Oligarchy

DEPLOY THE ACRONYMS!

I used to be a keen photographer and would buy photography magazines for long train or plane journeys, until I realized that they basically only ever had one article — “How to Use Your Digital Camera” — which was repeated in different forms month after month. The magazines’ readership appeared to consist solely of people who had just bought a DSLR and wanted to know how it worked, and who, therefore, would only ever buy one issue, so the editor’s job consisted of endlessly coming up with new ways to write the same article. Working for one of those magazines must be one of the most soul-crushing forms of journalism in the world.

Anyway, writing this newsletter is nothing like that because you are an attentive and alert readership, always yearning for new oligarch-adjacent content. You therefore know already that I have a soft spot for the daft acronyms chosen by American legislators for their bills, because I regularly talk about it.

Which brings us to the Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act, which is back in Congress for — I think — the 13th year in a row. Do legislators come up with the name first, then fit the words to it, or does it work the other way around? Is there one particularly gifted legislator who everyone else asks to do the acronym, like the clever kid at school? Or do they have an AI-enabled computer program? And more to the point, does having a catchy acronym help a bill become law? The fact that this particular piece of legislation has been failing to get passed every year since 2010, despite its great name, suggests that perhaps it doesn’t.

• “A toxic flood of dark money has given billionaires and special interests a powerful way to rig the system secretly in their favor, dark money even enabled these same interests to capture our Supreme Court,” said Senator Sheldon Whitehouse. “It’s time to pass the DISCLOSE Act to end the corrupting influence of dark-money spending and make government work better for the American people.”

It is indeed long past time. Incidentally, Whitehouse was in the U.K. last week, and I enjoyed meeting him at lunch.

• “The sad fact is that, if you do not have a super PAC or a history of making multi-million contributions, you cannot make much impact in Congress,” he said. For the record, I do not have a super PAC or a history of making significant contributions, which may help explain why nothing I want to happen ever happens (witness Wales’ dismal Six Nations campaign).

As I mentioned last week, I am slowly but surely making my way through Martin Wolf’s new book, in which he analyzes deeply what’s gone wrong in the political systems of major Western democracies in the last few decades. His thesis is that capitalism and democracy are mutually necessary for each other to function, since neither political freedom nor economic freedom can long exist without the other. However, the interests of the wealthy few and the not-wealthy many are essentially contradictory, so there is a constant dynamic tension at the heart of democratic capitalism, and the balance has gone out of whack of late.

• “It is impossible to sustain a universal suffrage democracy with a market economy if the former does not appear open to the influence — and the latter does not serve the interests — of the people at large. This, in turn, demands a political response rooted not in the destructive politics of identity, but of welfare for all citizens — that is, a commitment to economic opportunity and basic security for all,” he wrote in this piece in the Financial Times. “Only if trust is revived will the legitimacy of the system be protected against its predators, who are not only without, but also, alas, within.”

Increasing wealth inequality has led to increasing political inequality, with rich donors able to buy access to politicians, but weirdly that has gained only a fraction of the attention of the (far smaller volumes of) Russian money going into Western politics. In the U.K., concerns over foreign interference spurred the government to introduce the Foreign Influence Registration Scheme, which is disappointingly known as FIRS, because Britain has no tradition of fun political acronyms.

• “The new Foreign Influence Registration Scheme will make it harder – and riskier – to operate covertly in the U.K. at the behest of a foreign power. It will also increase openness and transparency around the scale of foreign influence in our political affairs and make it harder for our adversaries to undermine our democracy,” said Ken McCallum, head of MI5, when it was announced in October.

The bill is based on the US Foreign Agent Registration Act and an Australian equivalent, so perhaps the Brits thought it would be uncontroversial, but as soon as it was announced representatives of foreign companies started to complain about being bracketed with firms from unfriendly places like Russia. One businessman called it one of the “most bone-headed, dunder-headed, ill-thought-through pieces of legislation,” which is quite something considering the competition recently. And the scheme has since been amended to make clear this won’t impede journalists or others from doing legitimate work. There is still a lot of grumbling from representatives of EU countries, the U.S. and other British allies who don’t think this should apply to them at all, however.

Perhaps they’re right, but I can see why politicians want to err on the side of caution. The danger of getting it wrong is visible in the ongoing corruption scandal afflicting the European parliament, where countries like Qatar and Morocco — neither of which are exactly considered major geopolitical rivals to the EU, but which appear to have caused substantial mischief anyway — are accused of buying influence.

• “Prosecutors suspect Belgian MEP Marc Tarabella of ‘having taken certain positions in the European Parliament in favor of a third country in exchange for cash,’ according to the report on him. ‘A testimony against him puts forward that he may have been compensated several times for a total amount estimated to be from 120,000 euros to 140,000 euros.’”

Incidentally, I thought Whitehouse’s most interesting point at the lunch I attended was that Western countries need to get better at articulating what they are actually aiming to achieve. What’s the positive vision that unites us all? I always feel that it’s better to be in favor of something (which is why anti-austerity always seemed a bad brand) rather than to be defined as an opponent of something, so what’s the positive vision of the West? And, on that point, should this newsletter be called something more catchy? Maybe I need an acronym of my own. Oliver’s Lengthy, Informative, Great, Argumentative, Readable and Consistently Helpful to You (OLIGARCHY) newsletter? Hmmmmm, perhaps not, anyone know an acronym consultant?

RUSSIAN MONEY!

Few oligarch-related issues are more hotly discussed than what we should do with the Russian money that has been frozen in Western countries. Bill Browder, as you’d expect, has made a very strong case for seizing the wealth and giving it to Ukraine, for fighting Russia with banks as well as tanks, and many politicians agree with him. Canada has already started using new powers that allow it to seize sanctioned wealth.

• “Putin’s oligarchs are complicit in Russia’s illegal and barbaric invasion of Ukraine. Canada will not be a haven for their ill-gotten gains,” said Chrystia Freeland, the minister of finance (and author of a really good book on Russia’s 1990s privatization, which is definitely still worth reading). “It is just and appropriate for Russian assets to be used to help rebuild Ukraine.”

The United States has transferred forfeited Russian money to help the Ukrainians, and some U.K. politicians are demanding the same happens in London.

But how much wealth is there to share? Obviously, it’s not easy to put an exact dollar value on the houses and superyachts sanctioned in Western countries because selling them requires a buyer in a market depressed by the absence of, well, Russian oligarchs. Equally obviously, there won’t be enough money in the pot to rebuild Ukraine on its own: Criminals’ actions always cause more damage to their victims than they earn profit for the perpetrators.

But much of the money is in the form of Central Bank deposits, etc., and so we should have a pretty good idea of its volume — $300 billion is the estimate shared by the U.S. Treasury’s Russian Elites, Proxies and Oligarchs (REPO) task force. The EU estimate, incidentally, is 300 billion euros though I think they’re basically saying the same thing, although it’s odd that the U.S. estimate of frozen oligarch wealth is $30 billion, compared to the EU’s 19 billion euros (about $20 million).

John Cusack, a financial crime expert, has gone beyond the aggregated figures and attempted to add up the various estimates given by different countries, and it’s a more baffling picture than we’d like. France, for example, was last year reported to be holding Russian Central Bank assets worth 71 billion euros, but now is saying it has a total of just 23.7 billion euros.

• If the French figures are correct, it would seem unlikely that other Western countries though didn’t experience a similar reaction. Applying the same level of reduction seen in France across all Western Countries would reduce the amounts potentially frozen to just $112 billion or a reduction of $228 billion,” Cusack concludes.

This does seem important, and the lack of clear information about where these assets are is a bit alarming. More information please!

• “Providing greater transparency on the amounts frozen and the locations of Russian oligarchs’ frozen assets and Russian Central Bank assets would help clear up whether and how much of these assets are actually frozen and where in the West these assets are held, as well as then who gets to decide what happens to these assets and what laws apply,” Cusack said.

Incidentally, the U.S. Department of Justice has launched a civil case looking to confiscate $75 million worth of property belonging to Viktor Vekselberg, whom it accuses of sanctions violations. Thanks to Google street view you can gawk at properties one, two and three (in New York) from the comfort of your home, but you can’t gawk at numbers four, five and six, which are protected from such gauche scrutiny by virtue of being in “a very exclusive private community… often described as one of the best-kept secrets of Miami.” Perhaps Fisher Island just didn’t let the Google photographers disembark, but then it is the richest ZIP code in the United States, so I guess it can afford to.

UNEXPECTED SURPRISE

This week, Michael Gove, a British cabinet minister, just gave a speech about the future of the country, which included the following snippet.

• “A butler economy, which attracts international capital by serving it, through the provision of financial and business services, no-questions-asked property transactions and a bias towards rentiers can never be truly resilient,” he said.

Someone’s been reading my book. I wonder if he’ll do anything about it.

WHAT I’M READING

I just devoured “Trust” by Hernan Diaz in a couple of sittings, having bought it for my Kindle a while ago and forgotten all about it. Coming to it completely cold, I found its peculiar structure at first a bit off-putting but then increasingly sucked in. I’d recommend it.