The Russian Oligarchy and the “Civilization State”

Paul Jay

Hi, I’m Paul Jay. Welcome to theAnalysis.news. In a few seconds, I’ll be joined by Jeffrey Sommers. We’re going to talk about the Russian state, the rise of Putin, and what it means in terms of the current war in Ukraine. Be back in just a few seconds.

As Israel continues its bombing of Gaza, Russia continues its attack on Ukraine. These wars have some things in common, but that’s not what we’re going to talk about today. We’re going to talk about Ukraine, the Russian invasion, and the rise of the state as led by Putin and what we make of it today.

Now joining us again to talk about this is Jeffrey Sommers. If you haven’t watched my previous interviews with Jeff, you really should because they help set this one up. You’ll find them in the links below.

Jeffrey Sommers is a professor of political economy and public policy at the University of Wisconsin-Milwaukee, where he also serves as a senior fellow at the Institute of World Affairs. In addition to his academic work, he’s been published in outlets such as the Financial Times, the New York Times, Project Syndicate, the Guardian, the Nation, Social Europe, and often in Counterpunch. Thanks for joining me, Jeffrey.

Jeffrey Sommers

Paul, great to be here.

Paul Jay

So, in the previous segments, we talked about the end of the Soviet Union and the beginning of the rise of this new version of Russia. We talked to some extent about the ’90s, but I left off the last interview asking a question that I think leads to the issue of the rise of the oligarchs and the rise of the state under Putin. 

The question I was left off with was, as the ’90s unfolded, certainly at the beginning of the selling of public assets, the big privatization that took place after the fall of [Mikhail] Gorbachev and the dissolution of the Soviet Union, a lot of assets were sold to individual Russians, many or most of whom had been in the party or certainly were seniors in the bureaucracy, which probably meant in the party. Assets that might have been worth hundreds of millions, maybe even billions, were sold for two or three million, I’m told. If I’m right about that, where did these people get two or three million? Nobody was supposed to have individually two or three million dollars entering the ’90s. So, what had happened prior to the dissolution of the Soviet Union that there were such people?

Jeffrey Sommers

It’s a good question, and it’s a fascinating one, and one which I think can still see you probably wearing concrete shoes and finding yourself at the bottom of a deep river if you ask too many questions along this line of inquiry. But nonetheless, it is fascinating.

Under Joseph Stalin, actually, even under this period of totalitarianism, we saw periodically the rise of millionaires. Stalin, when he did discover them, had them typically shot. But nonetheless, you’re absolutely right. We’re not supposed to see people in possession of much money during the Soviet Union. Nonetheless, it happens.

Well, how so? First of all, I would like to set this up in terms of a brief political economy of the 1980s and 1990s, and just very cursorily looking at the differences, again, between China and Russia and the very different trajectories that they took. Thinking about how both of them played an essential role in the creation of this neoliberal, globalized order that emerged in the 1980s out of the crisis of the 1970s— crisis being relatively low profits in the Western capitalist world.

Just to rehearse that different set of trajectories and their importance for launching a 40-year period of profitability and some prosperity for some in the world system thereafter, we have China playing the role of a large state with a massive reserve army of labor. A state that is strong can impose its authority, can put in place the infrastructure that is needed, and can bring in all of this industry from Western capitalist states where labor costs had become uncompetitive, at least according to their owners. It provided a vehicle for restoring profitability within the global system by providing high-quality manufactured goods at relatively low labor costs, delivered efficiently onto markets. And, of course, as we know, China was able to use its leverage as a supplier of these essential goods to get the majority share, 51% plus ownership of many joint ventures with foreign firms, and to have significant degrees of technology transfer from abroad to them. So that puts them on this launching pad for a mission to economic development and prosperity, which, of course, as we know, over the past four decades, they’ve been wonderfully successful with something that I don’t think anyone else could really do. They had a unique set of advantages at a specific point in history, which allowed them to leverage neoliberalism and globalization into this project of national development, which delivered such fantastic results for them.

By contrast, the Soviet Union was an entirely different animal. As much as living standards were not on par with the richest countries in the world, they were nonetheless still too high in order to have a workforce that would be competitive in terms of the global system, and this desire to set up new production facilities and take advantage of very low-cost labor. 

