If the U.S. and Europe ever get serious about finding and freezing the assets of sanctioned Russian oligarchs, they should keep it in mind that it will be ordinary Russians who might be forced to reimburse them.
Next week, Russia’s rubber-stamp parliament will consider, and probably pass, a bill that envisions government compensation for Russians’s seized overseas assets.
The idea began circulating among allies of Vladimir Putin 18 months ago, after the U.S. Congress passed the Magnitsky Act, which empowered the U.S. government to freeze the assets of Russians guilty of human-rights violations. The 2013 bill, almost identical to the one under consideration now, allowed Russians faced with “illegal” property seizures by foreign courts to seek redress from the Russian government.
That bill died amid opposition from anti-Putin legislators, but the new Cold War changed things. On Sept. 23, Vladimir Ponevezhsky, a member of the pro-Putin United Russia party which dominates the legislature, reintroduced the bill. This time, the government backed it, pointing out that Russians’ property could be seized by executive order, not just through the courts, and the victims should be compensated in these cases, too. “The sanctions imposed by European countries and the U.S. have nothing to do with international law,” Vladimir Pligin, head of the parliament’s constitutional legislation committee and another United Russia member, said after the committee voted to support the bill on Sept. 30.
The backing of United Russia and the government usually makes a bill a shoo-in. The legislature will consider it on Oct. 7, Putin’s 62nd birthday.
Once it is passed, billionaire Arkady Rotenberg, whose four villas and luxury hotel were sealed by the Italian authorities last week, will be able to file suit in a Russian court, seeking reimbursement from the finance ministry. If the court rules the foreign asset freeze illegal, the Russian government will pay out the value of the property and will be empowered to take a bite of Italy’s assets in Russia, ranging, presumably, from diplomatic mission buildings to Italian state companies’ property.
Considering the provenance of Putin’s sanctioned friends’ fortunes, made mostly on vastly inflated government contracts, Russian taxpayers have already paid for their villas, hotels and luxury condos. Now, they will have to pay a second time: European countries and the U.S. probably have much less government property in Russia than the Putin cronies have foreign assets. The Russian government, however, doesn’t really consider ordinary citizens as taxpayers, as political commentator Stanislav Belkovsky recently pointed out.
“Our government is its own taxpayer,” he wrote. “It sells oil, gas and other minerals, and it distributes the proceeds to the population according to how valuable they are within the current system of power.”
Russians, who have acquiesced in Putin’s external aggression and intolerance of internal dissent, are no more than serfs, expected to accept whatever their lord tells them in the name of the all-powerful state.
A prominent member of the Putin elite, Constitutional Court Chairman Valery Zorkin, recently suggested in the government-owned Rossiyskaya Gazeta that the abrupt abolition of serfdom in 1861 may have been a mistake. “Despite all its drawbacks, serfdom was the brace holding together the nation’s internal unity,” he wrote. “It was no accident that, according to historians, the peasants told their former masters after the reform: ‘We were yours and you were ours.’”
Zorkin’s historical ruminations are no accident. Before Russia annexed Crimea and became a de-facto pariah state, membership in the international community restrained the Putin elite, forcing it to show at least superficial respect for human dignity. Now, it’s no longer necessary, and Russian citizens are being openly treated as property of the state. The government has already confiscated part of their pension savings to finance Crimea and is now about to scrap the $10,800 subsidy paid out to mothers who give birth to a second or third child.
There will be no mass protests because, though Russians once again belong to a master, they feel he belongs to them.
Leonid Bershidsky, a Bloomberg View contributor, is a Berlin-based writer.
© 2014, Bloomberg News