Russia has been on a steady path to authoritarianism ever since putin entered the scene 18 years ago. Since then, a new generation has entered adulthood. One that does not remember a russia before putin. As these young russian men and women enter the work force, they confront institutions in both the public and private sectors that have been completely ssimilated into putins krl kleptocontractic architecture and are left with a choice to be could he opted into this corrupt cooperated into this corrupt system or ejected from it. While putin is the central figure, hes not the only one. The strong man of the kremlin is surrounded by a loyal group of cronies who aid and abet the president. Complicit in the robbery of the russian people and the sad state of russian democracy. Moreover, these cronies enable the kremlin to export its brand of kleptocracy into neighboring countries, transforming corruption into a potent geostrategic weapon. We will establish who most strengthens and benefits from his rule. Additionally, well analyze how these cronies advance putins goals and interests. We are grateful to have such distinguished panelists with us here today. I look forward to hearing your thoughts on this important issue. First we have brian, who joins us all the way from prague. Hes a senior russia analyst for rferl and also writes the power vertical blog. Prior to joining rferl in 2007, he worked for eight years for the boston globe. In the globe as moscow bureau, and later as the central and Eastern Europe correspondent based in prague. Following brian, we have elia. I understand your wife just had a baby. So thank you so very much for beings with us here today. [applause] rather than at home. We understand what a sacrifice youre making to talk about this very important topic. Who join us from the russian not the russian federation, the Free Russia Foundation. Where he is a Research Expert and hes an academy associate. In addition, he heads free speech ll c. , which runs a project on the export of corrosive practices from postsoviet states to the west. Postsoviet states to the west. Well then hear from dr. Anders who the hell jinx commission knows very, very well. Who is a senior fellow at the Atlantic Council and a professor at georgetown university. Anders is a leading specialist on Economic Policy in russia. Ukraine, and Eastern Europe. And worked as an Economic Advisor to the president of ukraine from 1994 to 1997. Following anders, we have marias. Who joins us from vilnius, even further away than prague. Hes a senior analyst, but with a policy for institute for policy analysis and a former fellow at the Hudson Institute. A highly regarded journal frist lithuania, hes been reporting on russian domestic and Foreign Policy for over two decades. Finally, well hear from ambassador. The ambassador is one of u. S. Governments foremost experts on russia and the former soviet sphere. His career with the Foreign Service has spanned over four decades. And seven presidencies. Wow. Ending earlier this year, when he retired from his post as the state departments coordinator on sanctions policy. The very relevant father very relevant for this discussion. Well conclude with a q a session. Id like now to give the floor to our first panelist, who will provide us with an overview of the russian kleptocontractic political system. The floor is yours kleptocontractic political system. Kleptocratic political ystem. Should i start again or did everybody hear me . I cant say how delighted i am that this issue is finally getting attention. Weve been talking for the last few years a lot about the information war. Ive attended seminars and dialogues, more than ive been harping on the issue that we need to broaden the apper tour here a little bit. Information is just one of the things that the kremlin has weaponized. In my opinion, the most important thing theyve weaponized is corruption. Ill start by saying, i think its a bit misleading to characterize putins russia as simply kleptocracy. This implies that the regimes primary aim is the enrichment of the elite and i dont think thats the case. Corruption has been instrumentalized at home and weaponized abroad in russia. The domestic role of corruption is to control the elite and to maintain its loyalty. Members of the russian political elite effectively have a license to monetize their positions so long as they remain politically loyal and politically useful. To the putin regime. Only those who prove disloyal or unuseful are ever prosecuted. For corruption when theres a Corruption Case in russia, the first question i always ask myself is not, did he or she do what he or she is accused of doing, because of course they did. I say, who did they cross politically . What happened . Why are they on the outs politically . What happened here . Thats always the first question to ask when a Corruption Case bubbles up in this regime. Internationally, corruption has been weaponized and used as a tool of state craft. The kremlin seeks to capture elites and establish networks of influence abroad by ensnaring officials in corrupt deals. Im not going to get into details here because we want to keep it brief in the beginning so im going to paint in Broad Strokes and we can go go into details later. Moreover, the russian state has both kleptocratic and ideological elements to it. What i call the two russias. Sometimes kleptocratic russia and ideological russia do indeed work hand in glove. By ideological russia, i mean these projects of putins to make russia great again. To bring russia back off of its knees and to restore it to what it believes to be its rightful place as a world power. Sometimes corruption and ideology go hand in hand. But at other times the two russias are in tension with each other and operate at crosspurposes. Closely related to the weaponization of corruption is the weaponization of russian organized crime. Which is also used as a tool of state craft. But just as it is incorrect to classify russia as simply a kleptocracy, its also incorrect to classify it as a mafia state, as many kremlin watchers do. They are a state with nationalized mafia. Security services operate closely with organized crime, often facilitating their activities. As a result, the Security Services are able to establish a socalled black account. Which has untraceable cash that can be used for all sorts of off the books operations. And influence operations abroad. I can go into detailses a little bit more, but ill keep my opening remarks brief. Organized crime groups are often pressed into service to perform tasks the kremlin wants to keep its fingerprints off. Not just smuggling weapons, assassinating troublesome disdenlts in london, and so on and so forth. Weaponized corruption and organized crime are also part of a larger, noncommitic arsenal that putin is using to weaken western institutions. Other elements of this include finance, information, support for extremist Political Parties and rbling. Religion. If you want to think about the sources of putins conduct in this, why is this regime behaving this way, and you look at putin the man, id like to look at putin as a hybrid product. Hybrid is another one of the words of the past few years. Im going to put it into a whole new con tech. Putins a hybrid man. Its very stereotypical to look at putin as a project of the k. G. B. This is correct but the only