Archive for the ‘The Daily Beast’ Category

Berlusconi and Putin Pillow Talk

Thursday, December 2nd, 2010

When Vladimir Putin blasted the Obama administration on Larry King Live yesterday, he was posturing, letting Obama know that a “reset” and a red button won’t make them buddies. It was a stark reminder that Putin still does business—both political and economic—the old way: through personal friendships.

What camaraderie with Putin entails can now be easily gleaned from the fresh bash of diplomatic cables released by WikiLeaks. One cable especially, apparently sent to Washington last year from the embassy in Rome, reveals the Berlusconi—Putin definition of Paesano. The decade-old connection thrives on the personal chemistry between the two politicians but also on billions of dollars in energy contracts, helped along by “lavish gifts” and a “shadowy” intermediary, who has helped keep the money flowing between the two countries, according to the cables as well as political observers.
“I think it’s interesting that Russia and Italy have this strangely close relationship,” says Alexander Kliment, a Russia analyst with the Eurasia Group. “And I think it has to do with three things: One is the personal connection between the two leaders; two, energy deals and banking, and three, thesimilarity in political cultures.” As Kliment describes it, it’s an “extremely personalized” way of doing politics and business, often as a way around the extreme bureaucratization of society.

So how close are Putin and Berlusconi? In a word: Very. The most recently released cables portray Berlusconi as a man desperate for the lasting friendship of Putin, who seems a bit more cautious. “Berlusconi admires Putin’s macho, decisive, and authoritarian governing style, which the Italian PM believes matches his own,” writes the author of one diplomatic cable, adding that Berlusconi sees a fellow “tycoon” in Putin—a strange categorization for a man who, last year, claims he made just $120,000. (Unofficially, Putin is thought to be one of the richest men in the world.) “From the Russian side, it appears that Putin has devoted much energy to developing Berlusconi’s trust,” notes the cable. According to the cables, it is energy well spent: Berlusconi is shown repeatedly flouting his NATO and E.U. obligations in order to press Putin’s interests in the region.

It is a relationship that goes back to Putin’s arrival at the wheel of the ship of state. For his first foreign trip as president, he decided to go to Italy and, a year later, Berlusconi, who had just been elected (again) to the post as prime minister, flew to Sochi, a resort on the Black Sea. There the two men strolled down the boardwalk, talked of big things (probably), and drank Russian tea. Whatever it was they discussed at their first meeting, it is clear that the connection they forged was far stronger than that which Putin simultaneously built with British Prime Minister Tony Blair or President George W. Bush in those first heady years of his presidency. But whereas their friendships with Putin quickly and fatally unraveled, Silvio and Vlad have seen their relationship go from strength to strength.

By the time Putin joined Berlusconi on his n-th trip to Sardinia, in 2003, they were already on hugging terms. In times of crisis, Berlusconi talked to Putin on the phone daily, and Italian diplomats in Moscow complained that, because of this direct line between the two men, decisions got to them ready-made, with little explanation. Berlusconi was even rumored to be the only foreign leader to have been given the honor of spending the night in the Kremlin. He reciprocated by naming one of his beds “Putin’s Bed,” made famous by some secretly recorded pre-business banter between Silvio and Patrizia the Prostitute. (Putin’s Bed was, of course, the place where the business got done.)

There were other touching moments, too. Last fall, Berlusconi ditched the visiting King of Jordan and, bearing “fine wines,” flew to St. Petersburg to celebrate Putin’s 57th birthday. Their offspring have also been bonding: one summer, Putin’s daughters, Maria and Yekaterina, hung out with Berlusconi’s daughter, the Russian-speaking Barbara, on her father’s yacht and in her father’s nightclubs.
During the last decade, the two men—one young, blonde, and wiry; the other a broad shovel of tanned antique leather—have enjoyed all manner of presidential pastimes. They have, for example, attended extreme fighting events (the eye-gouging kind) together with their other bud, Jean-Claude Van Damme. They have also tested emergency aircraft, yachted together, and holidayed in Berlusconi’s private villa in Costa Smeralda and at Putin’s dacha near the Black Sea. “By our reckoning, Putin has held more bilateral meetings with sitting Italian PMs in the recent past than any other world leader,” quips the cable.

