Vladimir Putin reacted swiftly to U.S. Secretary of State Colin Powell’s criticism of Russian democracy following the Russian president’s reelection on March 14.  The exchange indicated increasing tensions in U.S.-Russian relations, tensions that may have as much to do with the Bush clan’s business interests as they do with the geopolitical interests of the two countries.

Following Putin’s reelection (he won over 71 percent of the vote), Powell repeated criticisms of the Russian political system similar to those he made last January following the landslide electoral victory of the Kremlin-backed United Russia party in the December parliamentary elections.  Powell commented that the United States “was concerned about a level of authoritarianism creeping back into [Russian society].”  He told ABC TV that “We don’t hesitate to point out to President Putin that he should use the popularity he has to broaden the political dialogue and not use his popularity to throttle political dialogue and openness in the society.”  Powell followed up with criticism of the lack of media access allowed to Putin’s rivals: “Russians have to understand that to have full democracy of the kind that the international community will recognize, you’ve got to let candidates have all access to the media that the president has.”

Dmitry Kozak, Putin’s campaign chief, countered Powell’s criticism by making reference to the controversial U.S. presidential election in 2000.  In an official statement released on March 14, following the announcement of the preliminary results of the Russian election, Kozak stated that “Russian voters already have significant experience in democratic elections and don’t need suggestions from anyone, even less so from representatives of a country that has clear flaws in its election procedures.”  The next day, Putin echoed Kozak, telling reporters at a Moscow press conference that Powell was quick to “see the splinter in another’s eye and ignore the log in one’s own.”

Powell’s comments regarding the Kremlin’s (successful) efforts to manipulate the election results were not baseless.  Putin’s staff made heavy-handed use of its “administrative resources” to undercut rival candidates and is rumored to have threatened regional leaders with dire consequences if the presidential administration’s “seventy-seventy” formula was not met: According to Russian Kremlinologists, Putin’s staff wanted a 70-percent voter turnout and at least a 70-percent pro-Putin vote in the elections.  When the vote tallies were made public, Putin enjoyed Soviet-style levels of electoral support in many regions, especially in those widely known for the dictatorial grip of the local political boss.  In areas where the vote or turnout fell short of the seventy-seventy plan (overall turnout was about 64 percent), rumors began circulating immediately of the Kremlin’s plans to punish local leaders, who, according to Russian sources, used both coercive methods (threatening the jobs of “budget workers,” such as teachers) and questionable inducements (vouchers for utilities payments, free drinks, cheap bread) to get the vote out for Putin.

Nevertheless, Powell’s criticisms and the sharp comments made by figures associated with the Bush White House (Richard Perle’s call for Russia to be kicked out of the G-8, for instance) indicate a ratcheting up of tensions between Washington and Moscow that dates back to the struggle in the United Nations over resolutions regarding the war in Iraq.  Tensions increased once again following the arrest of Russian oil oligarch Mikhail Khodorkovsky (for tax evasion) last October.  Since then, the United States has made a series of moves that have added to the hostilities: Washington has expanded its influence in the Caucasus and Central Asia; continued planning for NATO expansion and the shifting of U.S. European bases closer to Russia’s borders; and, more recently, aided authorities in Qatar in an investigation of the assassination of Chechen insurgent leader Zelmikhan Yandarbiyev in the Qatari capital in February, an investigation that led to the arrest of three alleged Russian agents (a strange turn of events, since Washington has not ruled out the same tactic in its own “War on Terror”).

Apart from Moscow’s protest of Washington’s apparent determination to expand its influence over an oil-rich “arc of instability” that stretches from the Middle East to Central Asia, which includes Russia’s traditional sphere of influence, there may be other factors triggering White House irritation with the Kremlin: the Bush family’s and its associates’ business interests, which include business relationships with Russian magnates (“oligarchs”) who have used insider connections and dubious means to amass great wealth.

Journalist Andrew Meier’s article “The Oligarchs’ Ball” in the April issue of Harper’s claimed that the Bush administration’s alternately hot and cold relations with the Kremlin are related to business relationships between Bush associates and Russian oligarchs, including Khodorkovsky.  The Bush White House’s connections with Khodorkovsky were made through the Carlyle Group, an equity fund that reportedly manages more than $17 billion and has investments in 13 countries on three continents.  James Baker, who served as secretary of state under George H.W. Bush, is among the Bush clan’s associates at Carlyle, serving as the group’s “senior counselor,” a position the elder Bush himself once held.  Khodorkovsky reportedly met with ex-president Bush twice following the September 11 attacks, announced his intention to invest $50 million in the Carlyle Group, and was appointed to the group’s energy board.  Khodorkovsky also, according to Meier, subsequently met with Vice President Dick Cheney, whose ties to the U.S. oil industry are well known.  Simultaneously, the Carlyle Group reportedly returned investments made by Shafig bin Laden, Osama’s brother, and either returned or saw withdrawn other monies invested by Arabs, since their association with Carlyle made for bad press.  An unnamed Moscow source told Meier that “[The Carlyle Group] need[s] the oligarchs’ money more than ever . . . they have been replacing the Bin Ladins with the Potanins and the Khodorkovskys.”