Number one, there was not a lot of excess labor in the Soviet Union, at least not to the extent that there was in China. Again, it was far too expensive. But what did the former Soviet Union have, and especially Russia? Well, as we know, that was raw materials. Those raw material prices when depressed from their very high levels in the 1970s. We have to remember that the 1970s crisis was not only caused by too much competition driving profits down and wages which kept going up but also rising raw material prices. Well, in the 1980s, the Soviet Union began to supply an increasing quantity of these raw materials at low prices, and this helped to return the global system to profitability. And, of course, this continues in the 1990s. This is why the 1990s are often referred to as the peak of neoliberalism, the point where we had a unipolar world in which the United States prevailed over the system almost without peer competition, profits were very, very high, and there was much prosperity.

Now, getting us back to your question, how does Russia fit into this system as continuing to provide these raw materials? Well, as we had mentioned in our last talk, as the 1980s unfolded and as we get the Gorbachev reforms, which were designed to restore some efficiency and competitiveness in the system within the Soviet Union, they had exactly the opposite effect. Again, Gorbachev pursued this model of restoring or creating democracy. He’s always got his face in the works of [Vladimir] Lenin. He’s trying to figure out where the system went wrong and how to write it. He’s convinced that, more or less, the recipes for success are located there. We see this dramatic flourishing of democracy at this time. It was thought that this would also give rise to innovation, and this would save the Soviet economy. Instead, it launches this period of rampant rent-seeking and theft. It takes the tendencies that had emerged and fully flowered of corruption throughout the late 1970s and through the 1980s and throws gasoline on it. It’s in this environment that you get this new class of people that emerge, that begin to accumulate capital.

They create, within the early Soviet Union under Gorbachev, things such as cooperatives. We discussed this a little bit last time: these economic cooperatives, which were like subdivisions, oftentimes within existing enterprises. The idea that Gorbachev had was that there were probably all sorts of goods and services that the existing Soviet enterprises could deliver if they just had more freedom of latitude in which to act. So what they essentially did was to say, “Hey, guys, look, if you got a factory that’s producing so many metric tons of steel rebar for construction, if you can do something else with that steel as well and bring it into the market and sell it at whatever market price it will command, you can keep those profits and continue to find these new, un-heretofore discovered areas of need in the economy.” So that’s how it was supposed to work.

To do this, the Soviet authorities also began allowing the creation of banks to provide some of the capital needs of these newly emerging cooperatives. The money that was provided, oftentimes, for investment and expansion into certain areas was backed up by the state, by the government. So, in a sense, this was a license to create money in the late Soviet Union and then to steal it if you chose.

Now, how did you steal the money? Well, you had to turn it into a foreign hard currency and send it abroad. We discussed this a little bit last time, that it was the KGB that was tasked with this job of showing some of these new managers or managers of existing state enterprises that were beginning to create these cooperatives how you dealt with international finance. Sometimes, you might need to buy electronics from abroad or whatever it is. You needed to engage international finance in order to do this. The KGB was the only area where the resident’s skills and knowledge existed of how to work the system of banks, especially offshore banks, and one has to remember that this was another element of overcoming the 1970s crisis of profitability, which was to begin avoiding your tax bills.

We see this really big explosion, especially in London, of the offshore banking industry, which, again, goes all the way back to the 1950s in terms of the euro-dollar market and the need to deal with the intricacies of rebuilding Europe after World War II. Europe has all these countries, and you can’t have all these multinational companies getting taxed every time they cross the border. So, everyone does a wink and a nod to tax avoidance every time you cross the border. That was more or less, I think, legitimate.

They created in that process in the 1950s the offshore banking structures, which in the 1970s and the 1980s would be used for much larger scale tax evasion and all sorts of dubious activities. The KGB provides this skill set to this emerging class of managers and entrepreneurs. They weren’t always the new owners of these enterprises in the [Boris] Yeltsin years. They did not always come from within these enterprises. Some did of the type that I just referenced, but others were figures in the Komsomol. So, in other words, energetic young members of the Communist Party. They had a really great Soviet Union-wide network. They were engaged in all these conferences all the time. They knew each other. They could use that same network for all sorts of practices, corrupt and otherwise. And they did. And then there were also some academics of talent, often coming out of physics, which today still produces, along with philosophy, they have the two highest sets of standardized test scores for aspiring new students. P&P, physics and philosophy, produces a lot of smart people. Some of them find their way into these activities as well. Some of them do things really simple, like selling flowers, of which, in the Soviet Union, that was a really big deal. You were always bringing flowers for some occasion, i.e., Names Day.