part of the picture. If genelogically hes a product of the k. G. B. , sociologically hes a product of the wild 1990s. Of the darwinian criminal world that existed in cities like is the petersburg where he was deputy mayor in Saint Petersburg where he was a deputy mayor. I think this is something thats very important to understand. In conclusion, ill say that one of my favorite talking points is the headline of a piece i passed out to the other panelists here. And that is that corruption is the new communism. The kremlins black cash is the new red men also. And it has to be looked at that way. Corruption is a tool of state craft. The something that is spreading from moscow and its spreading as a toofl influence. And if you think about this, communism, despite its faults and of course they were legion, did attempt to appeal to universal human ideals and aspirations. Although in practice it often worked against these ideals. Corruption on the other hand appeals to the most universal and basist human instincts. That of agreed. Sadly, its greed. Sadly, its often in sic with in sync with human nature which makes the new red menace more dangerous than the old one. Finally, ill say corruption today is not just a matter of Good Governance anymore. Its not something we want to fight just because we want to be honest and good, although we do. Corruption is a National Security issue of the highest order. And needs to be treated as such. Thank you. Paul thank you very much, brian. For that fascinating overview. As well as the sorts of elaborations on how the regime exactly is structured, that its not simply a rule by theive, it has these ideological components to it. I read your article, corruption is the new communism today. Just an incredible piece. I think that framing the issue in those terms is precisely the way that u. S. Foreign policy need to be approaching this topic. So with that ill hand the floor to il irving a elia. Elia thank you for coming. As brian correctly said, this topic is out in the open. Everyone discussing it. And quickly transfered from not discussing it to a term which i recently heard, outrage fatigue. Everyone understands the problem, but no one knows how to handle this unbelievable flow of information about kleptocracy and what to do with it. Ive been studying this topic since at least 2011. Been a junior expert with other people and senior experts on russia and europe, warning about National Security implications of corruption for the west. Coming from postsoviet space. Even before aggression against ukraine happened, i predicted in 2013 that, especially russian pleau tock are asy, are taking their corrosive practices and corruption to europe and the u. S. Over at least 25 corrupt or corrosive channels, including media manipulation of rmation, [inaudible] universities and so forth. In this briefing i want to put forward a further warning and prediction. I think the west, especially the u. S. As leader of the democratic world, has been so negligence d appeasing of postsoviet corruption of Democratic Values under putin that even on the best case scenario, russian plutocracy will not be eradicated. The best the west can hope right now, from now on, is to try to attempt to contain negative Global Impact of rampant pmbing l umbing tocracy coming and try preserving its own Democratic Institutions. In a nut shell this problem is really no longer just about russia or postsoviet. Its really about the u. S. And the west. In my Research Paper that is slated to come out in the next i really want to emphasize the incidence of nonstate actors or supposed known state actors coming from postsoviet space. The biggest difference with the soviet union is that not only there is this seeming sort of business interactions between supposedly private sector states and in the west, but the nature f transactions has changed considerably. And there is little understanding in my view in the west, despite ample evidence hat, really from soviet times, we now see fusion of three different worlds. And values coming from postsoviet space. In one elite. So, in soviet times, we used to worlds. Ee different communist party, k. G. B. And Law Enforcement. And actual organized crime. They were actually quite antagonistic and conflicting, especially at some important points. But now i would argue that current political elite, especially in russia, but also in surrounding postsoviet states, they took the worst, but most practical, values and Business Practices from each of the free world andal maualuga mated them into one. An d [inaudible] investigative journalist [inaudible] have been showing that especially in st. Petersburg in 1990s, putin has already tested all this free world and practices from those free world. And he came to power with a team which has been experienced and used networks from all those free worlds. I think one of the important conclusions of that study and others is that we do in the Free Russia Foundation is that there are no systemic or any kind of liberals in russian government. Its a big myth. Which is still somehow spread in europe, especially in countries that like finland or germany, that still cooperate with russia on many business levels. People have been implicated in those years under putin, even in st. Petersburg. Go together with putin. I would argue recently i highly recommend a study that just came out. Its emblematic that militant security raises this question. Russian style corporate rate something one of the most widespread mechanisms of operation of especially big businesses in russia. Studdingy doesnt want to implement any consistent measures to protect businesses. Previously, last year, in the report for free russia undation [inaudible] i also argue that the term oligarch is no longer meaningful really. In fact, it is commonly widespread, but theres a dangerous mistake in the west to believe that a private businessman and market economy exists in russia. It doesnt. Its been hijacked by criminal groups. Security services. And business in russia really eans tax breaks, sponsors from kremlin, and these oligarchs are really now cash handlers of cash flows that are allowed by putin. And also kremlin has special compromising material or other leverage over their life. Even if the previously considered oligarchses, they live in the west and appear to be western business men and have looks and lifestyle and lawyers like western business men, theyre actually putins handlers. Because theyre based this russia really in russia really. But they want to spend money and sort of enjoy the best of two worlds. This brings me to my second major point in preng. Kleptocracy in russia is not something residual. I believe there are strong indicators that were passing through times when, as in 1930s, the very existence of liberal western capitalism, with s of Good Government [inaudible] i call this phenomenon g13 versus g7 in g20. In fact, g7 itself could be, you know, not seen as that much about western liberalism. If you look at countries like italy or ette. So we see that most developing countries seem to be learning worst kleptocratic government and Business Practices and capitalism based on the rule of law and proper separation of powers is no longer an ideal for societies where people have adapted to sophisticated and often seemingly comfortable and acceptable forms of state level corruption. So