The Russia Report

The Russia Report

John Lloyd
John Lloyd
12 min read

A report released this July by the UK’s House of Commons Intelligence and Security Committee is more concerning than its relatively restrained prose appears to indicate. It shows us that Russia is an enemy determined to undermine liberal values and institutions, and it exposes a galaxy of details of Russian malignity—an alarming reminder of just how deep and how dangerous the threat is. Much of the report rehearses what is already known about Russian efforts to hack into democratic states’ networks to influence citizens’ voting, and to produce results which will benefit Russia’s foreign strategy—that is, whatever is bad for the West is considered good for Russia.

These hacks included intervention in the 2014 referendum on Scottish Independence, where a vote for secession would have meant the break-up and weakening of the United Kingdom—a plus for Russia denied by a substantial vote to remain in the union, at 55–45 per cent. Then, in 2017, hackers entered the networks of the new French party, République En Marche, and leaked a large number of emails which were said to expose election fraud and tax evasion—claims which were themselves fraudulent. This exercise was undertaken before the final round of the presidential election for the benefit of Marine Le Pen of the right-nationalist Front National—the Kremlin consistently supports such parties, because of their disruptive potential. Le Pen was about to face off against Emmanuel Macron, who was unwelcome to Russia because of his strongly pro-European Union views. Macron won heavily, which again appeared to render the Russian interventions a waste of time and money.

The Russian hackers were, however, third time lucky. The UK’s 2016 referendum on membership of the EU was narrowly won by the Leavers, which was Russia’s preferred outcome. Would the result have been much the same had there been no such propaganda? Probably. Leavers voted as they did because they wished to return power to a parliament they could control. The damage to the UK economy is likely to be considerable, while the threat, at least in the short term, which the EU poses to British sovereignty was overrated. Nevertheless, it was a vote for democratic accountability.

The actual impact of the Russian attacks may have been limited but they were large intrusions even so, because they struck at democracies’ ethical core: that the people must have the right to choose, and to dismiss, the politicians who govern them. Large, too, because a strong civil society, the necessary accompaniment to institutions and voting in a state which is democratically stable, depends on a more or less agreed version of what constitutes the truth. That ought to be the purpose of journalism and the rationale for the subsidies provided to public broadcasters—the (imperfect) pursuit of objectivity and neutrality in reporting.

Russia does not have independent democratic institutions elected by free and fair votes; and though it does have something of a civil society and a subculture of independent journalists who have carved space for adversarial commentary and investigations (the latter perilous, especially in some regions), both are vulnerable to constant harassment, arrest, and sometimes worse. In July, the experienced reporter Ivan Safronov, who had been pushed out of—or resigned from—the daily newspapers Kommersant and Vedomosti for his critical view of the government, was arrested and charged with treason. It was alleged that he had been passing classified information to a NATO state. Treason is increasingly used in such cases, and a conviction could mean a 20-year sentence.

Russia’s covert cyber activity is augmented and amplified by the widely available programming of the RT news channel, and the online news service Sputnik. These have been compared to the propaganda of the Soviet period produced by Radio Moscow and the papers and publications of the various Western Communist parties. They are certainly as mendacious, but there is a difference, crucial to our understanding of relations between the West and the authoritarian world, led by China and Russia. Communist propaganda was disseminated in pursuit of a putative global ideal—a world in which cooperation replaced competition, comradeship replaced greed, and solidarity with other peoples replaced fear, racism, and exclusion. Familiarity with the reality of the Soviet Union rather undermined all these claims, but the ideal of the Marxist society—a secular version of paradise—had and still has a hold on the imagination beyond the terrible truth of Communist societies.