Paul Jay

The same thing happened in the U.S. A lot of people who studied physics wound up either in Big Tech or on Wall Street.

Jeffrey Sommers

Wall Street, right. Exactly. Yes, Wall Street and Big Tech; that’s exactly right. So there were people who started off young, energetic, small, and from these rather humble beginnings. Just through a lot of hustle, ended up acquiring quite a bit of money that way as well. Not enough money to buy a state nickel company or something like that. It wouldn’t be worth a massive sum of money. This is where we started to see some of the initial capital accumulation.

What I am trying to lay out are the various ways in which this initial capital accumulation started. It was with these commercial banks that were set up, as I was explaining, it was with these guys that got into these entrepreneurial activities. Simple as, again, selling flowers and honey at markets. Next thing you know, their operations go big, and they’re starting to operate across the entire width and breadth of the Soviet Union.

I think I might have even mentioned the case of Latvia last time, which became really the hub of offshore banking activity for the post-Soviet oligarchs that were looking to get their money to places like New York and London. Of course, thinking about the political economy and overcoming that crisis from the 1970s and maintaining profitability in the 1990s, something like a full $250 billion comes out of Russia and ends up in the equity markets of New York alone. So, that really boosts asset prices. Then, of course, in London, we have the purchase of all this real estate and all the rest.

Now, in the case of a place like Latvia, to give a concrete example of how this initial capital accumulation could work, we had, as I think I mentioned before, this bank called Parex, which would go on to become the biggest bank in Latvia in the 1990s up until the financial crash of 2008 wiped it out. You had two enterprise and Komsomol members, young communists, and they get their humble start by filling duffel bags full of rubles and taking the train and going between Riga, St. Petersburg, and Moscow. What they discover is that on the street markets, there’s different— it’s ever so slight— but there’s this arbitrage. Different levels at which they can exchange this currency for others; that’s how they get their start. As I indicated before, these guys then start, they get the first official approval for a currency exchange within the Soviet Union in 1990. They become then the clearing house for these cooperatives and some of the state managers who are running some of these cooperatives. Throughout the entire Soviet Union, the money is flowing into Riga again. 

As I think I mentioned last time, they were not very subtle. Parex used to have a sign in the front of its bank. Now, this would have been in the early 1990s, after they established a bank in addition to their Soviet-era currency exchange. But when they create this bank, they have this sign that says, “We take all currencies. We ask no questions.” It’s right on the sign in front. Another of their signs, as I think I’d mentioned before, was, “Riga, we are closer than Switzerland.” They had a bit of a sense of humor. And, of course, they were also very direct about what they were doing. They both became people who ended up with— their net worth was estimated around $800 million each.

Now, how this then unfolded in the 1990s is that we had this privatization period that began. There were friends of ours, like Boris Kagarlitsky, who is now in jail just east of the Urals for his criticisms of Putin’s government. He, as I think I mentioned before, was in the Moscow City Council. It’s called the Moscow Duma between 1990 and 1993, arguably the most democratic period in Russia’s history. He tried to expose what was going on. I think I may have mentioned this example before. For instance, just to highlight, this is great public relations. Boris really was smart with this kind of thing. Just to highlight the level of theft, he went to this one hotel near the Kremlin that was being sold for next to nothing. Boris had the chandelier alone in that hotel appraised, and then he gave a speech saying that they were privatizing and selling this hotel for less than the chandelier was worth, which was true. So that speaks to your point regarding the kopecks on the ruble.

Paul Jay

Let me jump ahead a bit. During this period, which was in the ’90s, there was a very chaotic grab by anyone who had some capital, can get hold of these private enterprises and get super rich, and they did. If I understand it correctly, at this point, the state and Yeltsin are fairly subordinate to the power of the oligarchs in the midst of all this chaos. When Putin came to power over the years, did that relationship change? Because it seems like now, we’re at a point where the oligarchs are subordinate to the state to a large extent, and Putin has been able to establish the state as the most powerful force, and the oligarchs better get along with it. If I’m right about that, how does that process take place?

Jeffrey Sommers

Well, you’re absolutely right about that, Paul. I remember some of these resentments that started to be expressed. A friend of mine used to be the head of publishing, which, in effect, was all information for the Soviet Republic of Latvia during Gorbachev’s period. She started reporting to me in the late 1990s that the KGB guys were getting really restless, and they were getting, frankly, pissed off about what had transpired in the 1990s, not because the country had been sold out but because they didn’t get theirs.