corruption is a new accepted norm on many, many levels in societies, both in the west and in postsoviet space and elsewhere. So together with Free Russia Foundation and the group of 2,000 activists around the world, we are preparing a launch of a Research Project called undermineness, which you mentioned in my introduction. I think this is a new term that we believe is more relevant than oligarchses and other nonstate actors. It basically shows that we have a whole group of people and actors, nonstate actors, but connected with kleptocratic regimes who actively undermine democracy in the u. S. , while enduring illicit profits in russia and spending them in the west. I believe these individuals and cooperations learned even more sophisticated financial methods to advance their own interests. There are multiple examples which i want to go into here in this session. What can we do . I have one minute to discuss this. With this outrage fatigue. I think we need a new system of containment against russian and other postsoviet kleptocracy that will enforce strictly existing laws will create more up to date laws that deal with todays International Corruption and subversion, especially in regard to unanimous companies in offshore injures dicks. Something which Kleptocracy Initiative of the Hudson Institute is doing very well and many other anticorruption groupses are now discussing in washington especially. I also think we need to build Awareness Among western general public that will link that will create this understanding, acknowledgment, in the minds of people about the link between transnational kleptocracy and erosion of democracy in the west. So far ive seen very few actual examples of it. So people in london now finally kleptocra tmbing s from around the world are raising real estate prices. I will finish my presentation with a warning that the price we pay today in the west to stop is considerable and we have to understand that there will be a price. We need to, especially in the business sector, we need to do containment. We need to really prevent some of the cash flows is considerab we have to understand especiall. But also many, many hours at Different Levels of subversion and corruption. This price is still much smaller than the one that were likely to be forced to pay tomorrow or he day after tomorrow. Paul thank you very much. I think your comment that oligarch is no longer meaningful is an extremely important point to hit home. Steven colbert recently went to russia and did a little piece on a day with oligarchs. These oligarchs arent really oligarchs. Theyre cronies of putin. Thats what they are. Its certainly not like it was and to a point still is in ukraine where the oligarchses have a competitive political environment. These guys arent competing with one another. Theyre just working for putin. Id also like to back up your comments on the work of the kleptocracy. Give a shoutout to charles davidson. I see you hiding there in the audience. Who is joining us today. He was a panelist at a briefing we did last month, two months ago, on asset recovery. And he talked a lot about the Corruption Services industry. In the west. Where lawyers and bankers are ready and willing and advertise to take these funds and hide them in the west. So as far as you say so negligent and appeasing, yes, very much so in the west. Ill hand it over to the doctor now. Thank you very much, paul. And the hell jinx commission for this invitation. I think russias kleptocracy is a very important topic. When i worked as Economic Advisor to the russian government in the early 1990s, my perception of corruption was like this. A pyramid, a little at the top and a lot at the bottom. Then it changed like this. The pyramid was inversed. A lot of corruption at the top, a little at the bottom. Russian administration works much better now than it used to. Much fewer small. Now it looks like this. Anders it has become an atomic mushroom, with all the corruption at the top. I think that there have been two important thing said here. Organized crime and oligarchy are over. They have been consumed by the state and an addition here is to a considerable extent they have been legalized. President putin is a lawyer and thingnks about legalizing hes doing. Its more a matter of how the ystem functions. Ive written several books about russias soviet unions economic reforms. Right now im at the final part of the new book, with a working title, russias crony capitalism. The main idea is very much putin has successfully integrated enrichment of elites in his Economic System. And i would say that i see the russian Economic System today an power system as four different circleses. The first circle, that is state power, f. S. B. , and judicial power. No independent courts in russia. Therefore there are no Real Property rights. Property rights are something at you have abroad, not in russia. But since you have in abroad, [inaudible] because it stops your enrichment. The second part is the state cooperation. Russias state sector, 12 years ago, according to official russian statistics, generally id 35 of g. D. P. Today it is 70 of g. D. P. The big state companies are buying up the companies from the former oligarchs quickly, at half the price. Because the oligarchs are not allowed to the former oligarchs are no longer to sell to one another or to foreigners. They have to sell to putins Close Friends or to state companies. And then the prices are at most half of what they should be. Therefore we can see that the prices on the Russian Stock Exchange are extremely low. If you take the most outstanding at company, it was worth the peak on the london Stock Exchange 369 billion. Today they have wasted 320 billion. Its down to 50ds billion. 50 billion. This is an extreme example but its not untypical. In 2007, putin did something quite extraordinary. He transformed six big state ompanies with one law to state corporations which are called nongovernmental organizations. So effectively privatized assets of more than 1 billion of value and then you wonder, who controls these nongovernmental organizations . Well, of course its putin who controls it all. And theres a third circle that is the cronies, four of them have been sanctioned by the u. S. Overnment. This is the real putin. These are not k. G. B. People. They work in state companies, they are putins real friends whom the u. S. Government assumes also holds part of putins wealth. Analyzing this, you wonder how do they make the money . Essentially two ways, asset stripping, mainly from gazprom, that is they buy assets from companies, Television Companies from gazprom, cheaply and the other is that they get big state procurement orders at the massively inflated prices and theres no competition because these are putins friends so Everybody Knows that they should be given it. Looking at the numbers, i come 20 assessment that billion a year has been taken out of this group of essentially 2006. Dozen people since we have only this way 100 billion to 200 billion thats been taken out by this group of people. A consequence of this is theres not much corrupt revenues left for the others. Corruption in russia today, we call it like that, really quite legalized. They have state procurement legally, its very concentrated. But what i will shock you with that ilya touched upon, that is the west this would not happen the