Their favorite activity, however, seems to be holding joint press conferences. At one of their most memorable appearances together, in Moscow, in 2008, a Russian journalist named Natalia Melikova asked Putin about his apparent marital trouble and rumored romance with the young and indecently plastic gymnast-cum-parliamentarian Alina Kabaeva. When asked about the liaison, Putin’s face hardened. “There is not a word of truth in this story,” he said. Berlusconi, giggling, regarded the exchange. When Putin had finished answering, Berlusconi cocked his hands, and, imitating a gun, fired with a silent “Pow! Pow!” at Melikova. It had only been a year and a half since Anna Politkovskaya, an investigative journalist, had been shot in her Moscow elevator, and Melikova was reduced to tears. On the dais, Berlusconi laughed, and Putin nodded.

Somewhere near the nexus of the Berlusconi and Putin relationship is a 48-year-old former translator named Valentino Valentini, from Bologna, described in one the cables as a “shadowy figure.” Valentini, according to one cable, is “Berluscon’s [sic] key man on Russia, albeit with no staff or even a secretary.”

Now a lawmaker from Berlusconi’s People of Freedom Party, Valentini has served as the prime minister’s foreign policy advisor since 2001. “Valentini, a Russian-speaker who travels to Russia several times per month, frequently appears at Berlusconi’s side when he meets other world leaders,” says the cable. “What he does in Moscow during his frequent visits is unclear but he is widely rumored to be looking after Berlusconi’s business interests in Russia.”

And those appear to be extensive. As the relationship between Putin and Berlusconi has blossomed, so have the shared business interests of their respective countries. There is, for example, the southern Russian city of Lipestk, a special economic zone, which is dominated almost entirely by Italian companies. “The bureaucrats down there even speak Italian!” says Russian parliamentarian Sergei Markov.

Italian banking and finance in Russia has also grown considerably in recent years. The biggest Italian bank in the country, UniCredit, alone has over $17 billion in Russian assets. There is now talk of a Russian entry into the sacrosanct Italian telecom sector, particularly a buy-in to Mediaset, the ailing media company Berlusconi founded in the 1970s.

And Italy’s gain has sometimes been America’s loss.

“Back in 2007, there was an unspoken rule to give American banks here a fight because Americans were seen as anti-Russian,” says Ivan Ivanchenko, who heads investment strategy research at VTB, a major Russian government bank. “Whenever there was a big deal going down, we could give it to the global franchises, but not the Americans.” The Italians, he says, were often the beneficiaries of this informal embargo.

Critics of the closely aligned business interests of Russia and Italy also point to the case of Alexei Golubovich, an executive of Yukos–the company of jailed oil tycoon Mikhail Kodorkovsky. Golubovich was seized and placed under house arrest in Rome in 2006. According to sources familiar with the case, the arrest came “with a phone call. No warrant, no court, nothing.” A year later, with Khodorkovsky languishing in a Siberian jail, Yukos was dismantled and sold off to Putin-friendly interests. Eni, the Italian energy company with ties to Berlusconi, got one of Yukos’s major gas fields. They were the only foreign company to get such a plum prize.

In 2006, after the Russian state-owned gas behemoth Gazprom, had begun to build two crucial pipelines to fill in the energy vacuum in Europe, Russia needed a partner for the southern branch (called South Stream). It found a perfect collaborator in—you guessed it—the Italian Eni, a company that has a bigger staff in Moscow than the Italian embassy itself. According to the Rome cable, the company funds most of Italy’s think tanks and allegedly has several journalists on its payrolls. And Eni’s director has more access to Berlusconi than the Italian foreign minister. Two years after the deal between the companies had been signed, Eni was singing Gazprom’s tune. “ENI’s view of the European energy situation was disturbingly similar to that of GAZPROM and the Kremlin, and at times laced with rhetorical flourishes reminiscent of Soviet-era double-speak,” says the cable.