Paul Jay

There’s an interesting thing. Do you know the show The Americans? I’ve been rewatching it because I think it’s one of the best series that’s ever been on TV and shockingly nuanced for an American network dealing with Soviet spies in the United States. We’re up to the last season now rewatching it, and there’s a split in the KGB, pro-Gorbachev and anti-Gorbachev. With the anti-Gorbachev saying these reforms, especially democratization, are going to lead to the end of the Soviet Union. Well, in some ways, I guess maybe they did. It certainly was followed by the end of the Soviet Union. This kind of split in the KGB that thought democratization was a big mistake, does Putin come out of there?

Jeffrey Sommers

No. He’s really, to my mind, a very distinctive figure because he bridges so many different groups. That is his tremendous advantage or has been his tremendous advantage. He understood so many different groups, and he was seen as credible with so many different groups. So he gains credibility with the military, who definitely comes out of that wing of this has been a huge disaster, the collapse of the Soviet Union and the West is going to just run roughshod over us. That’s the message that they’re telling him all along. We’re really seeing the country being screwed. These oligarchs are the ones that have done this to us, along with the West. Then there are the oligarchs. In other words, he’s referencing Yeltsin. He was somebody who could not control the oligarchs; you are absolutely right about that. But he was also not so much seeking to control them. In other words, as they used to call the members of his family, they were the family, and they were oligarchs themselves. So they partook in this process. 

There are lots of reports, of course, that Yeltsin, especially at the end of his life, just knew that everything had gone south and wrong, and it was a disaster. He really felt that somehow he was going to be able to create this prosperity in Russia. He was a very simple guy. He really didn’t understand political economy. 

One of the ideas that he had, again, was that Russia was supporting all these bums and the other republics. If we could cut them off from Russia’s great wealth, boy, were they going to get rich. By the way, the Ukrainians thought the same bloody thing. They thought that, boy, once they cut themselves off from these other republics in the Soviet Union, the sky was the limit, given the Black Earth belt and all the industry in Donbass. He had these really primitive ideas regarding the political economy that he held.

We then get into this new period. Putin is somebody who sees this meteoric rise in terms of his career, as we know, and it comes out of apparently nowhere. I remember this at the time: everyone was just like, what the hell happened here? How did this guy situate himself in this position of power? Well, some of the story has to do with the role that he played in St. Petersburg, serving as the Deputy to the Mayor and being very super loyal. Yeltsin picked up on that. This was a guy you could trust completely, that to him, loyalty was everything, and that he would protect you against principle or anything else. So that made him very attractive in many ways, and competent. 

Whatever everyone thinks about Putin, he is not a stupid man. He gives these Fidel Castro-like long orations on any and all topics about the Soviet economy, rather the Russian economy, with great detail and precision; it’s actually pretty impressive. He’s somebody actually who has a hard work ethic, but he’s cynical, too. At the same time, he thinks he understands something about human nature and that given the environment and milieu that he came out of, both growing up in terms of a tough neighborhood in Leningrad at that time and then seeing the collapse of the Soviet Union, the view of young, talented Chekists, KGB— remember the KGB, was that the Communist Party was comprised of people who were both old and stupid. I mean, that’s how they viewed them. And that they were in possession of this antiquated, archaic ideology that was destroying Russia. Many of them look back to the period of the Tsars and of the Stolypin’s reforms and all the rest and the late Tsars period that if they would have just gone in that trajectory, everything would have been great, and they could have carried on with this empire, forgetting about things like the existence of nationalism and other messy things which would have definitely blown this empire apart. Putin is a little bit guilty of that. He suffers from this delusion a little bit, not completely.

Paul Jay

Well, maybe more than a little bit. The more I learn about Putin, the more he seems, at least in the last few years, unless it’s kind of just to use it, but he seems to have internalized this toxic mix of the Russian Orthodox Church, nationalism, and the historic mission of Russian civilization. They talk about how they have to defend the state civilization, that this is Russia’s real contribution to humanity, and going hearkening back to all the old Russian emperors and church.

Jeffrey Sommers

Paul, absolutely. They’re using that language now, civilizational states, that’s what they’re calling it, right. Russia is a civilization, but he’s a nuanced guy in a lot of ways. You’re absolutely right. He’s definitely gone in that direction. Especially since 2014, he’s gone increasingly in that direction. But he hasn’t been at the forefront of this. He’s almost been kind of slowly pulled along.