way it does without the west. After the money goes through cyprus, cyprus is only a channel. Then it goes normally to some caribbean island, british virin islands is typical of this, then it goes to two places. London and new york. Or the u. S. More broadly. It goes through Anonymous Companies, l. L. C. s, that are usually in delaware. They can also be in nevada, wyoming, and south dakota. This should not happen. But it does. And the other problem is that the money passes not through the bank system which is properly regulated but through law firms. Fine, wellrenowned law firms which consider this to be attorneyclient privilege. And in this way, there was an article on the 26th of december last year that says that at least 40 billion a year goes into this country in this fashion. These are the two things that i suggest that we should focus on stopping. There should be no Anonymous Companies whose beneficiaries are not known. And there should be absolutely not in the illegal sorry its legal, accepted transfers of the money through law firms that buy part of, that by pass the bank system. These are the two suggestions i have that the United States congress should do something about. Thank you. Paul well, thank you very much for that comprehensive analysis, dr. S a lund, youve been such dr. Aslund, youve been such a wealth of knowledge for so long. Thank you for running us through this. To reiterate your circles, one is state power, two is state corporations, three are the cronies and friends of putin and inally, four, is us. The floor is yours. Thank you, paul. I would like to thank the organizers for getting me here. I would like to give credit to other institutions first of all, year work for them all and through do reports on them for deputizing the clebbing to becy, how putin deputizes the kleptocracy. I believe these guys at eptocracy initiative, not to disregard anyone else, they are the best. The other institution i would like to mention is the institution im affiliated right now, the institute for policy analysis they sponsored me here to d. C. And because of them i am talking and sharing my expertise with you today. Marius i think we in the baltic region and Eastern Europe, we have something to share with you. Almost everything you are experiencing here in the United States or in the western europe, e have experienced before. Everything. Kleptocracy. Economic influence. You name it. Everything we have experienced already. So i will try to speak today about this particular experience because i believe you will find some parallels to the processes in the west yourself. So first of all, i would like to say that i was asked to talk about kleptocracy as a tool of Foreign Policy of russian regime. Should say, its not all foreign policies. Its not only putin, its not just about putin, its about the system. But when putins regime recognizes kleptocracy and its not only about Foreign Policy, certain part about os Foreign Policy. And the sec thing was, it was already mentioned, we are dealing with not a normal state or even not a normal authoritarian state. Something ing with different. They are projecting all kinds of influence which is not usual to normal state influence. And kleptocracy is one of them. So talking about our experience, ilya said that he started to be interested in the topic of kleptocracy in 2013. I should say i started to be interested and work on this in 2003. And it was because i dont know how many of you know but we are here, the first impeached president in europe in the history of europe. It was 2003 when the scandal our president ties of our russian president to business and even criminals. That was a real eye opening for me, myself. I have been working on russia since 1991, so its already 26 years. It was really eye opening because we found that the nfluence can be projected by these relations which at that time were considered just normal business. The relations to the criminal, it was on the list of the people who were related to people around our president where some ,eople who was on the u. S. List sanctions list, on the f. B. I. List. So i started to work on that and later im i look back to the history and i should say that is crony capitalism or kleptocracy in russia started not in the year 2000 when putin came to power. It started at least in 1991. Or i would say it started even earlier when the communist party, k. G. B. , made the plans to finance money, different amounts of money, there are different calculations, but at least 50 billion was transferred to the west. Hundreds of billions of dollars. So they are projected the influence hundreds of millions of dollars. So they are projecting the influence of this money, using this influence and network, for example. Other than the example the other example i would like to give you is from our neighboring country, latvia. Now we have a coalition in latvia which is led by the party lindstuf. What is interesting about him, he is not called or named prorussian or russian agent but what is interesting about him, he started his business in 1991 with the guy who was already mentioned. And why are they doing this . They tried to not just achieve some Foreign Policy goals, they tried to capture as it was said by brian, they tried to capture institutions and the ultimate goal is if its possible to capture the entire state. So first of all they captured of course not only by the nstallations of the mayor, lindberghs, but other people they captured a port and now they have, again, looking back in history, i can say that they projected the russian influence through several governments of latvia which were not called prorussian. The others, the Prime Ministers of latvia, they are clear business relations with russia nd always were, well, at least semiprorussian. Semi prerussian. We dont call mr. Lindburg prorussian, he was the guy who publicly called Russian Troops n latvia as occupational ones. And the thing is that no one cares about that and no one looks into the history of his business. The same thing i should say u. S. Ur, well, even it wases in 2003 because when we were talking about russian influence over lithuania and the supporter of the impeached president at that time was u. S. Ambassador there. Every second day he went publicly to defend our president saying that he is normal guy, prowestern, and just about politics, not about russian influence. Working on the Kleptocracy Initiative, i put several documents on the issue o you can find yourself. To make it to then i should say we should look at the issue, having in mind the quotation of the famous spanish prosecutor hoe si rimba, i dont remember the exact quotation but he said about network of criminals working for russian regime, he said, you know, when russian reason or for one another to achieve something by means of the state they employed criminals. So at the same in the same manner they employ kleptocracy to aheave some achee some goals the state cant achieve itself. Paul absolutely. Thank you, marius, especially for that in depth look at how far back this all goes. I think that is the most surprising thing. Starting in 1991 and now in 2017 were finally taking an in depth look at it. So finally, we have ambassador daniel freeh who is going to talk about what the United States might be able to do about this. Daniel thank you. My point of departure is to assume that