The “Shulaya Enterprise” organised crime bust in New York

FBIA big case opened yesterday in New York, with 33 people being charged with membership of a Eurasian organised crime group (the “Shulaya Enterprise”) and a wide range of charges, from murder-for-hire and gambling fraud to, intriguingly enough, stealing 10,000 pounds of chocolates (gangsters after my own heart). I duplicate the press release below and look forward to following the case, but a few points leapt out at once:

Razhden Shulaya, also known as “Roma” and “Brother,” the vor v zakone (not “zakonei”) considered to be the boss of the outfit, was arrested in Lithuania as part of a major crack-down on Georgian gangsters in 2013. I note now that he has been living in Edgewater, NJ. I’ll be curious to hear how a guy not only arrested in Europe but well known previously in St Petersburg as a protégé of major crime figure Zakhary Kalashov and his smotryashchyi or “watcher” in that city, got from a Lithuanian holding cell to the States…

The not-so-Russian-“Russians”: This is called a “Russian Crime Syndicate” but the boss is Georgian, and a quick glance through the names of the accused shows a mix of Georgian, Russian, Armenian and even Central Asian names, with Georgians very much predominating. This is characteristic of modern Eurasian organised crime groups in the States, in particular, but it is worth stepping beyond the ROC cliché. I appreciate this is just a press release, but still there’s no harm in a press release being accurate. (And don’t get me started on the mythical “Brothers’ Circle”…)

Imagination is one of these gangs’ hallmarks; as I told Ben Weiser of the NYT, I was not taken aback by the more outré gambits such as “a scheme to defraud casinos with a hacking device that predicted the behaviour of particular models of electronic slot machines.” Rather, “what surprises me actually is they were still involved in the traditional types of crime.” Instead of trying to compete in crowded and fiercely-defended markets such as drug-dealing on the streets, these gangs often seek to identify new criminal opportunities, especially involving fraud and technology.

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Is the Russian National Guard suddenly acquiring sweeping new powers? No, not so much

Rosgvardiya1A new Presidential Decree with the snappy title ‘On Approval of Regulations of the Operational-Territorial Unification of forces of the National Guard of the Russian Federation‘ has suddenly caused something of a fuss because of a clause which allows the president to subordinate military units to the Rosgvardiya. From Versiya, for example, there came the outraged cry that “Nothing like this has happened in the country’s history” and that it was “impossible to imagine” the “Russian imperial army commanding the gendarmes, and NKVD the Red Army.” In Ezhednevnyi zhurnal, the warning was that “it has become clear that sooner or later war plans require the use of troops against the population. Russian officers do not want to shoot at their fellow. And the officers of the General Staff, it seems, did their best to slow down the adoption of the policy documents. But the Kremlin was anxious. And the National Guard conquered the army.”

Of course the creation of the National Guard from the basis of the MVD’s Interior Troops and public order forces was a worrying sign of the paranoias of the Kremlin. It is a force of some 180,000-190,000 security troops and special police, by the way, not 400,000 – there are perhaps as many private security officers, but they are not all armed, are scattered around the country, and in some cases are other Rosgvardiya officers moonlighting in a second job. It was clearly established both in case the Kremlin wants to break heads on the streets, and also to represent an additional obstacle to any elite political coup.

But let’s not get caught up in the hyperbole. The present presidential decree does indeed say that the president has the right to transfer army units to Rosgvardiya command for specific operations at home. However, the decree starts by enumerating the existing decrees relating to the MVD Interior Troops that it supersedes. One is the 2005 decree ‘On Approval of Regulations of the Operational-Territorial Unification of the Interior Troops of the Ministry of Internal Affairs of Russian Federation,’ as amended. And guess what: that decree allowed the president to subordinate military units to the Interior Troops…

In other words, this was just a piece of legislative tidying-up, find+replacing National Guard for Interior Troops. Not so unprecedented, not so impossible to imagine, not demonstrating any sudden new bloodlust. And I very much doubt the General Staff were trying to fight it off.