Today’s Russia, on the other hand, proposes no global idea. Instead, it claims to be a quite separate civilisation; Russia, writes Christopher Coker in The Rise of the Civilizational State (2019), is “busy refabricating its own past to reflect ancient truths and ancestral verities in a bid to inoculate itself against the contagion of liberal ideas and Western norms.” President Vladimir Putin does not believe in “Western norms” regarding human rights, freedom of speech and publication, and sexual diversity. He believes instead in a Russian—often expressed as Eurasian—civilisation. In a 2012 speech to the upper and lower houses of the Russian Duma, Putin argued that Russia’s “civilisation state” is a protection against its dissolution “into this diverse world.” The scholar Adrian Pabst comments that the Russian leader believes that “the West is a threat to this civilisation because… it denies moral principles and traditional ways of life.”

Implausibly, he also appears to believe that Russia lives by Christian standards the West has abandoned. Last June, he asked the Financial Times’s Lionel Barber:

Have we forgotten that all of us live in world based on Biblical values? Even atheists and everyone else live in this world. We do not have to think about this every day, attend church and pray, thereby showing that we are devout Christians or Muslims or Jews. However, deep inside, there must be some fundamental human rules and moral values. In this sense, traditional values are more stable and more important for millions of people than this liberal idea, which, in my opinion, is really ceasing to exist.

Putin has rejected the cultural and irreligious shifts in Western political practice—as have Xi and Jarosław Kaczyński, the chairman of the ruling Law and Justice Party in Poland, who espouses a highly conservative version of Catholicism. Hungary’s Prime Minister Viktor Orbán, meanwhile, has argued that Christian Democracy itself should become illiberal, specifically by protecting Europe from mass Muslim immigration. The European elite, he says, promotes multiculturalism and an era in which nations simply disappear.

After the US Presidency was won by someone uninterested in liberal—or any other—values, this anti-liberal bloc has grown in power and confidence as the West seeks a new ideological centre. But that power and confidence has grown alongside massive corruption, undermining their self-flattery and the elevated principles by which their leaderships claim to live. Coupled with the insistence that Western-imposed liberal rules and Western-imposed morality are now no longer relevant (except when they are useful), this corruption poses an existential challenge that will dominate global politics. And the West can by no means be complacent on this score—corruption has also provided opportunities for the willing hands and open pockets of those in Europe and North America who scramble to act as conduits for money plundered from the populations of the authoritarian states, and which now enriches bankers, lawyers, public relations people, and politicians in the West.

In what is the most caustic, if under-stressed part of the report, the committee found that the “light touch” regulation of the 1990–97 Conservative government, and in particular the 1994 Investor Visa scheme, drew large numbers of wealthy Russians to the city where “few questions if any were asked about the provenance of this considerable wealth.” The government and others claimed to believe that the London experience would promote clean corporate governance. Instead, “what is now clear is that it was in fact counter-productive, in that it offered ideal mechanisms by which illicit finance could be recycled through what has been described as ‘the London laundromat.’” The American investor Bill Browder, whose campaigning prompted the US to pass the Magnitsky Act, named for his murdered former Russian colleague, told the committee that “Russian state interests, working in conjunction with and through Russian criminal private interests set up a ‘buffer’ of Westerners who become de facto Russian state agents—many unwittingly, but others with a reason to know exactly what they are doing and for whom.”

It is “widely recognised,” says the report, “that Russian intelligence and business are completely intertwined.” Several members of the House of Lords—an unelected body, with its members selected by the political parties—“have business interests in Russia or work directly for major Russian companies linked to the Russian state,” and the authors worry that the Russian state might exploit them. At the same time, Prime Minister Boris Johnson’s list of nominations for a seat in the Lords (released after the report’s publication) includes Evgeny Lebedev, son of the former KGB agent and banker Alexander Lebedev, who employed former Conservative Chancellor George Osborne as editor of the Evening Standard and who has often hosted parties at which Johnson was a guest. The prime minister, along with Osborne and former premier David Cameron, attended a celebrity-heavy birthday party thrown by the Lebedevs at their Regent’s Park mansion to celebrate Alexander’s 60th year, the evening after Johnson’s election victory. This was either a significant sign of favour or gratitude. (In fairness, Alexander has often seemed to be at odds with the Kremlin, and blames the Putin administration for attacks on his bank.)