Berlusconi’s personal financial interests also appear to be a critical factor in the mix. According to Russian and Italian press reports, when Gazprom set about finding an Italian partner to deliver its gas to Italy, they picked Central Energy Italian Gas Holding, owned mostly by Gazprom’s subsidiaries. One third, however, belonged to one Bruno Mentasti-Granelli, widely believed to be a stand-in for Berlusconi’s financial interests. (The deal was later scuttled by a major outcry, but apparently there is now a quiet effort underway to put it back together with the help of some conveniently located intermediary companies.)

As for the “shadowy” interloper, Valentini tends to pop up whenever there’s an important meeting for Silvio’s interests. Pictures show Valentini hovering uncomfortably close to the participants, scanning the action, sizing people up. When Berlusconi flew to St. Petersburg for Putin’s birthday party, Valentini was the only one to accompany Berlusconi other than some bodyguards and a valet. Why? In the whirl of dancers and booze, said Berlusconi aids, the two pals had some energy deals to discuss. Said Putin’s spokesman, “I can’t exclude that they certainly will be somehow celebrating his birthday, but it’s not the main reason for the visit.”

Berlusconi and Putin Pillow Talk [The Daily Beast]

Russian Spy Games

Friday, July 9th, 2010

Sam—and let’s just call him Sam—is an American journalist. Last fall, he arrived in Moscow, wide-eyed and overwhelmed by the city’s tantric energy. He moved into his new apartment complex, which houses various Western press outlets and is owned, like all such buildings, by the UPDK, the branch of the Russian foreign ministry that oversees diplomatic housing.

Soon after his arrival, Sam was sitting in a Moscow café when he realized that his briefcase, which had been sitting on the floor between his feet, the shoulder strap wrapped around his ankle, was gone. He panicked. That briefcase had his iPod, his press badge, his digital recorder, and some Russian homework.

The next day, he received a call from a friendly woman who said her father had found Sam’s briefcase and would Sam mind picking it up? With chocolates and flowers in hand, Sam met the man, and got his briefcase back, but his iPod and recorder were missing.

He thought nothing of it, until he had dinner later with an American diplomat who was not surprised by his story. “Oh, yeah,” the diplomat said, in Sam’s recounting, “It’s your turn. That’s the FSB”—the security service that succeeded the KGB. “They do that to new diplomats and new journalists when they first get to Moscow. They just want to let you know they’re around.” And that’s when Sam realized that something had been a bit weird: The man had called Sam’s landline, which was not listed on any document in the briefcase.

There are lots of strange stories like Sam’s floating around Western diplomatic and journalistic circles in Moscow, and the recent flameup over Anna “Bond Girl” Chapman made me think of them; how Russians spy on Westerners, not abroad, but at home. It is not unusual to come home to find the furniture subtly—but noticeably—rearranged. Sometimes, a piece of furniture is missing, but reappears hours later. Sometimes, the diplomat or journalist comes home to find the computer turned on, with files and email opened. Or teams of dubious tech specialists arrive, unannounced, to fix unbroken wiring.

One evening, a British friend of mine, a journalist, came home to her new apartment to find a gun lying on the floor outside her door, carefully aimed at her apartment. Terrified, and not wanting to add her own fingerprints, she left it untouched in the hallway. When she left for work the following morning, the gun was gone.

When another British journalist, who had just arrived in Moscow, began publishing stories on subjects unpopular with the government, such as how much money Putin had stashed away, things started to get a little weird. His children’s toys were rearranged, their windows were opened. Alarm clocks went off at ungodly hours. He wondered if he was just being paranoid. But when the British ambassador got involved and lodged an official complaint, the antics suddenly stopped. (When I called the journalist, he told me: “I just can’t be on this line. It just sort of encourages them.”)

