to the world if Trump becomes president because he seems to be for reasons that still nobody quite understands he seems to want to side with Putin you know over democracy”
If the West truly wanted to stop the war in Ukraine, it should embargo Russian oil sales completely; instead, policymakers are allowing a 'huge huge loophole' in oil sales to continue, suggesting they are not fully committed or are distracted.
“we just need to have a more robust and muscular policy to end this war and at the moment um the people who are in charge of the policy are they're not getting distracted the war has been going on for a while and and they're letting this huge huge loophole continue which is the sale of this oil”
The idea of BRICS creating a common currency will never happen because no one would want to hold the currency of Russia, China is not a true economic miracle but is instead going through a worsening problem, and authoritarian systems with lack of free speech and poor demographics don't lead to good economic outcomes.
“the big idea is having a bricks currency and when I hear that I I just laugh um you know it's it's never going to happen in a million years who who would want to hold the currency of Russia uh uh you know what about China though I wouldn't want to own the currency of China China is is is the most arbitrary uncertain uh bad place and by the way China's no economic Miracle you know CH China's got is going through uh a pro problem right now which is just going to get worse and worse and worse”
Putin's current wealth is approximately 200 billion dollars, and when combined with the wealth of oligarchs around him, totals approximately one trillion dollars of money stolen from the Russian state.
“you have um Putin who's worth 200 billion or maybe a lot more and then if you add up all the oligarchs around him um uh it adds up to a trillion dollars of money that was stolen from the Russian state”
China was presented as an economic miracle when Browder was in business school in 1989, similar to how Japan was presented as the 'be-all and end-all,' but both have ended up as failures; in 20 years, China will be perceived the same way Japan is now.
“I remember when I was in business school I graduated business school in 1989 and at the time Japan was the the Beall and endall their stock market was trading at alltime High High the the value of the one mile in the central Tokyo was more than the value of all real estate in California um we were studying how Japanese did their things and now Japan is like a a you know nothing um and that's the same that I I I guarantee you in 20 years time when we're looking at China we're going to see the same thing”
The BRICS Development Bank that was created as an alternative to the World Bank will help Russia on only an extremely small scale—amounts that would help Russia for weak not weeks not for a year not for five years.
“yeah and on an extremely small scale I mean this is these are numbers that would come you know that would H you know help Russia for weak not not for a year not for five years”