the previous speakers are correct about the nature of russian kleptocracy and its weaponization at the hands of the putin regime. I make this assumption because i agree with it. But you i need not go other the ground that has been covered. What, then do, we do . First of all, as was the case during the cold war, nothing will work if we lose the political and, may i say, ideological struggle. We need to have faith in our own democratic system, in ourselves, in the free world. And when we do that, we have a foundation from which to proceed. I say this because now that very foundation is also under attack, both from without, from the russians, but principally from within, from people not necessarily at all connected with russia, so this is a different kind of a struggle, its not my purpose to go into that, but i want to mention it. Designed a u. S. Policy to push back against russian kleptocracy and corruption needs to be integrated in a complete russia policy. There is nothing incompatible between pushing back on russian aggression in various forms and seeking those areas of Common Ground where it may be possible. I wouldnt be too hopeful about the positive ageneral ta, but you dont rule it out. A second point is that this is out, s has been pointed the americans may have discovered this recently, but this has been a problem well before we discovered this on the front pages of our newspapers. Europeans have been dealing with this for a long time. And the Baltic States and poland , bulgaria, have been dealing with it since 1991, essentially. So the answer should not be made in the u. S. Its got to be coordinated with europe, in particular, and within the g7. That said, what are our options . First is exposure. We should not let the corruption take place in the shadows. In the darkness. And this is a job principally for nongovernmental organizations. 21st urnalists, for the century cadre of investigative journalists and that sort of means tech savvy, younger people who are adept at exposing maligned influence. Theyre all over, including in russia itself. We need to expose what the russians are doing. The better to anathematize it. Just as it was not popular in the United States to be associated with the soviet union as their agent or as their useful idiot, it should there should be a price to be paid for doing the kremlins work for it. Secondly, and this is more in the area of government there is pressure. There are both sanctions and there are enforcement of financial regulations. Treasuries and the Financial Crimes Enforcement Network is not a sanctions organization but it goes after financial crimes. Theyre very good. They need to be their expertise and their resources can be useful in expodsing what the russians are doing. Secondly, and i this requires some discussion, but russian investment is often, let us say, strategic. They want to buy up key elements of a countrys infrastructure, using cutouts, false fronts. There is in the United States theres a committee on Foreign Investment which screens it for National Security purposes. It works. It may be that european count yes countries should study that and learn from the example. I understand a body like that can be a hindrance and a bureaucracy to legitimate Foreign Investment but when youre dealing with money that isnt what it claims to be, governments may want to provide themselves with protection. Now, sanctions. May have a place here. My last job in government was the state department sanctions coordinator. I dont want to overestimate or oversell the ability of sanctions to solve the problem. Till, it is a useful tool. Act was not designed to go after these, it was to go after human rights abusers but we know that the corruptions that the russian lawyer who was murdered because he uncovered corruption had uncovered a lot more than we realized at first. s he panama papers, the prevazon case. When you pull on a russian thread you never know what comes out the other end. To agnitsky act seems bother the russians, so much so they want to talk about adoptions with just about anybody. Adoptions being the euphemism for the deal it would take to roll back the magnitsky act because the russians imposed a ban on american adoptions of russian children as retaliation. When you hear someone talking adoptions with the russians what it really means is theyre talking about getting rid of magnitsky. The magnitsky act was not designed to deal with this problem but stumbled into it because threads in russia tend to lead to one another. The global magnitsky act, senator cardins creation , in a way, does explicitly deal with corruption. It is a legislative vehicle, now a law, which allows for us to go after corrupt russian officials. My experience, it is hard to demonstrate this, but that means you go to work, including with nongovernment sources of information. This army of investigative bloggers and tech savvy people i mentioned earlier. The ukrainian sanctions went after putins cronies, by design. We were not intending to make things pleasant for the kremlin after it had invaded its one of its neighbors for the second ime in 10 years. The senate bill which passed 982, which is now being taken up in the house, the senate bill on russian sanctions, includes among its many provisions, two subprovisions dealing with corruption, one on pive privatization, allowing the administration to go after individuals who unjustly benefit from privatization, again. May be hard to demonstrate. But it is a useful vehicle. And more generally, corruption. Milar to the global magnitsy act. Sanctions are not going to solve the problem, but they are a useful tool. I mentioned the various threads that come together. All of the tools i mentioned are useful to the degree that we americans and the europeans and the g7 take seriously the challenge of an autocratic russia which wants to export its corruption and seems to be aiming to make the world safe for russian autocracy. That is, by weakening Democratic Institutions and weakening the idea of democracy. And lest you think thats an original thought on my part, its actually about a 200yearold russian policy from the time of nicholas i, no need to remind the lithuanians about czar nicholas who used his army to crush every liberal revolution it could reach, the better to keep out the infectious ideas of the enlightenment. I do not believe that russia is doomed to live forever its worst history. I dont accept the notion of a civilizational divide. In russian history, russia does, en it failed at external aggression, turn to internal reform. And has sometimes been successful. And the period of russian history we think of as the most successful, the period that gave us world class literature and art and music and a rapidly developing economy and a and the beginning of a more modern Economic System came as a result of its the failure of its aggression. Failure in various wars. Crimian war, russojapanese war, i mention this because it is important to remember what it is were trying to i achieve. Were not trying to achieve a weakening of russia. Were trying to achieve a defeat of putinnist russia, the better to have a better relationship with that better russia. A my view, being a lithuanian or a native of russia may have a more jaundiced view of russian history. Couldnt agree more. Daniel ok, good. Remember the current era reminds me more than