The “Potanins” is a reference to Vladimir Potanin, an oligarch favored by the Kremlin who controls the Norilsk Nikel metallurgy group.  According to Meier, the Bush administration apparently pulled bureaucratic strings to help Potanin acquire Montana’s Stillwater Mining Company, the only U.S. producer of palladium, a metal used in producing catalytic converters.  The sale, as reported by Meier, was engineered by James Baker (hired by Norilsk to arrange the deal); approved by Bush and Putin at a June 2003 meeting in St. Petersburg, Russia; and sealed when Norilsk appointed Craig Fuller, a former chief of staff for the elder Bush, to its board of directors.  The Americans did not receive the original asking price, however: According to Meier, Norilsk, which had agreed to pay most of the price in metals, may have dumped metals, including palladium, on world markets, waited for the palladium price to crash (which it did in the summer of 2003, decreasing the value of the American mining concern), then closed the deal on Stillwater for nearly $100 million less than the original asking price.  Meanwhile, as one observer wrote, a Russian oligarch now controls “half of the world’s supply of palladium” and has “a foot” in “America’s heartland,” a place in which the gangsters-cum-businessmen have longed to be for some time.  At the same time, Baker was likely richly rewarded for his role in the affair, and the Bush clan’s Fuller was awarded a spot on Norilsk Nikel’s board.

Thus, the Bush administration found itself torn between its irritation over Khodorkovsky’s arrest and the possibility of profitable (for Bush clan associates, at least) business deals with Russian oligarchs.  President Bush himself and Vice President Cheney have left the expression of Washington’s occasional displeasure with Moscow to proxies.  Bush and Cheney have not joined in either Powell’s criticisms of Russia or the neoconservative clique’s outright Russia-bashing.  Perle has been the most fiery of the neocon, White House-connected critics of Russia: Following the arrests of Khodorkovsky and his partner, Platon Lebedev (a former “advisor” to the Carlyle Group), Perle, speaking at the Carnegie Moscow Center, called the arrests signs of an “arbitrary, capricious, and vindictive campaign against a private company,” which is likely correct.  In the interest of full disclosure, however, perhaps Perle should have mentioned the ties to Carlyle of both Khodorkovsky and Lebedev, as well as the Yukos connection to Washington’s Carnegie Endowment for International Peace, with which the Moscow Center is affiliated.  Yukos, for instance, reportedly plans a three-year grant of $1.5 million to Carnegie.  Carnegie has reportedly already received the first installment of $500,000.

Another anti-Russian blow came from Bruce Jackson, whom Meier identified as a “protégé” of Cheney, Perle, and Paul Wolfowitz.  Jackson, writing in the Washington Post, compared the arrest of the Jewish Khodorkovsky to Nazi persecution of the Jews.  He claimed that, “in dollar terms, we are witnessing the largest illegal expropriation of Jewish property in Europe since the Nazi seizures during the 1930s.”  Perle’s American Enterprise Institute (AEI) colleague Leon Aron further claimed that Khodorkovsky was the Kremlin’s “scapegoat for the misdeeds” of insiders during the privatization of the 1990’s.  Again, this is not far from the truth, in that Putin himself and a number of leading Russian political and economic players also helped construct the “oligarchy”—and recognized that sacrificing Khodorkovsky was a popular measure that enhanced the regime’s shaky legitimacy.  But Aron, like Perle, did not bother to tell the readers of his article in the New York Times that Yukos has also promised $500,000 to AEI.  (AEI has reportedly received $125,000 thus far.)

Russia’s thuggish oligarchs have used their connections in Washington to expand their operations in the United States and are buying influence in the U.S. capital, using U.S. media to sway public and elite opinion, while Moscow and Washington are engaged in an elaborate political game, with the tone of U.S.-Russia relations apparently influenced by the business interests of the Bush clan.  While it is true that the United States began seriously to eye Russia and the former Soviet republics as an alternative (to the Middle East) source of oil in the 1990’s and sharply focused on Russia after September 11 (a legitimate means to serve U.S. interests), it appears that the Bush clan’s business ties have proved at least as important in shaping U.S. relations with Russia.  Bush and Co. have opened the door for Russia’s gangster magnates (part of the Yukos investigation involves alleged contract murders ordered by senior company personnel; “ordered killings” are not an uncommon occurrence in Russian business), helping them buy up American assets on questionable terms and arguably damaging U.S. national interests in the process.  Moreover, given the Bush White House’s behavior in the Yukos affair and the Stillwater Mining sale, is it any wonder that critics have claimed that the Bush clan’s interests have superseded U.S. national interests?

The connections between business and politics, control over property and influence in the Kremlin, are well-established facts of Russian life and have been for centuries.  As Andrew Meier pointed out in his Harper’s piece, however, “matters in America are not so very different.”