Roberto Saviano, the Italian anti-mafia activist and writer, has called London “the most corrupt place on Earth.” That’s a gross exaggeration; many British institutions—such as justice, administration, education, and more—suffer little if at all from corrupt practices. But the smooth absorption of Russian money and moneymen into the British establishment, is nonetheless a cause for real concern. In Moneyland, a forensic detailing of the webs of corruption now tightening around us, Oliver Bullough writes that:

Officials in Nigeria, Russia, Malaysia, Kenya, Equatorial Guinea, Brazil, Indonesia, the Philippines, China, Afghanistan, Libya, Egypt and dozens of other countries have likewise stashed their wealth beyond the reach and the oversight of their fellow citizens. Estimates for the total amount stolen each year from the developing world range from a massive $20 billion to an almost unimaginable trillion dollars.

And this money makes its way, via the offshore secrecy jurisdictions, into a handful of Western cities: Miami, New York, Los Angeles, London, Monaco, Geneva. It is all but impossible to imagine countries with such skewed economies building healthy democracies, or honest political systems, or even being able to defend themselves… corruption is a force multiplier for the West’s enemies, and yet the West continues to accept dirty money into its economies by the billions. The money sucks at your feet, the ground falls away.

Bullough worked in Russia as a reporter for six years and has written two excellent books about the country—Let Our Fame be Great (2010) and The Last Man in Russia (2014)—the second of these highly pessimistic about its future. In Moneyland, he writes that, in the 15 years after Putin became president in 2000, the ultra rich (over $180,000 a year) “saw their wealth increase by an astonishing $687 billion. The top 10 percent of Russians own 87 percent of everything: a higher proportion than in any other major country—pretty stark for a place that was communist just three decades ago.”

Moneyland cast a wide net over corruption around the world and has been followed this summer by another superb book of probing research, which focusses more closely on what the Russians are doing to the UK. Catherine Belton’s Putin’s People: How the KGB Took Back Russia and Then Took On the West puts flesh on the Intelligence Committee’s skeletal report and offers a horrifying glimpse of the obscene wealth of the 0.5 percent of the population and of the ends to which the cash is put. In the course of her research, Belton made a discovery which, if fully developed, heralds a struggle on a much higher plane than cyber attacks and RT propaganda:

What emerged as a result of the KGB takeover of the economy—and the country’s political and legal system—was a regime in which billions of dollars at Putin’s cronies’ disposal were to be actively used to undermine and corrupt the institutions and democracies of the West. The KGB playbook of the Cold War era, when the Soviet Union deployed “active measures” to sow division and discord in the West, to fund political parties and undermine its “imperial” foe, has now been fully reactivated. What’s different now is that these tactics are funded by a much deeper well of cash, by a Kremlin that has become adept in the ways of the markets and has sunk its tentacles deep into the institutions of the West. Parts of the KGB, Putin among them, have embraced capitalism as a tool for getting even with the West. It was a process which began long before, in the years before the Soviet collapse. [my italics]

Belton also has the measure of the New British Russophiles: the legal and PR companies and the noble Lords who saw the various needs and manoeuvres and feuds of the Russian oligarchs heavily represented in London’s most exclusive areas as means of enrichment. The businessman Sergei Pugachev was quick off the mark in 1991 as the USSR collapsed, founding one of the first banking “co-operatives”; he became close to Putin as an adviser on business and finance, only to find himself ejected from the inner circle. Many of his assets—such as shipyards, a planned hotel, and much more—were stripped from him at derisory prices and re-allocated to those who had stayed within the circle. Most of his $15bn was frozen and he ended up in the London High Court in the hands of another group of ruthless, if less bloody, individuals—London lawyers, who “viewed him mendaciously as easy prey.” “‘He’s on our territory now,’ said one partner at a global law firm representing him.” Belton writes that that City lawyers become “spoilt” by the huge sums Russian clients were willing to pay to have their cases heard in the High Court. Pugachev, while pursuing justice, had met “a string of English lords who had guffawed and shaken his hand and told him how great they thought Putin was… they believed Pugachev was ‘Putin’s banker,’ as the press called him then, yet they still asked him to donate to the Conservative Party without question or thought.”