any other era of the 1980s. Everyone was hostile to the west russia was hostile to the west,ern was worried about the outbreak of war, russians were beginning to whisper, americans in the soviet union, i was one of them, things cannot go on like this. Reagan administrations approach to russia had two periods. Pressure before gorbachev and when the russians turned inward, having failed to intimidate the west, reagan abandoned his more rigid cohorts and reached out to gorbachev. And it may be that one of these years a russian attempted internal attempt at internal reform will succeed. So rather than end on a note of toughness and hitting back at the russians, i wanted to talk about at least the p ten rble of a better future. That time will come, though its not today. Paul thank you very much, ambassador. Great talk. Let me add, for the much deeper perspective, going back to the 1980s, also going back 200 years and also conversery for the shoutout to the role of young people in getting this done. Both tech savvy and politically engaged. I know there are a lot of politically engaged young people in this room. That leads to my first question, well now enter the question and answer phase, and this one is for ilya. In march and june, major protests against corruption novalo,t, led by alexei leading to crackdowns and imprisonment. Did this signal cracks in putins kleptocracy or is it a flash in the pan . And what more can be done to provide assistance to those russians who want to see a democratic, human rights respecting russia in the future . Ilya its a good question that all russians ask themselves, and theyre divided now as russian opposition is often divided. I would say definitely hopeful sign that this new generation of senior students from school and students from universities are really fed up with no prospects in life and no social mobility and rampant corruption that they face and huge brain brain drain and immigration out of russia as the only option to really succeed. The question is, how sustained this process can be and how much resistance these young people can provide because one thing that is not realized in the st, i think, enough, is that russia since soviet times has really traumatic experience of state oppression and repression and thats why in my report i call the gula fwmbings values. Gulag is a system of prisons and oppression in russian culture and political culture as well. Russian ng to say people fear repression. Theres a limit to how much people can stand. Many of us have had to leave russia because we faced unprecedented dangers to our life. So i would say a good way to support is for the west toup hold its own values. But also to engage in what i would call containment. Definitely keep people to people contacts and programs. Participated in a program called statetostate and saw thousands of students coming to the country and becoming longterm advocates of democracy in their own countries, even if they couldnt really enforce their views in political life. Its a longterm game. With say i agree ambassador freed that one day this regime will collapse, it is inevitable. The question is, it may take a decade or 15 years or a lifetime , so its a long game but which a delayed approach. Three comments about this. The first is focusing on one thing. I think this is very wise. The top theme, corruption. Its not about what kind of reforms that should be done. Anders this is what you do when you want a democratic breakthrough. The second is that learning from protests in 2011 and 2012 that was very concentrated in moscow and did not excite the rest of russia, they are now troying to engage 200 different cities around russia, the whole country. As ilya said hes focusing on the young. And the third is quite interesting. Criticizing one specific person after another and not putin. Thank you. Paul thank you very much. Given that we are coming up to our time constraints here, lets have a whole halfhour for audience questions, ill refrain from asking a second question. Audience, please, hands. Ver there. We got a make for youful a ike for you. I dont know what it would look like in the Putin Administration but in a russia reform package would have to involve getting rid of the kleptocracy, opening up the economy, the rule of law at home and all supported by a better relationship with the west. The russian economic reformers such as they are make the case that it is precisely russias hostile relationship with the west and its failure of the rule of law at home which keep the economy backwards and dependent on export of raw materials. So you would have a series of liberalizing reforms at home and an anticorruption campaign. That is a little bit hard to imagine under the current eadership only because president putin has a bit of the king lear problem. You cant go into retirement after youve done the things ouve done to stay king. But, you know, anders is the person who knows the state of russian economic reform thinking and can do a better job answering the content of what a reform package would look like. Anders i would rather say that first you need to get rid of the regime. With t change anything people who are all dependent on a corrupt system. You have to change the people, the leadership, thats the only way. In order to do that, you need democratic elections. Democratic elections of both president and the parliament and then lower down. Economic reform, we know how to do, thats not a big problemment paul additional questions . Right there. I wanted to call attention to the best and worst of russia, today is best milias 90th birthday, shes the longstanding chairwoman of a moscow group, usually referred as the i do yen as the doyenne of the group. I want to ask about something a rumor ive heard for many years which is that putin is probably the richest man in the world. For many years i heard that he is worth 70 billion. Now ive heard anup dated figure of 120 billion. You pointed out why people inside russia unfortunately dont seem to be able to afford, literally or fig rah tyly, to refer to that fact but i wanted to get your reaction to that. Do you ore he speaks, ind give yurg name and organization . Im recently retired from the u. S. Commission on International Religious freedom. Paul if all audience members could do that, that would be great. Anders i think something on the order of 100 billion would be reasonable. The putin group takes out 10 billion to 20 billion of russia each year. What we know from sergei who was a minor partner in one of the branches of the putin scheme, he was involved in 32 offshore companies and fled the country 2011 afraid of losing his life, he what he said was that normally putin owns about one third in each company. In fact, he really owns it irectly. If yo take 200 billion an give m one third, that would make sense. But we cant know. We have no idea how many Anonymous Companies there are in this country. In britain, Prime Minister david meron had a bit more of an idea, there were 9,000 buildings in britain owned by Anonymous Companies. These are normally buildings that host several Million Dollars each. His is a lot of money. Something to add to that, to me mind its misleading to focus just on putin. We are usually doing thises me take in the west, that its about few putin, its putins regime, its about putins wealth. I would say its much more about the system