For instance, he’s not been like Aleksandr Dugin, who the U.S. press in 2014 proclaimed to be Putin’s brain. In fact, because Dugin was making way too much noise about the need to get this nonsense over and just take over Ukraine, Putin fired her from his job at Moscow State University. He had him off to the curb. Then you have people like Igor Strelkov or Girkin, the guy that was sent in by some part of the KGB to stir up trouble in Donbass. The trouble was already there, but to encourage even more of it. Then, from Girkin’s perch, where he sets himself up as the head of the republic, he wanted Putin to take over all of Ukraine. By the end of 2014, Girkin or Strelkov, the name that he gave himself, he makes too much noise about this, and Putin yanked him out. He says, “No, we’re not ready to take over Ukraine right now. That’s not the direction we should go.”

Putin has a different path, the Minsk agreements and all the rest. He thinks that, somehow, the situation can be managed. We’ll get back to your original question. I think the strategy of Putin has been one of slowly, over time, bringing back all of the Russian-speaking people into Russia. But I think he has seen that it could be a slow evolutionary process where they would, of their own accord, wish to come back in. Now, of course, it hasn’t worked that way at all, but I think he thought that, well, most of Ukraine, not the Galatians in the far west, which he sees as quite different, and they are. Most of Ukraine, it’s a newly invented country. Lenin caused all sorts of trouble, created this republic, and then those nationalist ideas really were fueled by this.

Paul Jay

I guess what I’m asking is, like Israelis, the Israeli right has this metaphysical conception that God has given the Jews from the river to the sea and that it’s part of this God-given mission in defense of Jewish civilization. It seems like over time, Putin’s come around to a vision of a God-given Russian civilization that has a right to this, a Russia that’s not within the Russian borders, and that there’s a metaphysical aspect to it, at least the way it gets talked about.

Jeffrey Sommers

Yeah. And again, it’s figures like Dugin and others who have really talked about it in those terms.

Paul Jay

I was just reading about this story about this exodus, not exodus. In 1922, Lenin expelled, I think, 200 right-wing intellectuals. They go to Germany, which is interesting. He doesn’t shoot them; he expels them, and they wind up living in Germany. One of them, whose name I’m going to screw up, and you’re going to correct me, I think his name was Ivan Ilyin. Am I close?

Jeffrey Sommers

Brought back by Putin. Putin brings his bones back. 

Paul Jay

The guy was essentially pro-fascist. He may have had some differences with Hitler, but on the whole, he wanted that kind of dictatorship in Russia. He was pro-Mussolini, and Putin brought his bones back.

Jeffrey Sommers

It’s absolutely clear, and this is what’s so vexing about Putin. There are a lot of contradictions with him. He’s definitely adopted this kind of right-wing, nationalist viewpoint, and these figures, who I guess we can call fascists or proto-fascists, definitely, for sure. At the same time, he presides over a country because he’s very much a pragmatist, which he knows is multiethnic and is potentially a powder keg. He also is very careful to say, “Hey, we are not a mono-ethnic nation state. We are the civilizational state, and we are fully open, welcome, and accommodating to Muslims and to other peoples.”

One of the things that the Soviets did, of course, was they created both republics, and then they created all of these autonomous regions. There are a dizzying number of ethnic groups within Russia. He wants to be careful not to stir that pot, and he is careful not to do it. He’s been saying things really during his entire tenure in power if one actually listens to him. He also understands the Soviet Union, from his perspective, expanded too much. He thinks that the whole project of the Warsaw Pact and all of that was too much. He has flat-out said that the Soviets were not liked by these people. They were not liked by the Hungarians. They were not liked by the Czechs. We should have never been there. It was too expensive, and it was politically ruinous as well. So, this rhetoric about him wanting to restore the Soviet Union or the Soviet empire is absolutely false. No, he understands that was a stupid idea, and he has said just that. Of course, he said that the collapse of the Soviet Union was the biggest tragedy for Russia, and at the same time finishing the thought, he also said that anyone who wants to bring it back is stupid in its form.

Paul Jay

But he does see, in terms of Russian civilization, neighboring Russian-speaking population should be in Russia?