Sure, there are always grounds for concern, especially when figures such as blowhard ex-general and Rosgvardiya hanger-on Yuri Baluevskii trumpet how Russia is beleaguered by Western attempts at regime change through coloured revolutions. But sadly this is nothing new and even reflected in Russia’s national security doctrine. This is a regime which fears and mistrusts its people, and which is at least willing to contemplate the use of violence to maintain power. But at the same time, let’s not fall prey to the temptation to think the sky is breaking every time the thunder peals.

Crimintern: How the Kremlin uses Russia’s criminal networks in Europe

C9s92ljW0AAhnPtMy latest report for the ECFR is out. While I am waiting for the bidding war for the film rights, I’ll settle for pointing people in its direction – you can download it free here – and offer up the summary:

  • Over the past 20 years, the role of Russian organised crime in Europe has shifted considerably. Today, Russian criminals operate less on the street and more in the shadows: as allies, facilitators and suppliers for local European gangs and continent-wide criminal networks.
  • The Russian state is highly criminalised, and the interpenetration of the criminal ‘underworld’ and the political ‘upperworld’ has led the regime to use criminals from time to time as instruments of its rule.
  • Russian-based organised crime groups in Europe have been used for a variety of purposes, including as sources of ‘black cash’, to launch cyber attacks, to wield political influence, to traffic people and goods, and even to carry out targeted assassinations on behalf of the Kremlin.
  • European states and institutions need to consider RBOC a security as much as a criminal problem, and adopt measures to combat it, including concentrating on targeting their assets, sharing information between security and law-enforcement agencies, and accepting the need to devote political and economic capital to the challenge.

I confess I am pleased with the ‘Russian-based organised crime‘ notion, that I think fills an ontological niche, in that it is clear that there is a difference between those gangs which still have strong connections to Russia — who could as easily be Georgians, or Dagestanis, or whoever — and those who have essentially moved out of the country. It is the former who are especially susceptible to use by the Russian security apparatus, and who genuinely worry me. (And yes, I’m also pleased with the title…)

A Few Quick and First Thoughts on the US Airstrike on Syria

missileThe use of chemical weapons against civilians cannot continue with impunity, but is a 50-missile strike the right response? My thought is that it is not a great response – but that in the circumstances nothing better was available. (Though at almost $15 million, an expensive one.)

First of all, such a one-off strike is unlikely to be militarily decisive, even if it has made a real dent in the Assad regime’s airpower advantage. It is essentially more symbolic than kinetic, an act of communication, drawing red lines and reiterating that the USA is a serious force (and putting paid to the silly claims that Russia has become the regional hegemon in the Middle East).

That’s not at all a bad thing, but the question is what the message was meant to be, and how it is received, and that depends heavily on Moscow.

Its initial response was to huff and puff and call it unprovoked aggression, of course; it could do nothing less. But it is noticeable that its much-vaunted air defence systems – which could have been deployed against the Tomahawk missiles although not take all 50 out – was not even activated. Moscow might not like Washington’s response, but nor was it willing to stand in the way of it. That is a heartening sign of realism.

And how does Damascus respond? The chemical attack was as politically stupid as it was morally bankrupt, suggesting either that Assad’s regime is tone deaf (not impossible) or that it had some more nefarious intent, precisely to try and force a response in the hope of solidifying Russian support (a little conspiratorial, but not impossible).

Much depends on the backchannel messages from Moscow to Damascus. Will they be “don’t worry, this was just a one-off, let business continue as usual, but lay off the chemicals” or “what the hell were you doing, stop making this worse for us all”? Obviously no one will tell us openly, but we should be able to divine from what happens next whether the Russians are in control or not (and usually, to be honest, imperial backers have at best imperfect control of their supposed clients and proxies) and whether tactical successes on the ground mean more to them than the wider geopolitical context.

With Tillerson due in Moscow next week, this is an opportunity for Moscow to show some kind of flexibility and willingness to come out of the trenches. Assad’s move allows them the cover to withdraw slightly from him. If they are willing to take it. A big if. My money, sadly, on their not being willing or able to make the move.