itself. And the system is based on k. G. B. , still based on k. G. B. Of course its a hybrid system. Not just k. G. B. But based on k. G. B. Looking to the history even in ears of 1999 to somebody i should say looking back through history we d say that all these its really based on the k. G. B. , we he k. G. B. Managed it should look at the year 1991, 1990, what they did at that time. They managed to come back to power in just 10 years. Toto give an answer, we need do something with all the systems. Not just putin or his cronies. Paul thank you. Additional questions . Ight here. Hello, my name is ellen, im an intern. My question is, i was wondering if you could discuss more about how kleptocracies with business ties lead to the undermining of democracy. Paul start with brian here. Brian a few examples barking in 2010 i was researching an article i ultimately coauthored published in the new public looking at russian influence in the Czech Republic and networks of influence. I came across this Company Called venex. It was an Energy Trading company with a mine bogglingly opaque Ownership Structure. It ultimately led to gazprom this Company Bought up 10 to 12 of the czech Energy Market and those with ties to it were unsurprisingly supportive of the kremlin line. I actually wrote this down because its pretty complicated. Its owned by Companies Based in switzerland, germany and austria, one is centrex, Europe Energy and gas, founded by gazproms financing arm and is owned by two companies, one in sigh plus and the other controlled by gazproms german subsidiary are you confused . Good, thats the point. My late colleague, the former director of the ukrainian service, testified before the Senate Foreign relations ommittee back in 2008 that centrex is just one of these companies. Gazprom has set up 50 or so middleman canes companying like this. Why is this undermining democracy . Every one of these creates a network of influence that is undermining the rule of law in every one of these countries. I called my article on the Czech Republic the velvet surrender because you had the velvet revolution which brought in democracy, new democracy was being undermined and surrendered by the presence of Shell Companies and the networks of influence they were creating, they create. Ive noticed over time as these companies have proliferated other things have also proliferated. Youve had many socalled alternative news sites pop up in Central Europe with similarly opaque Ownership Structures, which not surprisingly have a very euro skeptic line, a very antiamerican line a very prokremlin line. I dont think these things are i think these things are not unrelated to each other. So when corruption undermines our most basic values, and i want to kind of riff off something ilya said, its the g7 versus the g13, this is a very elegant way of saying something, a theme ive been playing with recently, were not in a new cold war right now. Were in a system, we do have two normative systems. Essentially facing off against each other in the world. I like the way you put this, the g7 versus the g13, thats an elegant way to say it. One to the west based on all the things we hold near and dear, that appear to be under assault. He stability of law. And one to the east based on cronyism, kleptocracy, the subordination of law to power. Unlike in the cold war, we dont have two hermetically saled systems. These things are not separated by a gap or iron curtain or berlin wall. They are seeping into each other. Our values are, lets face it, attractive and they do seep into the other side. The other side is forcing their values into our system to the extent that we let them. Thats the operative phrase. The extent we let them. So i hope that addresses your question. This is how i see corruption undermine Democratic Values right now and why i see it as a National Security threat of the first order first order. Let me continue with the example. E most the former chancellor of germany, schroder, who immediately after he left as the chancellor of germany, gazprom. Red by so hes legally paid big money and hes still an important person in german politics. This is all legal. Second example, when the pew when putin was Prime Minister, 2008 and 2012, he spent a large part of his time visiting various countries in the balkans, trying to promote soft stream. Whenever i see putin oneonone with without any aides, with a political leader, i immediately suspect that corruption is the real master there. The e third example is odious gas trieder trade for the ukraine. Here you have a really crude case. Theres a wonderful article two years ago called comrade criminal and they discuss how they got a credit line from gazprom bank for 11 billion and for this money he was allowed to buy gas cheaply in russia and sell it for billions of dollars of profit in ukraine at the rmal price and then he was main cofinance president nko vitch lech jankovic election campaign. A reasonable guess is that each of these cost him half a billion dollars. Ukrainian elections are very expensive. Almost like american elections. And of course jankovic was elected. Essentially this is a russian agent who is called gas trader because he carries out political erations to the benefit of moscow. I might mention also he was the for ce year financier 2. 5 million a couple of years ago. Paul thank you. Did you want to speak . To follow up on that, if you follow any story on undermining democracy in europe or in the u. S. You will find russian money behind that. So absolutely. Bauds absolutely. If you will take any support for antieuropean parties in europe, you will find its not state funded support. You always find some oligarch or russian bank or Something Like that. Behind them. Its not state funded. F you will look to, lets say, the fascist movement in moscow, they are doing that every year. So it is financed by russian oligarch. If you will look at the support to, lets take the United States, to the movements in the United States, you will find russian money and russian oligarches behind it. Its not a fun issue. I really encourage all of you to the the che chin chetch inmovement because i remember when we looked at it seven or eight years ago and laughed at that. We thought it was a funny issue. Now we know that this movement and Russian Support managed to it. St, well, get to the paul that seems to be the theme. Ambassador fried. Daniel i agree youll find russian money behind many of the antieuropean nationalist parties. Is let us say frances front not antieuropean and nationalist because it receives russian money. Its it receives russian money because thats what it is already. Which suggests the way to solve this and to make our societies less vulnerable to that kind of interference is to work on the issues that brought the west to its current path where we are vulnerable to these arguments. Its not to take issue with the question of russian money but we russians didnt cause our problem, theyre merely feeding n it and contributing to it. Paul thank you. Ambassador. If i may just jump in one more time , in terms of where all this money is coming from, i think there is one place we need to be looking. This refers back to my comments about organized crime in my initial comments. I dont know how many people member the case of estan cofar, a european citizen being kidnapped from a European Union state, brought back to russia and put on show trial. What was telling about the case to me, however, was what mr. Cofare was investigating. I think this is crucial to understanding where the money comes from. He was investigating a cigarette muggling ring run out of eastern estonia run by Eastern European groups facilitated by russian federation. At first glance this looks like some guys getting rich off a great smuggling ring. Thats not what it was. In my conversations withest tonian Law Enforcement officials, it was creating a black account. This is just one little cigarette smuggling ring, you multiply that across all of the operations going on that russian organized crime is involved in, it is tissue that are facilitated by the Security Services you get a lot of untraceable cash. And you wonder where this money is going that is supporting xenophobic and far right outfits across europe or supporting the socalled alternative media sites across europe and you begin to get a good idea. This gives the kremlin a lot of money to play with with no fingerprints on it. I think this is one of the places we need to be looking. Paul thanks, brian. Additional questions. Right there. Hi, my name is john berger, im a an intern for schumer. N john whats your assessment of the new guard because obviously they were not k. G. B. Trained. Is there any opportunity for us in the west to interact with hese new emerging leaders . Paul who is the question for . Marius . Marius somewhere them are k. G. B. Trained. But its not just about the individuals, its about the system. K. G. B. From the very beginning it was essentially we make a mistake when we judge about the k. G. B. As about Intelligence Organization we have in the west. From very beginning, it was a criminal organization, not only because it controlled all the criminal world in the soviet union, but because it had all kinds of relations with criminal organized crime groups in the west and everywhere. D that was when i look at nowadays situation i really dont, looking back into the k. G. B. History, i dont see major differences. And major new things. Only new things are some new tools like social media or Something Like that. Were talking, lets say, about fake news. And we consider fake news a new phenomenon. Lets look back to ideas like h. I. V. Was invented by the c. I. A. Or Nuclear Winter theory d many, many others, cooperation with nazis and many others. These are fake news which were invented decades ago and nowadays they are doing the same hing, using new tools. This is not happen what is happening is that there is a nationalization of a new elite. We can see groups, k. G. B. Officers, and nationalists. Putin has said very clearly, i will stay in russia and get a russian education, or you go abroad and stay there. Paul thank you. Lets try to do one or two more questions. Ight back there. You mentioned, you talked about how there are two aspects to the russian regime and corruption, could you and anyone else maybe expand on how those two aspect the ideological and he corruption work in concert . Yes, i can. When i talk about the ideological im talking about putins project of making russia a great power again. Making russia great again if you will. So in this sense theres good and bad corruption. If you have corruption thats operating abroad and creating networks of influence, that you can then use to undermine Democratic Institutions in the west, be they in the near abroad or farther west, along this regard i would say what echo what marius said earlier, what we are experiencing now they experienced before. We should pay close atonings to what russia does to its neighbors, its an indication of what theyll do to us later. Thest tonians were getting hacked before it was cool. The estonians were getting hacked before it was cool. When i describe the complex Ownership Structure of the company thats buying up Energy Assets in the Czech Republic, yeah, a lot of people are getting rich off this. And its also advancing the interests of the state. Where its not where its not where theyre working in competition with each other, ere ideological russia and kleptocratic russia are working at cross purposes, i think we begin to see evidence of this about a year ago, when we began to see putin start to cull his inner circle. When we saw people like kunin, the former head of russian railway, one of the most powerful men in russia, lose his job. When we saw the head of the socalled Antinarcotics Service which is nothing of the sort but anyway, saw him lose his job. When we saw ivanov, the former kremlin chief of staff lose his job. This i interpreted as putin trying to rein in some of the parts of hi atic inner circle to bring in you think yer people who will be willing to steal less and work harder. Imthis was an attempt to rein in kleptocratic russia because rebuilding an empire is expensive. This tension, i think, is something we always kind of need to keep our eye on between these two russias that, again, sometimes are working hand in glove but sometimes are working across at cross purposes. Paul on that, well conclude the briefing. Thank you so much, brian, thank you to the full panel. Fascinating briefing and well see you all at the next one. [applause] [captions Copyright National cable satellite corp. 2017] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] d on cspan 2, a look at the deloit a National PublicSafety Network for First Responders and on cspan3, local officials estify on ways to finance u. S. Water infrastructure. Friday, Deputy White House press secretary will discuss her involvement in politics as the daughter of former arkansas republican governor. And why she joined president trumps campaign. A profile begins tomorrow night t 8 00 eastern here on cspan. If you look across the park now and in this community its hard to believe this was a thrimbing and business district. There were stores owned by black, white, you name it. A lot of people did a lot of business here and didnt have to leave a community. But looting occurred and fires and wasnt by black folks but one of the debatest incidents. Join us for an American History tv channel. Live sunday starting at noon eastern on American History tv on cspan 3. Sunday on cspan. When we look at president obamas domestic legacy, i think there are two things that are very important that will have long lasting good consequences for the United States that can be summarized in four word. Sonya sotomayor and elena cage en. The second part of our interview. He talks about his book, rising ar the making of barack obama. The point to emphasize here over the course of his presidency, there were scores and scores of people in illinois who had known him in years earlier who were deeply disappointed with the trajectory of the obama presidency. Number one disappointed that barack forgot many of the people, most of the people who were essential to his political rise. Sunday night at 8 00 eastern on cspan. The issue of Water Infrastructure financing and Safe Drinking Water was the focus of a hearing today on capitol hill. A subcommittee heard from representatives from a local utility and metro Planning Board on their recommendations for funding and modernizing the nations water systems. Also testifying was a resident of arkansas who talked about his familys problems to getting Safe Drinking Water and the help he received