Why rearrange furniture? Why leave windows open and ostentatiously read email? It seems that the point is to make you paranoid, upset your balance, and, most importantly, remind you that you are a guest of the Russian state. The gun in the hallway is a message, pointing in one direction: Your welcome can be repealed at any moment, just like that.Another Western journalist friend of mine is convinced that Russian agents broke into his apartment after he wrote an article the FSB didn’t like. His passport disappeared just before a planned trip to a restive region in southern Russia, and he was forced to call off his travels. Days later, he found the passport—in plain sight, sticking out between books on his bookshelf. Had he misplaced it? Perhaps. Had the agents actually broken into his apartment, taken the passport, and then returned it in an odd and highly visible spot? Also possible.

Given the recent thaw in Russian-American relations, things do seem to have cooled a bit. And the U.S. government is at pains to downplay any espionage incidents, if they speak of them at all. “My impression is that there is not as much of that as there was before,” says an embassy spokesman. “But historically this is a matter on which we push the mute button. It’s tradition. We don’t want to let them know it bothers us.”

And though we journalists can be a little self-important, we are not the only ones under surveillance. One American businessman I spoke to decided he wanted to sell the dining room table in a new UPDK building he had just moved into. When he started to take it apart, he found a microphone the size of a pencil eraser drilled into its framework. Diplomats, too, live in UPDK buildings but sometimes the agents’ methods are much more extreme.

Last year, a video of Kyle Hatcher, who worked in the U.S. embassy as the liaison to a Russian religious and human-rights group, popped up online. It seemed to have come from the FSB, though no one could definitively prove it. On the tape, Hatcher was seen making phone calls, apparently to Russian prostitutes, checking a hotel room for bugs and, it seemed, having sex with a hooker. The tape, however, was shoddily shot and spliced together, and the American ambassador complained that the whole thing was a smear.

But perhaps the most troubling detail of the Hatcher campaign was that someone had collected these video materials before Hatcher even began to work for the American embassy.

What this suggests, of course, is that someone in Russia is playing a longer game, gathering incriminating details on anyone of potential interest, hoarding these nuggets of weakness (be they related to money or drugs or sex) only to use them years later when the target has gained strategic importance.

Spy games infect people with paranoia for a simple reason: you never know when someone is watching.

Russian Spy Games [The Daily Beast]

Laughter at the Kremlin

Tuesday, June 29th, 2010

Boris Reznik, a parliamentarian from Russia’s ruling party, has a take on the spy saga now unfolding in the U.S.: “Why are you causing this scandal?” he says, chuckling. “Watch out, or we’ll arrest all your spies here in Moscow! You guys have more of them here.”

Aside from the unfortunate timing of the event—coming just on the heels of Dmitry Medvedev’s honeymoon in the U.S. and at the G-8 summit—the roundup of the supposed Russian spy ring, known as The Illegals, has become some kind of strange American joke in Moscow. “It’s kind of unclear, and kind of stupid, and looks a bit like what we had here with that rock,” says Putin’s former chief of staff, the longtime Kremlin player Alexander Voloshin. He, too, laughs at the mention of the alleged spies. The rock he refers to is the 2006 incident when the Russian security services accused the British of using a rock to spy on them in Moscow. “It has about the same flavor,” Voloshin says, still trying to shake the giggles.

Sure, Russian officials have expressed hurt at the timing: Couldn’t they have waited a few months, you know, for the afterglow to pass after the high-level burger summit? And, behaving not unlike a woman scorned, Russians wonder: Who is trying to break America and us up?