The reports of the death of the Russian defence budget have been greatly exaggerated

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No more new toys? (c) Mark Galeotti 2014

Yesterday HIS Jane’s (disclosure: I have written them for decades, and respect their work) came out with the eye-catching assertion that “Russia announces deepest defence budget cuts since 1990s.” It continues that the “Federal Treasury have [sic] confirmed that Russia’s defence budget has been cut by 25.5% for 2017, falling from RUB3.8 trillion (USD65.4 billion) to RUB2.8 trillion.”

A 25.5% cut? Even if “Despite the cut, the 2017 budget will remain about 14.4% higher than the level of defence spending seen in 2014 in nominal terms” that is still a massive story, and spells the end to planned modernisations, especially given the inelasticities in the budget (upkeep and maintenance, salaries, etc). And in December, it had been agreed to but the budget not by the 10% MinFin wanted but a moderate 6%.

So what happened? Needless to say, all is not quite what it seems. After all, it is important to note that the Federal Treasury (Federal’noe kaznacheistvo) is not so much a budget-setting as accounting office, essentially a comptroller, and operates under some quite strict parameters. It accounts funds allocated and spent along specific budget line items, and in the process its apparent defence spend tallies do not, it seems to me, reflect the impact of debt repayment. It is also worth noting that the Treasury tracks money spent, and if one looks at 2016, according to the Ministry of Economy, the State Defence Order was only 88% executed. That alone may look like a 12% procurement cut through the Treasury prism. So, the data may well not truly show planned so much as predicted spending.

Let’s note that even more so in the West, Russian defence and security expenditures often appear under different budget lines and obscure headings. Pre-conscription physical and skills training outsourced to schools through the revived GTO (Ready for Labour and Defence) programme comes out of the education budget, much support for military science is under education, science and research, and part of the aid and development budget is likely paying for mercenaries in Syria.

Finally, it is crucial to appreciate that much of the defence spend, especially on procurement, is not just about military power but economic and political necessity. Key industries, on whose health cities and regions depend, are kept afloat through military procurement. Any major cuts, which would inevitably have to be focused on buying new toys, would have a disastrous impact…and do so in the year-long run-up to the next presidential election, intended as something of a triumphant coronation and celebration of Putin.

So the upshot is, yes, under budgetary pressure (and the probable need to have money to spend on buying votes in 2018), the defence budget is being pruned. But not by a quarter.

From Trump’s Washington to the Capitals of Europe, Corruption is Russia’s Greatest Ally

The steady drumbeat of Russian contacts with Trump’s team on one level should not surprise. The Russians – like most real and wannabe global powers – assiduously network, hoping to gather insights and make connections that can later be parlayed into access and impact. This is, however, a case study of the way that the dirty little vices of modern democracy, from the inter-connectivity of transnational and untransparent business interests to the use of money and flattery to buy a voice, all the ways in which democracy becomes distorted by money, serve as a force multiplier for predatory authoritarian kleptocracies.

In fact, my view is that for the West today, the greatest security threat is not Russian tanks or Russian disinformation, it is our own corruption – and the ways Russia seeks to use it.

Let’s look at the Trump White House. I still have serious doubts about some of the headline allegations kicked off by Steele’s ‘Trump dossier,’ from the ‘salacious’ stuff (that has become the code word of choice, after all…), to the suggestion that Trump has been given 19% of oil giant Rosneft as the bribe of the millennium in return for lifting sanctions. (Though that would mean we know the market value of the White House: about $11 billion.) Much more plausible is the general picture of regular, lower-level contacts between Russian officials and American movers and shakers, regardless of the serious tensions between their countries.

There are all kinds of contacts which are appropriate, unavoidable, and wholly acceptable. Some of the administration’s more strident critics need to be reminded that not every Russian is a spy or a gangster. However, all the mysterious bouts of amnesia or dependence on covert meetings suggests that even the participants realise they are transgressing the acceptable, and that they are probably not meeting simply to further international cooperation or exchange banalities about the weather.

In a dark past, America was ripped apart by the search for reds under the beds. Much of this was paranoid witch-hunting, but there were indeed those motivated by ideology, a sense that the Soviet Union represented something greater for humanity. Today? Sure, some imbecilic racists and blinkered social conservatives may believe that Putin’s Russia stands for their values, but the people we are talking about, the people who matter, are in the main neither simpletons nor idealists, but pragmatically self-interested.