Jeffrey Sommers

No doubt about that. That’s what I’m saying, is that I think what he wanted, what he’s getting is something different. What he wanted was this kind of slow evolutionary process where he would bring in the Belarusians; he would bring in many of these Ukrainians who are really just Russians from his perspective. In Donbass, a lot of them are, not the majority, but a lot. But nonetheless, from his perspective, yes, these are Russians. In Kazakhstan, the northern part of the country, there are lots of Russians. So these are the kinds of people who would willingly, at some point, after Russia became more prosperous, would be able to willingly bring them in.

Paul Jay

I’m going to jump to something that I asked earlier, and then I sidetracked it. Now, I’m going to get back to it. So where are we now in terms of Putin, the state, and the relationship to the oligarchs? I read somewhere that it’s ironic that the oligarchs who felt the sanctions the worst after the invasion were actually the pro-Western oligarchs. In some ways, it almost helped Putin because it weakened them and strengthened the oligarchs that were more closely aligned with Putin. Where is that relationship?

Jeffrey Sommers

So that is what we saw very early in Putin’s rule, which was this need to impose some order on the Russian economy and to send a message to the oligarchs that the state was going to reassert its power. You may know the story. The way he did it was very dramatic. He takes all the chief oligarchs in the country. He invites them to a meeting at Stalin’s old residence, and they’re going to have dinner. This residence is almost never used for anything, so it’s sending a very strong message. He brings them out, and he tells them, “We’re just going to be doing things a little bit differently. You can continue making your money, but if you get involved in politics, that’s a red line. Cross it at your peril.”

For the most part, the oligarchs listen to that. Except for, of course, as we know, Mr. [Mikhail] Khodorkovsky, who decides that he doesn’t like this message and that he is a billionaire now, and he does not have to express this kind of fealty to Putin’s vision of Russia. He finds himself eventually at a remote airport, at a re-landing, being captured by a bunch of FSB guys wearing ski masks, and spends quite a few years in jail before he’s released. So that was the message that was sent there.

But then, slowly speaking to what I was saying before about these KGB guys, now, these KGB guys, again, remember, they were essential for providing those skills to these emerging oligarchs in terms of using offshore banking and all the rest. They felt really cheated that they were completely left out of the grabbing and that these hustlers, who, as they were seen, had no loyalty to this idea of Russia, were allowed to grab all of this state property, all of this wealth, and that the Chekists got cut up.

Putin, I think, was very sympathetic to that argument. He didn’t see the oligarchs as very loyal to the state. He doesn’t have a night of long knives and get rid of them all in one single shot. He puts them on notice that either you become loyal or else. Over time, whenever they find an opportunity to move someone out, one of these oligarchs, especially ones that express any kind of independence, they will. Then they will place them with one of these siloviki, these old FSB guys. Now, the FSB used to be the KGB that had been waiting in this queue; they were all kind of promised within the KGB, according to my Soviet-Latvian source that I referenced before, they were all kind of promised their piece of cake, and they start getting it. The Russian economy and state over time— Putin usually doesn’t act quickly— it is slowly transformed from an oligarch, these older 1990s oligarchs dominated economy to one in which the siloviki are now dominating. They get all of these enterprises, and they are moved in, and they share this vision that Putin has of a civilizational state.

Even though Putin comes from these very working-class origins, they see themselves as a kind of aristocracy, a new aristocracy, and that there’s nothing that’s not good enough for them. If they see a CEO of a Western company with a big mansion, a private jet, and all the rest, well, then they should have two of those. None of this should be denied to them. They have no compunction about becoming big grabbers themselves. At the same time, Putin is not stupid. He understands that you need social stability as well. He also says to these guys, “Okay, much has been given to you. Much is expected. So if I need you to build a new soccer stadium in Smolensk in order to give youth something to do and not get into trouble politically and or engage in various thuggery, let’s try and provide people with a standard of living, then you’re going to pay for that.”

Paul Jay

So am I right to think that, then, this newer group of oligarchs is far more beholden to Putin than the previous?

Jeffrey Sommers

Yeah, far more beholden and part of the same class. They have a similar background. Now, at the same time, Putin is really unique in that he had so much contact with the original oligarchs as well. So he knows them very well, but he’s somebody who really is far more in tune with the siloviki. He has slowly created this process in which he has replicated himself throughout the elite of Russia and has gone closer to the military as well. The military, again, has been very upset with the direction that we see in Russia. They represent rural areas. There’s a geographic dimension to this. They represent the cities outside of Moscow and the industrial enterprises that are located within them. There is a lot of corruption there, too, but they often see themselves as patriots, that the rest of the world, led by the United States, is out to get them, and that Russia should have been taking a more autonomous and firm direction in terms of its dealings with the West all along.