But mostly the tale of The Illegals is seen as some kind of joke. The foreign ministry has issued just one statement; the Duma has asked for clarification, but that’s it, as far as seriousness goes. The president is mum. And the prime minister, a man who in his days as president would surely have lashed out with salty words—and, perhaps, a snot metaphor—is mute, as are his loyal security services. No one is making a move to kick out American representatives or arrest any American spies—or, indeed, the foreign journalists working in Moscow, who, in trying to discover policy outlines on the START treaty by talking to think tank experts, are doing pretty much what these supposed Russian spies did.

At a meeting with former President Bill Clinton on Tuesday, Vladimir V. Putin, the prime minister and a former spy himself, said, “Your police have gotten carried away, putting people in jail.” But he played down the episode: “I really expect that the positive achievements that have been made in our intergovernmental relations lately will not be damaged by the latest events.”

And no one is assailing the Obama administration or America as a whole, accusing it, as they would have during the Bush days, of trying to humiliate or vilify Russia. “The reaction has been minimal,” says Sergey Markov, a Duma deputy who chairs parliament’s council on global politics. “We’re trying not to spoil the relationship, to minimize the damage.”

Instead, the Russians, as is their wont, see a conspiracy. “America is a well-thought-out country,” one political aide told me. “It doesn’t do anything ‘just because.’ So if there is a huge uproar, why do they need it? And I think that you need to look not outside, but inside.”

In other words, Russia has nothing to do with this. The supposed spies, apparently, are an American domestic matter.

“The White House has lost control,” military analyst Evgeny Khrushchev told Russia Today, the Kremlin-backed news channel. “Beltway bandits have regained the initiative. Conservatives are hijacking the agenda. They are actively against resetting relations with Russia.”

Another theory is that this is an American military insurrection. “This is a protest of sorts,” Markov theorized. “It’s the military establishment’s démarche against Obama. If McChrystal, who is a serious general, accused him of unprofessionalism, it’s probably not only McChrystal who thinks this—that he is unprofessional and a pacifist.”

Or, some speculate, the unlikely tale is a product of overzealous U.S. intelligence. “Our intelligence services love distractions, your intelligence services love distractions,” Reznik told me, preferring, like many Russians, to see America as similar to Russia only with a better haircut. “If they don’t have work, they make work.” (Given the timeline of the FBI surveillance of The Illegals, this could be a byproduct of the snooping boom brought about by the War on Terror.)

Of course, no one is denying that there are Russian spies operating in America. “How do you not spy on Bush if he’s the most powerful man on the planet, and he periodically consults with God?” scoffed Markov, the Duma deputy.

So if spies in America and spies in Russia are a given, say the Russians, this whole mess is not about Russia in the slightest.

The utterly bizarre complaint filed in a Manhattan federal court doesn’t dispel that notion, and might offer hints why Russians wouldn’t rush to claim these particular spies.

First of all, there is a spy ring that is tasked with gleaning “information on the U.S. position with respect to a new Strategic Arms Limitation Treaty”… from New Jersey. Federal agents describe two operatives who can barely use their computers, and talk with awe of a super high-tech, state-of-the-art communication device known as the WiFi. Invisible ink makes an appearance in the complaint as does Morse Code, which, of course, is pretty uncrackable. And then there are the spies who bury cash in an open field and pass sensitive (think tank?) data to each other publicly… in bright orange bags. Not to mention the awkward Mata Hari, Anna Chapman, who buys a temporary Verizon phone using a fake name and the fake address at “99 Fake Street.”

Russians note that this motley crew hasn’t even been charged with spying. Instead, they stand accused of failing to register as foreign agents (maximum sentence five years) and money laundering (which could carry 20). And reading this complaint, it seems much more likely that a rogue element in the Russian secret service needed to launder some stolen cash and stumbled on some starry-eyed American suburban yokels and asked: “Hey, wanna be a spy?”

The American press is loudly invoking the late Le Carré. But to the Russians, it feels a lot more like Pink Panther. “I wouldn’t be surprised if it turns out that these spies are as real as Saddam’s atomic bomb,” Markov says, once again laughing.

Laughter at the Kremlin [The Daily Beast]