The Financial Times: Russian sharks are feeding on their own blood

July 6, 2009

By William Browder

When pres­i­dents Barack Oba­ma and Dmit­ry Medvedev met on Mon­day for their first major sum­mit, the main agen­da items were arms con­trol and Iran, and progress was made on the for­mer, at least. This may encour­age those who believe these issues can be dealt with in iso­la­tion from oth­er chal­lenges to US-Rus­sia relations.

As some­one who has been famil­iar with the coun­try for the past 15 years, I believe that approach ignores fun­da­men­tal dif­fer­ences between Rus­sia today and most oth­er nations. Sim­ply put, Rus­sia is not a “state” as we under­stand it. Gov­ern­ment insti­tu­tions have been tak­en over as con­duits for pri­vate inter­ests, some of them crim­i­nal. Prop­er­ty rights no longer exist, peo­ple who are sup­posed to enforce the law are break­ing it, inno­cent peo­ple are vic­timised and courts have turned into polit­i­cal tools.

Rather than a nor­mal­ly func­tion­ing bureau­cra­cy, Russia’s clans fight over con­trol of gov­ern­ment posi­tions and the pow­er to use state resources to expro­pri­ate assets. While cor­rup­tion and legal abuse go on every­where, the scale of them in Rus­sia should affect the way all coun­tries, par­tic­u­lar­ly the US, deal with it.

My own case is illus­tra­tive of the break­down of the state in Rus­sia. From 1996 until 2005, I was the largest port­fo­lio investor in the coun­try, with $4bn (£2.5bn, €3bn) invest­ed. In Novem­ber 2005, the gov­ern­ment sud­den­ly took my visa away and declared me a “threat to nation­al secu­ri­ty”, I believe because I was out­spo­ken about cor­rup­tion at state-owned com­pa­nies. This was fol­lowed by a cas­cade of malfea­sance so extreme it would make a hard­ened crim­i­nal blush – which I believe was orches­trat­ed by the authorities.

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