Nick Shaxson ■ Ukraine: how to put pressure on Russia


Following our blog yesterday looking at the national security implications of Europe’s tax haven mentality, we have been drawn to this post from 2008, looking at the West’s options in dealing with Russian aggression in Georgia at the time. It lists several interesting possibilities, but we found this one most interesting:

Cry “Havoc” and Let Slip the Dogs of Accounting. Russia has employed asymmetric weapons, notably cyberware, in recent conflicts with Estonia and Georgia. The financial interests of the Russian power structures are probably their greatest asymmetric vulnerability.

As one of the most corrupt nations in the world, it is almost certain that most Russians who matter politically, including perhaps Putin himself, have large sums of dubious origin stashed in banks outside of Russia. Unleashing forensic accountants and money laundering experts to identify these funds would present all sorts of interesting opportunities to put pressure on the ruling clique. Prosecution or confiscation are possible, but unlikely but knowledge is power. Credible “revelations” or even the threat of credible “revelations” regarding siloviki billions in Swiss banks would pose difficulties for Putin and the clans. And just think of the interesting dramatic possibilities that could arise from informing silovik X that silovik Y has HOW much in Switzerland? As kompromat, or as a reminder of what they have to lose personally from an escalation, detailed knowledge about the Putinists’ murky financial dealings can be a highly effective tool of asymmetric warfare.

Recall that accountants brought down Capone, and that they have played a crucial role in bringing down other criminal enterprises. Since there are more than passing similarities between the Russian political structures and organized crime, they may well be effective here too.”

Five years later, the advice stands just as tall, if not more so. Our only quibble might be that the biggest part of the money is in London, not Geneva or Zurich.

Britain, Austria, Luxembourg, Switzerland and other European repositories of looted ex-Soviet money will fight tooth and nail to prevent any proper investigation of the problem. Indeed, we’ve just seen that this is now official UK policy to eschew the biggest single lever (or set of levers) that is available. We like the money, and we don’t give a damn how much blood was spilt to obtain it.

What’s saddest about all this is that in the longer term, the people of Britain would be better off, economically speaking, without all this dirty money.

If you haven’t read our short post yesterday, we’d urge you to read it. The nexus between Big Finance and national security is larger than most people suppose.

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