So that’s a view that, in the past ten years, Putin has really adopted. Now, we saw it as early as 2007 and in 2008, with some of these speeches that he gave at some of these summits in which he started to read the Riot Act to the United States. You’re causing all this trouble. You’ve more or less turned North Africa and the Middle East into this chaotic area. And, hell, we’re only some 700-800 km away from Syria, and you’ve just set everything aflame, torched everything, you’ve done what you wanted, you haven’t consulted with anyone, and now you’re bringing NATO ever closer to us as well. We can argue how much NATO is responsible for the current war in Ukraine, but nonetheless, he’s been talking about this for a long time. He has been saying, “You can’t just keep doing this.” Of course, at one point, he wanted Russia to become part of NATO, and he got rebuffed twice. So there’s that dynamic as well.

So, yes, slowly we’ve seen him evolve from somebody who I think actually wanted in a very kind of cynical definition of the West, which is not entirely without merit, seeing it as, okay, they’ve got, like in the United States, two political parties, but they’re really not different at all. They collude and represent a class of people that really runs everything, but it creates political stability. They can change back and forth. I think he was playing around with that a little bit when he allowed [Dmitry] Medvedev to be president and then decided that’s not going to work too well because now too many people are beginning to line up with him.

Paul Jay

Now we only have a few minutes left, and clearly, we could go on a long time, and we should. We’ll have to do some more segments. Let me just jump to one thing. The last time I interviewed Boris Kagarlitsky, he was saying this was maybe a month or two before he was arrested. He was saying that he thought that most of the oligarchs, most of the military leadership, didn’t want this invasion of Ukraine and thought the whole thing was turning into a disaster. If there was an alternative to Putin, they would want such. Except that he didn’t see that. They don’t see an alternative, a person that could hold all these threads together because the fundamental problem is these oligarchs are not very quiet about their wealth. Most of the Russian people are poor, especially outside the bigger cities. That conflict, that contradiction, was getting more and more intense, people getting fed up with the wealth of the oligarchs, but Putin, with the nationalist narrative, the civilizational narrative, the role of the church, and so on, he’s able to hold it together, and in spite of what they thought was a disastrous decision to invade Ukraine, that there’s no alternative to him.

If Boris is right about that, if you agree with that, but also what’s happened is the war so far seems to have strengthened Putin’s hand because of the nationalist fervor he’s been able to create. What do you make of where Putin is at in relation to the oligarchs and the military leadership? Ukraine might not be as big a shit show right now as it might have been, and that may still turn out to be, but still, it’s not been a success story. 

Jeffrey Sommers

Yeah, to my mind, the war has gone through several stages. There was the initial invasion, which they completely botched, and it was corruption that helped in that. So, in other words, remember we had the FSB, where it very much looked like they were stealing the money that they were supposed to be using to bribe Ukrainian officials to welcome Russian forces. Then, of course, the head of the FSB was put in some detention for quite some time and then was eventually released. We also have that meeting in which Putin is trying to show that there’s this consensus for the invasion. At the outsets, he brings all those officials in, and it’s clear he completely catches the head of the FSB off guard with all this, who almost is trying to express that, well, I’m not exactly sure about this. We saw how sharp Putin was in his rhetoric.

Paul Jay

It’s an astounding moment. It’s like he’s rebuking a high school student.

Jeffrey Sommers

Exactly. It was really quite incredible. It’s clear that this was a decision made by a very small group of people. It did not include many, even very highly placed officials within the Russian state or even with the oligarchs. I think many of the oligarchs, of course, haven’t been completely remade in terms of the siloviki. There are a lot of them that are making a lot of money. They don’t like this business of what’s happened in Ukraine.

Now, of course, the war for Russia goes disastrously at first. It’s clear that they sent a very small force in, and they thought they were going to topple Kyiv very quickly and impose another government. They weren’t trying to militarily take over because they didn’t have nearly the forces for that. They thought they were going to use this combination of bribery and shock. So that fails. Then the negotiations break down in March and April, and the Russians have some success in the summer of 2022. In autumn, there is the offensive that’s launched by the Ukrainians, which leads to the Kharkiv region seeing the Russians driven out and also with Kherson being divided. They really embarrassed the Russians militarily— the Ukrainians did. They made them look very bad.

