- - Wednesday, March 4, 2015

ANALYSIS/OPINION:

The murder of my good friend Boris Nemtsov is a personal tragedy. When we met for lunch in Tel Aviv a few months ago, I warned him not to return to Moscow. Posters and ads denouncing him as a “national traitor” had been plastered all over the city’s Novy Arbat Avenue and on the Internet.

His 87-year old mother Dina, a retired pediatrician, also warned him to watch his mouth, “otherwise Putin will kill you,” he disclosed in a recent interview. Mother knew best.

Just like being named an “enemy of the people” under Stalin, the label “national traitor” or “foreign agent” under Russian President Vladimir Putin can mean a long prison sentence — or death. “To paraphrase Pravda, Putin is the Stalin of today,” says Stephen Blank, senior fellow at the American Foreign Policy Council and author of a book on Stalin’s nationality policy.

Boris Nemtsov joins the long list of assassinated friends and acquaintances over years. It includes Duma members Galina Starovoytova and Sergei Yushenkov, Novaya Gazeta editor Yuri Shchekochikhin, Serbian Prime Minister Goran Djindjic and Georgian Prime Minister Zurab Zhvania. I did not meet Alexander Litvinenko, the fugitive FSB officer who was poisoned with polonium in London, attorney Sergey Magnitsky, who died in a Moscow prison in 2009, or the slain journalist Anna Politkovskaya, but their names belong on this list of martyrs as well.

The damage wrought by Nemtsov’s murder, and the murders which preceded it, goes well beyond the personal. This trail of blood and tears has enormous implications for Russia, both political and economic.

Since 2011, Russia has been rapidly transitioning away from a “soft” authoritarian state, where the principal means of control were restricted access to the state-dominated media, stuffed ballot boxes, and police batons. All that is now in the past.

In the new Russia, there is a fierce struggle going on between “system liberals” — essentially, market economists who include former Deputy Prime Minister Alexei Kudrin, Deputy Prime Ministers Igor Shuvalov and Arkady Dvorkovich — and the “siloviki” — the men of the security services and armed forces. They include Mr. Putin’s confidante Igor Sechin, Defense Minister Sergey Shoygu, Investigations Committee head and former Putin classmate Alexander Bastrykin, as well as Security Council Chairman Nikolai Patrushev.

Thus far, the siloviki have been in ascendancy, and Kremlin political captains Vladislav Surkov and Vyacheslav Volodin also like to play rough. It is too early to say who gave the order to kill Nemtsov on the eve of a mass rally against the war in Ukraine and just prior to his release of a report on the Russian military involvement there. However, the truth will come out sooner rather than later because the factional struggle inside the Kremlin is intensifying.

The current turn toward “high” authoritarianism, replete with external warfare and internal murders, as well as an incessant barrage of hate-filled TV brainwashing, suggests that Russia will not see the dawn of democracy any time soon. On the contrary, what is coming is a calamitous period for the country, not unlike the fascist takeovers in Italy, Germany, Argentina or Chile in the last century.

As the dictatorship hardens, witch hunts ensue. Millions of the best and the brightest are leaving the country. Pro-Kremlin cohorts are attacking democratic and environmental activists. Gays are being reviled on television and beaten in the streets. Businesses are being expropriated and entrepreneurs driven into exile. Brave souls who tell the truth, like Boris Nemtsov, are being murdered.

Irreparable damage is being done by raising the degree of political risk involved in foreign investments in Russia and in Russian firms abroad. The EU and U.S. sanctions imposed in response to the Kremlin-backed war in Ukraine and low oil prices will eventually bankrupt Moscow.

Recently, British authorities blocked a $5.5 billion sale of oil and gas fields in the North Sea to the LetterOne investment fund, which sought to acquire the German energy company Dea. LetterOne is owned by Russian oligarchs Mikhail Fridman and German Khan, who may face sanctions in the future.

Exxon has frozen its investments in the Russian Arctic due to the sanctions. Last December, Mr. Putin killed the South Stream, a giant natural gas pipeline project worth $30 billion.

Beyond deals involving natural resources, food and consumer goods, Russia had been having a hard time attracting foreign investments even before the war in Ukraine began.

For the last couple of years, capital flight from Russia has been estimated at $120 billion annually. This is close to 5 percent of the country’s gross domestic product. Clearly, Russia’s businessmen are voting with their feet. Now, with clear signals that the Kremlin has set a course for stone-cold fascism, capital flight from Russia is likely to exceed even those recent records.

Thus, the murder of my friend Boris Nemtsov is but the tip of an iceberg. The iceberg is a political system based on murder, corruption and Orwellian propaganda. It presents the burden of political and reputational risk that Western businesses should consider carefully before investing in Russia.

Ariel Cohen is director of the Center for Energy, Natural Resources and Geopolitics at the Institute for the Analysis of Global Security and principal of International Market Analysis Ltd.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide