Category Archives: Russia

Putin’s Secret Submarines and Strategy

Posted on by

Russia has been placing, flying and deploying strategic military assets around the globe that appear in some curious locations, like aircraft near Newfoundland, aircraft near Alaska and ships near Nicaragua and Cuba.

Now it seems that a submarine that was detected and vanished has gained the attention of several countries.

Many countries are paying attention however, no one is saying if this is aggression, surveillance or part of a Putin Cold War Part 2 operation.

Few speak to the matter of Ukraine and even less when it comes to the risk of the Baltic States.

LONDON—The U.K. called in assistance to help hunt for a foreign submarine off the west coast of Scotland starting in late November.

Maritime patrol aircraft (MPAs) from France, Canada and the U.S. conducted patrols in conjunction with British surface warships in the search for the submarine in late November and the first week of December, operating out of RAF Lossiemouth in northern Scotland.

The incident began when a periscope was sighted in waters where U.K. and other submarines would normally surface as they head into or out of the Royal Navy’s submarine base at Faslane, home of the U.K.’s ballistic missile submarines.

At the height of the operation, aircraft involved in the hunt included two U.S. Navy P-3 Orions, a single CP-140 Aurora from the Royal Canadian Air Force and a Dassault Atlantique 2 of the French navy. Also involved was one of the U.K.’s Raytheon Sentinel radar-reconnaissance aircraft.

The U.K. defense ministry and the participating air arms have not confirmed they were hunting for a submarine. But a U.K. defense ministry spokesman told Aviation Week that Britain had “requested assistance from allied forces for basing of maritime patrol aircraft at RAF Lossiemouth for a limited period.

The aircraft are conducting Maritime Patrol activity with the Royal Navy; we do not discuss the detail of maritime operations.”

A spokesman for the Royal Canadian Air Force said: “Following a request for assistance from the United Kingdom, the Canadian Armed Forces deployed one CP-140 Aurora Aircraft to RAF Lossiemouth for a limited time.”

Maritime patrol aircraft are occasionally deployed to Scotland, mainly for NATO’s Joint Warrior exercise. Such exercises are usually announced in advance, but November’s deployment was unexpected, with the aircraft and supporting airlifters arriving around Nov. 26. The deployment appeared to end last last week.

The incident comes more than a month after Swedish authorities halted a search for a foreign submarine operating in its territorial waters in the Stockholm archipelago. While the Swedish search was unsuccessful, defense officials said there was no doubt that the country’s waters had been violated by a foreign power.

It is not clear whether the submarine being hunted by the U.K. and other Western nations had entered U.K. territorial waters, or if the maritime patrol aircraft successfully located the sub.

The Sentinel may have been using its radar to try to spot periscope-sized objects on the surface and then cue MPAs onto the target.

On Nov. 28, the U.K. reported it was tracking four Russian warships passing through the Strait of Dover and into the English Channel heading out into the Atlantic. The surface ships included a Ropucha-class landing ship and an Udaloy-class destroyer. These were shadowed by HMS Tyne, a Royal Navy offshore patrol vessel.

The U.K. retired its own fixed-wing maritime patrol capability provided by the Nimrod in 2010, and has been limited to the use of ships and helicopters for the anti-submarine mission.

Further, another look at Putin’s aggression and certain risks are worthy of immediate attention especially as the Russian currency is unstable due in part to the falling price of crude oil.

Russia and the West

The Geopolitical Nihilist

Jakub Grygiel

Putin’s Russia may be able to wreck the geopolitical status quo, but it doesn’t have the power to replace it.

Russia’s bold moves into Crimea and Eastern Ukraine give one the impression that a calculating strategist sits in the Kremlin. Putin’s own public pronouncements tell us that his apparent aim is to restore Muscovite power and influence over territories deemed by him to be historically Russian. Putin is thus feared to be a shrewd competitor willing to use all forms of Russian power—from nuclear innuendo to a superiority in conventional forces to relentless information warfare—in order to build methodically a new regional order. In other words, he may be a geopolitical master.

But there is another possibility. It’s plausible that he has no such well thought out vision of geopolitical reconstruction, and little or no planning for how to establish and maintain whatever new rules Moscow might impose. Even if Putin did have a new regional order in mind, he may be incapable of translating it into reality. By choice and by necessity, Putin may simply be eager to wreck the status quo with nary a thought given to what comes after. In other words, he may be a geopolitical nihilist.

Consider, for instance, that it is unclear what Putin’s desired “international order” would look like. His own statements on this subject are increasingly more detached from reality, rants fueled by his own propaganda. (He suggests, for instance, that Ukraine is oppressing Russians, or that the U.S. and the West more broadly have been aggressors against Russia for the better part of two decades.) Whether he believes this nonsense or not will never be known, but there is little in such harangues to suggest that he has a positive vision of an alternative political order. We know—and he knows—what he viscerally hates, but the destruction of what he hates does not imply a replacement.

Moreover, and perhaps more importantly, even if Putin has a long-term vision of the order he wants to establish, he may be unable to implement it. Weak and declining revisionist powers, such as today’s Russia, do not have the capacity to establish a stable regional order. They lack the strength necessary to maintain it, even though they may have a deep desire to demolish the existing one. The best they can do is to increase uncertainty about their behavior, flailing here and there, expanding their influence and control in weakly defended adjacent regions, and more broadly, increasing the perception of risk in the mind of their opponents. The result is a volatile and unpredictable situation—costly to all, but seen by the declining revisionist as perhaps more costly to its rivals (and thus in the selfish logic of relative gains, beneficial!). A declining revisionist power is a wrecker of order.

The inability to formulate and implement a cogent and viable alternative does not mean, however, that Putin’s Russia is not a serious menace to the security of Europe and the interests of the United States. Geopolitical nihilism is not the same as geopolitical passivity. Russia presents perhaps a greater problem than a strong revisionist state with clear and implementable plans for how to reorganize the international or regional order.

Russia has neither the power nor the authority to maintain an order, but it has plenty of force and abundant desire to destroy the existing one.

Russia is in fact still a formidable military power. It has a massive nuclear arsenal that is presented to the world as superior to the American one and as a symbol, if not a symptom, of great resilience and strength. As many analysts have observed, Russian conventional forces have undergone a dramatic, though still limited, improvement since the 2008 war in Georgia (and in any case, they are superior in size, firepower, and sophistication to those of Russia’s European and Central Asian neighbors). Yet the economy is in shambles, producing little of value and drawing wealth mostly from the extraction of natural resources. Moreover, Russia’s authoritarian political system is fragile, based on the so far unchallenged rule of Putin and his clan, a large propaganda apparatus fanning nationalist hysteria and resentment toward the West, and a good dose of violence targeted at political opponents and potential claimants to power. Russia is a ramshackle gas station run by a small group of well-armed, delusional gangsters.

This political, social, and economic fragility means that Russia cannot replace the existing order on Europe’s eastern frontier—an order that is based on exactly those pillars fraying or outright missing in Russia. But she can destroy it because of her military might. Russia cannot compete as an economic potentate or as a politically attractive entity, but can and does employ its military force to destabilize the region. It is not surprising therefore that Ukraine can be Western and European by the Ukrainians’ free choice but may still fall under Russian vassalage by the sheer brutality of Muscovite firepower. This is 21st century competition meeting 19th century extortion.

Extortion—brute force—creates an order that lasts as long as the fear it generates lasts. Were Russia a rising power, that fear and the resulting order might have some staying power. But today’s Russia is not China; neither is she the post-World War II superpower that could roll over a large swath of the Eurasian landmass and impose a bloody Soviet order. Whatever Moscow may establish in its immediate region through its armor, artillery, and nuclear threats will be backed by a flimsy state, seeking its own justification through invented myths of Western frauds, perversions, and belligerence.

The fact that Russia is unable to replace the existing order with her own stable and durable one does not mean therefore that the threat is nonexistent. On the contrary, the threat is more pronounced because the risks presented by Russia are higher. If Moscow had a clear idea of what it wanted to achieve—how far it wants to extend its influence, and what new rules of international behavior and domestic comportment it will enforce—the uncertainty would be smaller. We may, as we should, still deeply dislike and oppose the proposed order, but at a minimum the boundaries of the conflict would be well defined.

In this case, however, the vision seems to be nihilistic in the long term. Hence the on-and-off Russian interventions in Ukraine, the constant provocations in the Baltic regions, the boasts about nuclear capabilities and the willingness to use them, the Russian aerial forays from Alaska to the Gulf of Mexico, and so on. These are all attempts to shake the existing order. These actions have varied intensity and outcomes: While Ukraine is being broken apart by Russian artillery and armor, Alaska and Diego Garcia are safe from the occasional Tu-95s sputtering near their airspace. But the principle unifying all these actions is a negative one: to destabilize by introducing elements of greater risk.

Putin as the geopolitical nihilist is therefore different than the various tsars that he wants to emulate. In mostly unpleasant and violent ways, the past tsars built and rebuilt the Russian empire by expanding into adjacent lands while seeking some diplomatic arrangement with the more distant great powers. Putin expands into Russia’s southern and western neighborhood but with the aspiration to destroy the stability of the post-Cold War era. He seeks no grand diplomatic bargain that could underpin a new settlement.

What such a view of Russia entails is worrisome. Geopolitical nihilism indicates that a whole spectrum of actions, deemed unlikely because of the dangers they carry, is on the table. We now know, for instance, that Putin is willing to invade —not once, but twice (Georgia in 2008 preceded Ukraine). He is likely to continue that pattern and push farther westward irrespective of the costs. He has also engaged in nuclear saber-rattling for several years (for example, the Zapad 2009 military exercises ended with a simulated use of a nuclear weapon), and he is lowering the nuclear threshold. Nihilism is not order-building; it revels in destroying it. The spectrum of actions that establish an order is limited by their effectiveness at implementing the rules, whatever they may be, of behavior: their purposefulness is constraining. The spectrum of actions that destroy order, on the other hand, is much more open-ended.

The Western strategy of waiting Russia out through a 21st-century version of containment—a mix of economic sanctions, ostracism in global fora, and very modest, mostly rhetorical, shoring up of deterrence—will not suffice. Russia cannot be let to dwell on its internal decline and realize sooner or later its international ineptitude. Verbal rebukes and restatements of NATO’s Article 5 will not turn a geopolitical nihilist into a constructive partner or even into a rival with whom we can reach a negotiated settlement. Nothing in Putin’s statements and behavior suggests that Russia can be persuaded to accept the existing international rules and norms of behavior and to cease the belligerent posture it has adopted. On the contrary, this is a threat that is impossible to mitigate without a resolute and forceful policy that will physically stop and reverse the advance of Russian forces in Ukraine and be ready to do so in the future elsewhere. This can only be achieved now by arming Ukraine. The geopolitical nihilism of today’s Russia will not be persuaded or negotiated away or simply waited out. It has to be defeated.

Groups Behind Closing Gitmo

Posted on by

A few years ago, Marc Thiessen wrote a book titled Courting Disaster. The spirit of the book delivers proven evidence that interrogation of enemy combatants kept America safe and offered up more actionable knowledge in the terror networks globally. Thiessen provides names, organizations and lobby groups in full opposition of black sites and Guantanamo. One needs to understand all the moving parts before they offer criticism of decisions by the Bush administration.

So as Barack Obama entered the White House, his first move was to close Gitmo while almost 7 years later there are 140 detainees still there. The question is why? The team known to be the go-to operation to close Gitmo has also proven some success in getting terrorists released from the ‘other’ Gitmo, the prison(s) in Colorado that actually has more detainees than Gitmo.

These wars across the globe against terror networks involves hundreds of thousands of fighters, hence in begs the question, who no capture and interrogate? Is killing the via drone since all ground hostilities have been terminated effective? Terror cells have grown exponentially including al Nusra, Daesh, AQAP, Boko Harem and more. Their operating territory has expanded in the last 6 years as well.

Here are some facts that cannot be disputed.

If you knew who was behind “Close-Gitmo” push, you’d be shocked

On Saturday, January 11, a coalition of “Close-Gitmo” forces is expected to march on Washington to commemorate the 12th anniversary of detention and interrogation operations.

Though the march from the White House to the National Museum of American History is purportedly about advancing “human rights” and “stopping torture,” a closer look at the key participants reveals a more troubling, some might say hidden, agenda.

If more Americans knew who is behind this campaign, there would be nationwide outrage.

While everyone is for “human rights” and “stopping torture,” Americans should not be fooled by these false flags meant to damage U.S. power and prestige.

Dig a little deeper into who has been driving the anti-Gitmo disinformation campaign these past 12 years, and you will discover an international, fervently anti-American, far-left coalition attacking the nation through a savvy propaganda effort.

Just dig a little deeper into who has been driving the anti-Gitmo disinformation campaign these past 12 years, and we discover an international, fervently anti-American, far-left coalition attacking the nation through a savvy propaganda effort.

This includes those linked to Al Qaeda financiers, communist groups, anarchist movements – backed by sympathetic press and politicians.

Regrettably, it’s a coalition President Barack Obama has sided with in his priority to release as many Al Qaeda, Taliban and “affiliates” as humanly possible.

Let’s take a look at the key players:

Amnesty International. Along with Human Rights Watch, Amnesty International was revealed as partner organization to Al Karama, a human rights non-profit run by Qatar’s Abdul Rahman Omeir Al-Naimi.

Al-Naimi was recently exposed by the U.S. Treasury Department in December 2013 as a long-term major financier of Al Qaeda.  According to an expose by Eli Lake in the Daily Beast, “Terrorists for Human Rights,” the Treasury Department’s designation said he, “oversaw the transfer of hundreds of thousands of dollars to Al Qaeda and its affiliates in Iraq, Somalia, Syria, and Yemen over the last 11 years.”

Center for Constitutional Rights. CCR was founded by far-left civil rights lawyer William Kunstler in the 1960s, a man who told the press his goal was to “destroy society from within.”

Kunstler represented the “Chicago 7,” a group that was charged with conspiracy to start a riot at the 1968 Democratic National Convention, and later he defended domestic militant/terror groups like the Black Panthers, Weather Underground, and Attica Prison Rioters.

CCR is currently funded by groups like the “1848 Foundation,” named after the year Karl Marx’s Communist Manifesto was published and revolutions swept through Europe.

Kunstler would be proud of CCR’s signature work over the past decade in coordinating the “Gitmo Bar Association” of 500 lawyers representing detainees.

Reprieve. A British organization led by blogger Andy Worthington, it pressures release of British citizens and residents.  Ethiopia’s Binyam Mohammed, a British resident, allegedly plotted to blow up high rise apartment buildings in the U.S. with a dirty bomb; Ruhal Ahmed, Asif Iqbal, and Shafiq Rasul, a.k.a., the Tipton Three, ethnic Pakistanis went to fight for jihad in Afghanistan but were caught by the Northern Alliance in Nov. 2001; and Shaker Aamer, a Saudi citizen with British residence, alleged to have led a unit of Al Qaeda fighters in Tora Bora, and reportedly a former close associate of Usama Bin Laden, shoe-bomber Richard Reid and 20th hijacker, Zacharias Moussaoui.

World Can’t Wait. This organization is believed to have been founded by members and supporters of the Revolutionary Communist Party & Anarchists. It organized at least 24,000 supporters during Iraq War, including actor Sean Penn and anti-war activist Cindy Sheehan.

Jason Leopold. Leopold is a former Los Angeles Times investigative journalist with a checkered past.  According to Fox News media critic Howard Kurtz, writing in a 2005 Washington Post feature, “Leopold says he engaged in ‘lying, cheating and backstabbing,’ is a former cocaine addict, served time for grand larceny, repeatedly tried to kill himself and has battled mental illness his whole life.”

So these are the folks Mr. Obama and Democrats in Congress are trying to appease by releasing more Gitmo detainees?

Nearly half the current population of 155 may be freed under the National Defense Authorization Act of 2014.

It would be comical if the stakes weren’t so high.

We’ve already seen Al Qaeda re-take Fallujah, site of the Iraq War’s bloodiest battles, just two years after Mr. Obama’s ordered withdrawal.  And Al Qaeda and/or “affiliates” killed our Ambassador and three other Americans in Benghazi.

Speaking of which, a Fox News report this week by Catherine Herridge reveals that the State Dept. will finally designate ex-Gitmo detainee, Libya’s Sufian Bin Qumu, and his group, Ansar Al-Sharia as “foreign terrorist entities” for their roles in the Benghazi Consulate attack.

Does Mr. Obama really think it’s in America’s security interests to free more terrorists from Gitmo, nearly one-third of whom have already returned to terrorism?

The silent majority must take this opportunity to speak up. Preventing the next Al Qaeda attack may depend on it.

J.D. Gordon is a retired Navy Commander who served as a Pentagon spokesman in the Office of the Secretary of Defense from 2005-09. He serves as senior adviser to several Washington-based think tanks.

***

Military tribunals have proved excruciatingly slow and imprisonment at Guantánamo hugely costly — $800,000 per inmate a year, compared with $25,000 in federal prison.

The criminal justice system, meanwhile, has absorbed the surge of terrorism cases since 2001 without calamity, and without the international criticism that Guantánamo has attracted for holding prisoners without trial. A decade after the Sept. 11 attacks, an examination of how the prisons have handled the challenge of extremist violence reveals some striking facts:

Lengthy sentences. Terrorists who plotted to massacre Americans are likely to die in prison. Faisal Shahzad, who tried to set off a car bomb in Times Square in 2010, is serving a sentence of life without parole at the Supermax, as are Zacarias Moussaoui, a Qaeda operative arrested in 2001, and Mr. Reid, the shoe bomber, among others. But many inmates whose conduct fell far short of outright terrorism are serving sentences of a decade or more, the result of a calculated prevention strategy to sideline radicals well before they could initiate deadly plots.

¶ Special units. Since 2006, the Bureau of Prisons has moved many of those convicted in terrorism cases to two special units that severely restrict visits and phone calls. But in creating what are Muslim-dominated units, prison officials have inadvertently fostered a sense of solidarity and defiance, and set off a long-running legal dispute over limits on group prayer. Officials have warned in court filings about the danger of radicalization, but the Bureau of Prisons has nothing comparable to the deradicalization programs instituted in many countries.

¶ Quiet releases. More than 300 prisoners have completed their sentences and been freed since 2001. Their convictions involved not outright violence but “material support” for a terrorist group; financial or document fraud; weapons violations; and a range of other crimes. About half are foreign citizens and were deported; the Americans have blended into communities around the country, refusing news media interviews and avoiding attention.

About 40 percent of terrorism cases since the Sept. 11 attacks have relied on informants, by the count of the Center on Law and Security at New York University, which Ms. Greenberg headed until earlier this year. In such cases, the F.B.I. has trolled for radicals and then tested whether they were willing to plot mayhem — again, a pre-emptive strategy intended to ferret out potential terrorists. But in some cases prosecutors have been accused of overreaching.

Do we really want to close Gitmo? Do we really want to keep these terrorists in prisons around the homeland? They are quietly being released by the Justice Department while being radicalized still during their prison terms. Do you know where they are now?

Fading List to Replace Hagel

Posted on by

SecDef Chuck Hagel has an on camera reputation of being slow and lagging in control. But more that comes out since his termination that tells us otherwise. The position of Secretary of Defense is the least sought position in the Obama administration due in part to two wars, the Guantanamo detainee release program and most of all the shrinking budget for defense.

Politico explains why no one wants the job. Then there is the matter of releasing more detainees from Gitmo which is under the full authority of the Pentagon, and Hagel fought back hard under pressure from the White House to apply his signature for releases. More detainees are slated for release, trade or transfer.

Deputy Defense Secretary Work flew to Afghanistan to spend Thanksgiving with the troops and for meetings on the matter of recent Taliban attacks on ISAF. It was only yesterday that the Taliban attacked a NATO base. Matters in Afghanistan are sliding south and the Pentagon officials went to the White House demanding immediate action to prevent a rise in the Taliban and al Qaeda. Simply put a military leadership revolt occurred a few weeks ago such that Obama finally got the message and secretly approved an extended operation in Afghanistan including more aggressive operations.

Sequestration is the biggest threat to protecting national security at home and globally. If sequestration continues, Hagel said last week when he presented his “Strategic Choices and Management Review,” DOD might try to end civilian pensions for retired military troops who work for DOD, or cut unemployment payments.

Carter said changes in pensions, health care and other benefits would likely be grandfathered. Still, a $100 million dollar cut would do damage to DOD and its personnel that officials currently can’t calculate.

The Daesh containment strategy which is to manage the terror group to Iraq and Syria has already failed as Islamic State has moved into North Africa and Libya has fallen.

Little support and attention has been paid to NATO, Poland, Ukraine and the Baltic States except to throw money at building defenses. President Barack Obama, Secretary of State John Kerry and Defense Secretary Chuck Hagel pledged to defend the continent and announced $1 billion in additional military measures aimed at deterring Russia. They also pleaded with NATO members to use their bully pulpits to convince their governments  to boost defense spending. U.S. leaders promised that America would fulfill its obligations to protect Europe and urged other NATO members to do to the same. Obama cited the U.S. Article 5 commitment to Poland – referring to the portion of the NATO charter which states that a threat against one nation is a threat against all.  “As president, I’ve made sure that the United States is upholding that commitment.”

So who will approve staying on the list to replace SefDef Hagel? There are rumors that include Colin Powel and Tom Donilon, beyond that others are being considered. None of them frankly will have the military in their best interest and national security will likely continue to suffer.

Obama proposed his Pentagon budget for 2015 and it is less than 2014 while the global threat matrix increases. Another matter of great importance is keeping pace of the higher quality, readiness and assets of adversaries of the United States, those countries like China and Russia who are both jointly cooperating in military advancements.

Putin, Oligarchs, Wealth and More

Posted on by

While there is so much going on globally, in recent weeks very little has been said about Russia, Putin and his aggressions.

Creating global wealth undercover to the masses does not go without recognition to many of the worldwide elite class and Russian collusion is no exception. You may very well know the names and locations. The list is fascinating.

 

The Russian Foreign Ministry has taken a jab at its U.S. counterpart by uploading a picture of U.S. Secretary of State John Kerry and his predecessors “digging out trenches of the Cold War.”

The loaded comment was made alongside a picture of the politicians holding spades at a construction site, taken last Thursday at a ceremony for a future museum at the U.S. Diplomacy Center in Washington.

“Let’s hope that this is not the mobilization of veterans on digging out trenches of the Cold War,” the Russian Foreign Ministry said Monday on its Facebook account.

Also pictured in the photograph are former state secretaries Hillary Clinton, Colin Powell, Henry Kissinger, James Baker and Madeleine Albright.

Then comes Ukraine and why it has been rather easy for Putin’s aggressions going unchallenged by the West.

SPECIAL REPORT-Putin’s allies channelled billions to Ukraine oligarch

By Stephen Grey, Tom Bergin, Sevgil Musaieva and Roman Anin

MOSCOW/KIEV Nov 26 (Reuters) – In Russia, powerful friends helped him make a fortune. In the United States, officials want him extradited and put behind bars. In Austria, where he is currently free on bail of $155 million, authorities have yet to decide what to do with him.

He is Dmitry Firtash, a former fireman and soldier. In little more than a decade, the Ukrainian went from obscurity to wealth and renown, largely by buying gas from Russia and selling it in his home country. His success was built on remarkable sweetheart deals brokered by associates of Russian leader Vladimir Putin, at immense cost to Russian taxpayers, a Reuters investigation shows.

Russian government records reviewed for this article reveal for the first time the terms of recent deals between Firtash and Russia’s Gazprom, a giant gas company majority owned by the state.

According to Russian customs documents detailing the trades, Gazprom sold more than 20 billion cubic metres of gas well below market prices to Firtash over the past four years – about four times more than the Russian government has publicly acknowledged. The price Firtash paid was so low, Reuters calculates, that companies he controlled made more than $3 billion on the arrangement.

Over the same time period, other documents show, bankers close to Putin granted Firtash credit lines of up to $11 billion. That credit helped Firtash, who backed pro-Russian Viktor Yanukovich’s successful 2010 bid to become Ukraine’s president, to buy a dominant position in the country’s chemical and fertiliser industry and expand his influence.

The Firtash story is more than one man’s grab for riches. It demonstrates how Putin uses Russian state assets to create streams of cash for political allies, and how he exported this model to Ukraine in an attempt to dominate his neighbour, which he sees as vital to Russia’s strategic interests. With the help of Firtash, Yanukovich won power and went on to rule Ukraine for four years. The relationship had great geopolitical value for Putin: Yanukovich ended up steering the nation of more than 44 million away from the West’s orbit and towards Moscow’s until he was overthrown in February.

“Firtash has always been an intermediary,” said Viktor Chumak, chairman of the anti-corruption committee in the previous Ukrainian parliament. “He is a political person representing Russia’s interests in Ukraine.”

A spokesman for Putin rejected claims that Firtash acted on behalf of Russia. “Firtash is an independent businessman and he pursues his own interests, I don’t believe he represents anyone else’s interests,” said Dmitry Peskov.

The findings are the latest in a Reuters examination of how elites favoured by the Kremlin profit from the state in the Putin era. In the wild years after the fall of the Soviet Union, state assets were seized or bought cheaply by the well connected. Today, resources and cash flows from public enterprises are diverted to private individuals with links to Putin, whether in Russia or abroad.

Putin’s system of comrade capitalism has had huge costs for the ordinary people of Russia: By granting special cheap deals to Firtash, Gazprom missed out on about $2 billion in revenue it could have made by selling that gas at market prices, according to European gas price data collected by Reuters. Four industry analysts said that Gazprom could have sold the gas at substantially higher prices to other customers in Europe.

At the same time, the citizens of both Russia and Ukraine have seen unelected oligarchs wield political influence.

Firtash, whose main company, Group DF, describes him as one of Ukraine’s leading entrepreneurs and philanthropists, was arrested in Austria on March 12 at the request of U.S. authorities. The Americans accuse him of bribery over a business deal in India unrelated to events examined in this article. Firtash denies those allegations and is currently free on bail.

Firtash imported the cheap Russian gas through a Cypriot company of which he is sole director, and a Swiss one set up by Group DF. He and Group DF declined to answer questions about those two companies and their gas dealings. A spokesman said Firtash was not available to discuss his business operations, and that Group DF did not wish to comment on “any of the questions you put forth.”

The Kremlin spokesman Peskov said Putin has met Firtash but that they are not close acquaintances. He said Russia supplied gas at “lower prices” to Ukraine because Yanukovich had asked for it and Russia wanted to help Ukraine’s petrochemical industry. Peskov said the deals were arranged through Firtash because “the Ukrainian government asked for it to be that way.”

Yanukovich, who fled to Russia in February after mass demonstrations against his government, could not be reached for comment.

THE MIDDLEMAN

From the moment he first became Russia’s president, Putin moved to take control of his country’s most valuable resource: natural gas. After assuming power in 2000, he replaced the management of Gazprom, put trusted allies in charge, and ensured the Russian state controlled more than half the shares.

The corporate behemoth now supplies about a third of Europe’s gas, generating vital revenue for Russia and giving Putin a powerful economic lever. “Gazprom is very much a tool of Russian foreign policy,” says Rem Korteweg, senior research fellow at the Centre for European Reform. Every major deal that Gazprom signs is approved by Putin, people in the energy industry say.

Putin’s spokesman rejected such assertions: Gazprom, he said, “is a commercial, public company, which has international shareholders. It acts in the interests of its shareholders, which also include the Russian state.”

In normal times, Gazprom’s second biggest customer in Europe is Ukraine; Russian gas was piped directly across the border between the two countries until Russia cut off supplies earlier this year.

In the 2000s, though, Gazprom decided to sell gas not directly to Ukraine’s state gas company Naftogaz, but to intermediaries – in particular Firtash, an international gas dealer who had risen from humble origins.

Firtash grew up in west Ukraine, where his father worked in education and his mother in a sugar factory, according to an account Firtash gave during a meeting with the U.S. ambassador in Kiev in 2008. Both his parents disdained communism and lacked the contacts needed to get their son into university, he said.

He joined the army in 1986, then trained to be a fireman. When the Soviet Union collapsed, leading to Ukraine’s independence in 1991, Firtash found himself having to make a living in an uncertain world, according to his account to the ambassador. With his first wife, he set up a business in west Ukraine shipping canned goods to Uzbekistan, according to local media reports researched by the U.S. embassy.

A U.S. diplomatic cable, which summarised Firtash’s discussion with the ambassador, drily noted: “Due to his commodities business, (Firtash) became acquainted with several powerful business figures from the former Soviet Union.”

According to the cable, Firtash told the U.S. ambassador he had been forced to deal with suspected criminals because at that time it was impossible to do business in Ukraine cleanly. He said he had needed and received permission from a man named Semion Mogilevich to establish various businesses. Mogilevich, an alleged boss of organised crime in eastern Europe, is wanted by the U.S. Federal Bureau of Investigation for an alleged multi-million-dollar fraud in the 1990s involving a company headquartered in the United States. He was indicted in 2003, and described by the FBI in 2009 as having an “extensive international criminal network.”

Firtash has repeatedly denied having any close relationship with Mogilevich. Mogilevich could not be contacted for comment. He has previously denied any wrongdoing or any connection to the gas trade in Ukraine.

By 2002, a company called Eural Trans Gas, registered in Hungary, was transporting gas from Turkmenistan through Russia to Ukraine. Its ownership was unclear, but Firtash represented it. In July 2004, a new company, RosUkrEnergo, became the intermediary for gas deals between Russia and Ukraine. The owners of RUE were unknown at first, but it later emerged that nearly all of the company was owned by Firtash and Gazprom.

RUE bought gas cheaply and sold it on at a higher price in Ukraine and Europe. This arrangement guaranteed profits for RUE and was hugely controversial among Ukrainians who saw RUE as an unnecessary intermediary. Another U.S. diplomatic cable, from March 2009, described RUE as a “cash cow” and a “serious source of … political patronage.” In a website posting, RUE said that in 2007 it sold nearly $10 billion worth of gas and had net income of $795 million.

After Yulia Tymoshenko, herself a former gas trader, became prime minister of Ukraine in 2008, she reacted to public anger about the gas trade and moved to cut Firtash and RUE out of the business. She struck her own gas deal with Putin in 2009.

By that time, Firtash was rich. In the country’s 2010 presidential election, Firtash, by his own admission, aided the pro-Russian Yanukovich. A U.S. diplomatic cable described Firtash as a “major financial backer” of Yanukovich.

“Firtash supported Yanukovich in various ways,” said Vadym Karasiov, an aide to Viktor Yuschenko, Ukraine’s president from 2005 to 2010, in an interview. Karasiov said the mogul used his influence in the media to promote Yanukovich. In April 2010, in the aftermath of the election, Karasiov told the Kiev Post: “Without Dmitry Firtash there wouldn’t have been a (Yanukovich) victory.”

With Yanukovich president, Tymoshenko stepped down as prime minister. Business associates of Firtash were appointed to influential positions in the new administration. He had allies in the corridors of power, and ambitious plans to expand his business empire and get back into the gas trade. His friends in Russia were happy to help him.

THE LOANS

Tucked away in Nicosia, Cyprus, a bundle of tattered papers wrapped in string records Russian credit agreements made to Firtash companies. The documents, reviewed by Reuters, detail a series of financing deals worth billions of dollars.

The deals were arranged by a Russian lender called Gazprombank. Despite its name, the bank is not controlled by Gazprom, which holds only a minority stake. It is a separate business, overseen by people linked to Putin. They include Yuri Kovalchuk, a banker who until March 2014 controlled an investment firm that manages a majority stake in Gazprombank.

In a statement, Gazprombank said: “We do not receive any instructions from the Kremlin … The strategy of the bank is developed by its management board and approved by the board of directors. No other influence is possible.”

Asked whether Putin had any role in issuing the loans to Firtash companies, Kremlin spokesman Peskov said: “Putin, as president, does not have anything to do with this.”

Gazprombank began lending money to Firtash companies soon after Yanukovich took power in Ukraine in February 2010.

In June that year, Firtash established a company called Ostchem Investments in Cyprus. A month later, Gazprombank registered a credit line to the company of $815 million, according to the Cyprus documents. In September, Ostchem Investments bought a 90 percent stake in the Stirol fertiliser plant in Ukraine. It was perfect synergy: Firtash knew the gas business, and natural gas is a major feedstock for making fertiliser.

Further loans and deals with Firtash companies followed.

Reuters found that by March 2011, Gazprombank had registered credit lines of up to $11.15 billion to Firtash companies. The companies may not have borrowed that whole sum, but the documents indicate that loans up to that amount were available, according to Cyprus lawyers.

In the space of seven months in 2011 alone, Firtash acquired control of two more fertiliser plants in Ukraine, Severodonetsk Azot and Rivne Azot. He also bought the Nika Tera sea port, through which fertiliser and other dry bulk goods are shipped. He acquired a lender called Nadra Bank and invested in the titanium processing industry.

Such was his expansion that Firtash became the fifth largest fertiliser producer in Europe. Being a large employer brought not just potential profits but also political clout, he boasted. “We have relations with MPs,” Firtash told Die Presse in Austria in May. “We are big employers in the regions that they represent. Entire cities live on our factories. Election candidates seek our support.”

When asked in 2011 where the money came from to pay for his acquisitions, Firtash was coy. At a press conference called to announce his purchase of the Severdonetsk plant, he declined to name his major lenders. “It’s a secret,” he told Ukrainian journalists.

But a Gazprombank manager told Reuters that the Russian bank had led a consortium of lenders which in 2011 agreed to lend about $7 billion to Firtash. The official said Gazprombank itself lent Firtash $2.2 billion, and that Firtash still owed the bank $2.08 billion. The official declined to name other lenders in the consortium.

A $2.2 billion loan was a big commitment for Gazprombank: It amounted to nearly a quarter of the bank’s total capital, the maximum loan allowed by Russian banking rules for any single client or group. Based on regulatory filings, the loan facility made Firtash the biggest single borrower from Gazprombank.

Reuters was unable to establish exactly how much in total the Gazprombank consortium lent to Firtash companies.

In a statement, Gazprombank said that “the aggregate amount of loans disbursed to Ostchem Group” was “several times lower” than $11 billion. “And all capital requirements and limitations of the Central Bank of Russia in respect of loans granted have always been complied with by Gazprombank, including loans to Ostchem Group,” the statement said.

The bank declined to give any further details, saying it had to protect client confidentiality. The central bank had no comment.

GAS PROFITS

Firtash now had money, political connections and businesses that relied on large supplies of gas. What he needed next was fuel.

In January 2011, Firtash signed an unpublished agreement, seen by Reuters, with Gazprom to buy gas through a company called Ostchem Holding in Cyprus, where he is the sole director listed.

The gas deal was later extended to include sales to Ostchem Gas Trading AG in Switzerland. It was also agreed by Naftogaz, Ukraine’s state-owned gas firm, where Yanukovich had installed new senior management. Firtash needed Naftogaz’s sign-off because it controlled pipelines delivering gas and, until that point, had an exclusive deal to import gas from Gazprom.

Naftogaz’s decision to agree to the deal was an odd one. Not only did it mean Naftogaz would surrender its monopoly on Russian gas imports, but the deal could also potentially damage the state firm. Naftogaz had previously agreed with Gazprom to pay for a set amount of gas whether it could sell it in Ukraine or not. Firtash’s deal could leave the Ukrainian state firm buying gas it would struggle to sell.

Firtash’s return to importing gas became public knowledge after Yanukovich’s election victory. But the price he paid Moscow, and how much cheap gas he bought, remained unclear. An Ostchem spokesman told Reuters the price was “confidential information.”

Russian customs records seen by Reuters show that in 2012, Moscow sold the gas to Firtash for $230 per 1,000 cubic metres (the standard unit used in gas sales). In 2013 the average cost was $267 per unit. Those prices were at least one-third less than those paid by Ukraine’s Naftogaz.

Ukrainian customs documents and corporate filings show that Firtash’s Ostchem companies in Cyprus and Switzerland resold the gas to his chemical plants in Ukraine for $430 per unit. The prices and volumes suggest that the two offshore Ostchem companies made an operating profit of approximately $3.7 billion in two years.

Naftogaz’s current management is highly critical of the way in which Gazprom favoured Firtash’s companies. Aliona Osmolovska, chief of press relations, said: “These special deals for Ostchem were not in the interest of Ukraine.”

The real loser in the deal, though, was Gazprom. The arrangement, which Putin described during a press conference as having been made with the “input of the Russian leadership,” meant Russia sold its gas to Firtash for at least $100 per unit less than it could have made in Western Europe, according to Emily Stromquist, head of Russian energy analysis at Eurasia Group, a political risk research firm.

In addition, the profits from the subsequent resale of the gas were all reaped offshore by companies that did not benefit the Russian taxpayer. Those profits in 2012 and 2013 would have meant an additional $2 billion for Gazprom, whose ultimate majority owners are Russia’s citizens.

Gazprom declined to comment on its sales to Firtash’s companies.

Putin’s spokesman Peskov said Naftogaz agreed to Firtash receiving gas at low prices because the deal was intended to help Ukraine’s petrochemical industry. Asked why the gas was sold to companies in Cyprus and Switzerland, Peskov said: “Putin doesn’t need to approve this action. These operations are technical and were made by Gazprom according to the structures which are always used by its Ukrainian partners.”

Neither of the two Firtash companies that bought gas from Russia publishes accounts. Firtash declined to comment on the firms or their results.

UNEASY STANDOFF

The new government in Ukraine alleges that Yanukovich had allowed corruption to flourish and stolen millions of dollars. In the longer term, the new government says it wants to forge closer ties with the European Union and reduce its dependence on Russian gas.

In June, Moscow cut off supplies of gas to Kiev, claiming that it was owed billions of dollars by Ukraine’s state-owned Naftogaz. Late last month, the two countries struck a deal allowing supplies to resume, but the agreement runs only until March. Firtash retains large stocks of gas but has not imported new supplies since Yanukovich was ousted.

Firtash remains in Austria awaiting the outcome of extradition hearings. According to a U.S. indictment unsealed in April, he is suspected of a scheme to bribe Indian government officials to procure titanium. Two U.S. government officials said the American investigation into Firtash is continuing; they declined to give further details.

The Ukrainian oligarch has said the allegations are “without foundation” and has accused Washington of acting for “purely political reasons.” He has hired an all-star legal defence team. It includes Lanny Davis, who helped President Bill Clinton weather a series of White House scandals in the 1990s.

In his time of trouble Firtash has not been deserted by the Russians. Since his arrest he has received another loan in order to pay his bail: $155 million from Vasily Anisimov, the billionaire who heads the Russian Judo Federation, the governing body in Russia of Putin’s beloved sport.

“I have known Mr. Firtash for a number of years, though he is neither my friend nor business partner,” Anisimov told Reuters in an email. “I confirm that I loaned 125 million euros to him. This was a purely business transaction.” (Additional reporting by Michele Kambas in Cyprus, Elizabeth Piper and Jason Bush in Moscow, Oleksandr Akymenko and Pavel Polityuk in Kiev, Jack Stubbs in London, Warren Strobel in Washington and Michele Martin in Berlin; Edited by Richard Woods and Michael Williams)

 

U.S. Constant State of Emergency

Posted on by

From the White House on National Security:

Progress

Guiding Principles

The President’s highest priority is to keep the American people safe. He is committed to ensuring the United States is true to our values and ideals while also protecting the American people. The President is committed to securing the homeland against 21st century threats by preventing terrorist attacks and other threats against our homeland, preparing and planning for emergencies, and investing in strong response and recovery capabilities. We will help ensure that the Federal Government works with states and local governments, and the private sector as close partners in a national approach to prevention, mitigation, and response.

The National Security Strategy, released May 27, 2010, lays out a strategic approach for advancing American interests, including the security of the American people, a growing U.S. economy, support for our values, and an international order that can address 21st century challenges.

But the last time a National Security strategy was addressed in total was 2010.

Meanwhile, see below.

The United States is in a state of emergency – 30 of them, in fact

By Christopher Ingraham

The United States has been in an uninterrupted state of national emergency since 1979. Here in 2014, we’re not dealing with just one emergency – there are currently 30 of them in effect.

That’s according to data on presidential declarations of emergency compiled by Gregory Korte of USA Today. “Those emergencies, declared by the president by proclamation or executive order, give the president extraordinary powers — to seize property, call up the National Guard and hire and fire military officers at will,” Korte writes.

President Obama has declared nine so far, eight of which are currently in effect — they primarily deal with preventing business with people or organizations involved in global conflicts or the drug trade. Obama has also renewed many of his predecessors’ orders — just last week he renewed our ongoing state of emergency with respect to Iran for its 36th straight year.

Ronald Reagan and George H.W. Bush took a light touch on declarations of emergency – they invoked only a handful, none of which remain in effect. But Bill Clinton proclaimed 16 emergencies and George W. Bush declared 14, 13 of which are still in effect today.

Blocking business transactions with various interests may not seem like national emergency material. But the language underlying these declarations is often nearly apocalyptic. Obama’s recent continuation of a Bush-era emergency relating to “the property of certain persons contributing to the conflict” in the Democratic Republic of the Congo states that “this situation continues to pose an unusual and extraordinary threat to the foreign policy of the United States.”

The Obama administration also maintains that “the actions and policies of certain members of the Government of Belarus and other persons continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States.”

You may wonder why the president needs to declare a state of emergency to deal with what appears to be fairly routine instances of corruption in far-flung corners of the world. Korte notes that Congress provides little oversight on emergency declarations, even through it’s mandated to do so by law. In an era when tussles over executive power are a near-daily occurrence, this is a strange incongruity.

“What the National Emergencies Act does is like a toggle switch, and when the president flips it, he gets new powers. It’s like a magic wand. and there are very few constraints about how he turns it on,” said Kim Lane Scheppele, a Princeton professor interviewed by Korte.

In the absence of a crisis, there’s little compelling reason for a government to adopt a permanent crisis stance. The danger is that a public desensitized to claims to extraordinary circumstances could be more likely to allow excesses of authority performed in the name of those circumstances.

As Korte writes, “A post-9/11 state of national emergency declared by President George W. Bush — and renewed six times by President Obama — forms the legal basis for much of the war on terror” — a war which has so far seen a rise in terrorism around the globe.