Those in Trump’s campaign and his administration who retain links with Russians do so not because they are dazzled by Putin, less yet by Tchaikovsky and Dostoevsky. They do so because it suits and pleases them, because the Russians offer something: flattery, information, personal gain.

This is not necessarily the crude corruption of a suitcase of cash in return for documents or a favourable vote. It is rather the more insidious corruption of hooking people on the notion that the Russians can help you get closer to your financial and personal goals. After all, the biggest differences between this new Cold War and the old one is that there is little real ideological dimension, and our societies and economies are now incestuously connected. Russians buy penthouses in London and New York, Americans buy Russian stocks, Russian-funded media buy insert spreads in Western newspapers, and so forth. Much of this is essentially innocent, or at least as innocent as modern capitalism can be, but these are the wellsprings of the global rivers in which Moscow’s spies and agents of influence can freely swim.

In other words, the real story is about the way that the rich and the powerful may regard Russia as a geopolitical antagonist, and yet be happy to cut deals with Russians if it helps them become richer and more powerful.

But this is not just an American story. In Europe, too, corruption is Moscow’s friend. From the lobby groups which agitate against the Ukraine sanctions because they are suffering as a result, to the politicians happy to mobilise anti-US and anti-EU sentiment with the aid of Russian money and airtime to their own ends, this is a widespread issue.

The greatest danger, I would suggest, is not so much the overt ‘Putin-understanders’ such as the Czech Republic’s President Miloš Zeman or Hungary’s Prime Minister Viktor Orban. Of course, they are convenient for Moscow, not least because their words can be retransmitted for propaganda purposes, and their sentiments erode the European consensus on punishing Russia for its aggression in Ukraine. But at the same time, these are not fifth columnists looking to hand over their country to Putin.

The real threats are those motivated not by naïve or contrarian but probably genuine and consistent beliefs, but by corruption. These are the cynics and opportunists, and they are dangerous for several reasons. First of all, unlike the Zemans and Orbans of this world, they may be subtle and covert, couching their lobbying and sabotage in the language of good business sense, or European resistance to American ‘bullying,’ or whatever other rationalisation seems more appropriate. They can also be used as deniable fronts for Russian operations; the continuing (if unproven) belief that then-head of Lukoil in the Czech Republic Martin Nejedly funded Zeman’s campaign on Moscow’s behest (for which he was later recompensed) is a perfect example. Was this just a case of a Czech funding a Czech campaign, openly and entirely within the law, or foreign interference? And how do you prove the latter?

Secondly, they are self-propelled. They do not look to the Kremlin for instructions, although inevitably sometimes Moscow will seek to direct them. They will look for ways to advance their own causes, sometimes actually by seeking new ways to make themselves useful, because usefulness is rewarded. If it is true that members of Trump’s campaign colluded with Moscow to get him elected, did the Russians drive the whole process, or at what point did their American interlocutors begin to make suggestions and requests? You do not need to corrupt those who are already corrupt, and who will instead approach you and see what you are willing to offer.

Thirdly, they not only take advantage of the fluidity of modern capital and ideas, the difficulty modern states have in proving where money came from, where ultimately ownership of an asset lies. They actively seek to protect and extend this system. The drug lord, the spy, the terrorist, and the ruthless financial-political player all have a shared interest in foiling efforts to reverse this process. From the struggle to extend anti-kleptocracy laws in London, to the death-of-a-thousand-amendments facing new transparency laws in Prague, this is a battle being fought across the West, and yet one we have yet properly to appreciate is about security as much as fighting crime or controlling corporate malpractice.

The difficulty in regulating finances, the challenges addressing disinformation, and the failure often to monitor and limit campaign contributions, are all aspects of a common and systemic problem of corruption. The Russians – and not only the Russians – are taking fullest advantage of this, and this makes it one of the most important battlefields of a conflict which is as much as anything else about values, laws and ideas. What is being played out in Washington is as much as anything else a case study in how pernicious and wide-spread the challenge has become.

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