The Intelligence and Security Committee’s report is unequivocal: The Russian state is engaged in an escalating campaign against the UK, with other Western democracies, and the hitherto flaccid response must be strengthened, with MI5 as its main organiser. No attempt, by US presidents or UK prime ministers, to rebuild a relationship between Russia and the West has “had any impact on Russian intent, and therefore on the security threat that Russia poses,” while “its lack of strong independent public bodies and the fusion of government and business allow it to leverage all its intelligence, military, and economic power at the same time to pose an all-encompassing security threat… Russia believes that an undemocratic might is right world order plays to its strengths, which leads it to seek to undermine the Rules Based International Order—whilst nonetheless benefitting from its membership of international political and economic institutions.” As we’ve seen, the “rules based international order” is just what Putin rejects as an outdated liberal hegemonic imposition.

Britain is targeted because of its closeness to the US, the activity of its secret services, and its support for sanctions, especially following the attempted murder of the former double agent Sergei Skripal and his daughter Yulia by agents of the GRU military intelligence in Salisbury in March 2018. So it’s good that the Committee recommends more hawkish relations with Russia, and that it has been sharp in its criticism of the City operators who operate the “laundromat,” and on the Lords who use their rank and position to profit from membership of Russian boards or work for Russian companies. But the report is too brief. Bullough and Belton’s books build the case with layers of facts and interviews, and are of a quality that should change policy and inform action. They should also—is this a forlorn hope?—have some effect on those, usually in the City of London, who have grown rich on the wealth of their Russian clients—riches which should have been the property of the Russian people.

It also remains to be seen how seriously the UK government will take the report, and how far it will act on it. British politics, and the ruling Conservative Party in particular, have benefitted from donations gifted by Russian oligarchs close to the Kremlin, and Prime Minister Johnson has an ambiguous attitude to Russian money. Mark Galeotti, a scholar who has specialised in researching Russian crime, wrote last year that he had met an official from the National Crime Agency who had been “hearing suggestions that dealing with dirty Russian money isn’t as much of a priority” as it had been under Theresa May and David Cameron. But, Galeotti continues, the need for new alliances and trading partners after the UK breaks its ties with the EU could soften all complaints were a trade deal to be offered.

Of further concern to the police and security agencies was Johnson’s record as Mayor of London from 2006 to 2016. During this time, he encouraged a property boom in which a flood of un-examined Russian money poured in, and has since maintained friendships with several Russian oligarchs. Before and during his time as Foreign Secretary (2016–18), he took several trips to Evgeny Lebedev’s large Umbrian villa for dinner parties at which excess was encouraged. (At one of these, a fellow guest, glamour model Katie Price, lifted her top to expose her breasts, turning to face Johnson as she did so, an incident Evgeny later denied he would use as “kompromat” on Johnson). Others who claim Johnson as a friend are Alexander Temerko, who has gifted more than £1.2m to the Tories over the past seven years; and Lubov Chernukhin, who paid £160,000 to play a tennis match with Johnson, and gave more than £450,000 to the Conservative Party last year.

Corruption, and its effect on British members of the establishment, institutions, and markets is bad. Worse is Belton’s discovery that the problem is not merely a question of high-rolling representatives of the Russian super-rich spreading money about the greedier firms and Lords. These people are more or less conscious agents, undermining the West and its liberal institutions—institutions which the Russian president believes have had their time, and can now be ignored and then swept away.

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John Lloyd

John Lloyd is a contributing editor at the Financial Times and co-founder of the Reuters Institute for the Study of Journalism.