It was clear for a while that this was looking bad for the Russians. Presently, the Russian economy has done nothing like what the Western experts said would happen under sanctions. It did not implode at all. I think the Russians were really freaked out about the sanctions at first themselves, but they somehow managed to ensure that this process was one that they could adjust to, and they did. This counter-offensive of the Ukrainians has gone nowhere.

Paul Jay

Well, just on that, thanks to China and, to some extent, India.

Jeffrey Sommers

Yes, and at the same time, it’s not at all clear that Russia is going to be able to begin a new offensive either. They have been launching this one attack in the Northeast, and they lost a hell of a lot. We don’t know how it could turn out. Contingent variables always scramble everything, but right now, it looks like a bit of a stalemate. What’s happened is that a lot of industry in Russia has recovered. A lot of it is pretty strong. There are starting to be some inflationary pressures because they don’t have enough labor. In other words, like so many countries, there are not a lot of young people. Those inflationary pressures are beginning to creep up, but they’re really still quite small. While sanctions have actually, in some ways, helped their economy.

One of the things that Boris, referring to Kagarlitsky, since you just did, one of the things that he used to say following 2014 was, “Please, more sanctions.” In other words, the Russian state is so weak and it has so little incentive to actually develop the country that the only way it’s going to happen is if the West imposes sanctions, and these sanctions can somehow begin to build up Russian industry, which they did with agriculture following the 2014 E.U. sanctions. Russia’s agriculture was a mess because the E.U. sanctioned them in 2014. They rebuilt their agricultural sector. Boris was like, “Oh, please, can we now have them on our industry, and maybe we can rebuild this country’s manufacturing sector.” This appears to be a crisis that, at least right now, Putin has survived. He’s not thriving, but he has survived.

Paul Jay

All right, well, we’re almost out of time. We have to continue this. I do want to say, as we do this kind of analysis, we’re not forgetting the brutality of this attack on Ukraine and the tens and thousands, hundreds of thousands of Ukrainian civilian soldiers, Russian soldiers, the brutality of this war.

Jeffrey Sommers

It’s been World War I, like in its stupidity and cruelty. It’s just horrific.

Paul Jay

The thing I don’t get, you want to include all these Russian-speaking people in Russia and so on, a lot of the cities getting destroyed are Russian-speaking cities. I don’t know what these people want anymore. Before the invasion, maybe some of them did want to be in Russia. I don’t know what the hell they would want now because the place is so destroyed. 

Jeffrey Sommers

That’s a very good question. What would polling reveal today? It might be quite different.

Paul Jay

Well, that’s the only real legitimate resolution of this is legitimate, independently monitored referendums and let the people decide what they want. That should be the solution to all this. Why would the Russian state agree to a legitimately democratic solution there when they don’t have one at home? I have to say, the same thing goes for the Ukrainian oligarchy. Since when have they been interested in a real democratic solution for Donbass or Crimea?

Jeffrey Sommers

They could have had it with Minsk. It wasn’t perfect. I can tell you the Ukrainians will, and some of their arguments are quite legitimate. They’ll say, “Well, all right, so the Russians have come in, and now that they’ve cleared out lots of the Ukrainian sympathizers, now you’re going to hold a referendum?” No.

Paul Jay

Well, there have been UN-held referendums in other places where people who have left or been expelled can still vote. You just have to prove you were living there before.

Jeffrey Sommers

I really doubt they’re going to go for it. I absolutely agree with you. It would be the only way of resolving this mess.

Paul Jay

Well, just to say it again, at their heart, the Ukrainian oligarchs aren’t any better than the Russians, but this is not about the Ukrainian oligarchs. This is about an attack on the Ukrainian people, who I hope when this is over, with all the guns they have, I would love to see them throw the Ukrainian oligarchs out of Ukraine and build a different kind of Ukraine. I don’t know if that’s possible, but that would be a nice ending to all this.

We’re going to do this again because there’s so much to talk about here. Thanks again, Jeffrey.

Jeffrey Sommers

Oh, great to see you.

Paul Jay

Let me say to everybody watching and listening because our podcast platform is bigger than our YouTube platform, or if they’re watching on the website, send in any questions you want for the next time we have this conversation, and I’ll try to ask them. Thanks again. Thank you for joining theAnalysis. We’re getting near the year’s end. We are a 501 (c)(3) in the United States. We need donations to keep going. They are tax-deductible. As you’re thinking about your year-end giving, please keep us in mind. Thanks for joining us.