>> up next, author of "putin's kleptocracy." she talks about the designs putin has for russia today. she spoke about her book at woodrow wilson center in washington d.c. >> welcome. we are, indeed, in for a treat today, and if you haven't got enough discussion on putin, well, i think we're going to, hopefully, satisfy your curiosity today. it is our great pleasure to have karen here to talk about her new book, "putin's kleptocracy," and i should add that the books are available on sale as well. karen is the walter e. havenhearst director of science for postsoviet studies at miami

university in ohio. she is a former wilson center public policy scholar as well as a former guest scholar at brookings. she has taught at many universities including a long stint in the university of maryland. the author of numerous books, but i are a sneaking suspicion that this one really rises to the top of the list x she received her ph.d. from the london school of economics. karen will be followed by professor elizabeth wood for a commentary on her presentation. professor wood is the professor of russian and soviet history at mit, and elizabeth also will be joining us in january as a fellow here. she is the author of two books including her most recent book, "performing justiceage station trials --age station trials in early -- agitation trials in early soviet russia. and her book is also on vladimir putin and the performance of

power in russia today. so with that, i turn the floor over to karen. >> i'm going to stand. thank you, will, and thank you very much to the kennon institute and to the wilson center both of whom hosted me when i was here, and i would also like to give a special thanks to the staff in the library who were really terrific in supporting this research. well, we are in a very interesting period for u.s./russian relations or for european/russian relations. here we have the most serious crisis since the cold war in which one country expanded its territory at the expense of another, and the united states responded quite unusually by

putting sanctions against financial holdings of named individuals close to a certain russian politician. this doesn't happen every day. we very quickly got accustomed to the idea of sanctions, but normally -- if we could use that word, normally -- there should have been some movement of the sixth fleet, there should have been some military-to-military response, there should have been more early nato actions. and we need to think about why is it that they responded with targeted sanctions against individuals and their financial holdings? the reason, i think, is because these sanctions represented a public admission by united states government of what it had known for over a decade, that putin has built a system based

on massive predation not seen in russia since the czars. transparency international estimates $300 billion are paid every year in corruption. capital flight, according to official russian central bank figures since 2005, have been $335 billion. and credit suisse last year, in a very important study not picked up sufficiently in the west, credit suisse, an organization that is not exactly devoted to the plight of the poor around the world issued a report on wealth in russia. and in that report, it stated that russia now has the highest income inequality of any country in the world. 110 billionaires control 35% of

the entire wealth of this very wealthy cup. country. and before we say, yes, but g, the p per capita -- gdp per capita has been increasing, and all russian czars are doing better than they used to, they state that the median wealth in russia -- the median -- is now only $871. it is the lowest median wealth figure of any bric country, a country that is a net exporter of energy, has a lower median wealth than india. it also now scores below nigeria in its ability to control corruption. and, obviously, its willingness to control corruption. so what does this mean about what we can say about the putin system? the putin system nationalizes

the risk and privatizes the reward to loyalists. the pattern we see now of the redistribution of bash net to the inner core has been in place since the beginning. this is not a system in which robber barons create the industrial basis of robust emerging capitalist economy. this is a system in which barons are robbed by value-detracting, state-lading elites whose sole position is determined by their relationship to the current president. value detraction is an extremely important part of this picture. most of the academic world, including myself, have spent the last 20 years focusing on democracy in russia. on democracy building, on democracy sustaining, on democracy failing. but not on authoritarianism

succeeding. and the basic conclusion that i came to in this book is that russia is not a system under putin of accidental autocrats. it is a system that was created with a purpose by intelligent design from the very beginning of the putin regime. i started out this project with the idea of finding the authoritarian moment. that was the governing idea of this book. when did they decide what to do what they clearly have done? so i thought 2008. 2004? i went back to 2000 and realized after looking at mainly at elections, that's what i was interested in at the time, that even the 2000 election was fraudulent. putin would not have won in the first round without massive fraud.

that means that from the very beginning, the putin project was not a project that was dependent upon trying to win. it was all about guaranteeing the win. pavlov sky, who we all know was an extremely important member of the pr team around putin in 2000 and who has fallen out with the kremlin and vice versa, he has stated -- and i agree with this statement -- that putin was part of a, quote, a very extensive but politically invisible layer of people who after the end of the 1980s were looking for a relaunch in connection with the collapse of the soviet union. the argument of the book is that this group failed in 1991, but they i succeeded in 2000. it's the same group. ideologically. not everybody, but

ideologically. this group was seeking also to help themselves. they were kgb officers very interested in economic liberalism but with political control. and primarily liberalism for them. the book states that the whole story begins in the 1980s. seeing the collapse of communist rule in eastern europe after 1989 and the loss of the ruling status of communist parties there, the communist party of the soviet union authorized the kgb -- and there are documents that are quoted in the book -- to move money out of the soviet union. realizing that if cpsu lost its ruling status, in other words,

access to the state budget without limit, they would need money to live in a multiparty system, something that the polish, east german and hungarian parties hadn't thought about. money started to flood. and it flooded in such amounts that they virtually bankrupt the gorbachev regime first, and then when yeltsin failed to find the communist gold, they also significantly handicapped the ability of the yeltsin regime to succeed. what's interesting is that this was cpsu money safeguarded by the kgb. but when yeltsin outlawed the cpsu, who did the money belong to? well, it belonged to whoever knew what the bank account number was. and this started the scramble for offshore accounts.

coal international was hired, they couldn't find the money, hired by yeltsin, they couldn't find the money, and it was a very interesting episode. so the core of the book starts in 1991, and i regard it as the most conservative analysis possible based on edges tensive -- extensive interviews of putin's involvement in illicit activities in the '90s, his efforts to suppress legal cases that were started against him and the rise to power of the group around him. i interviewed russian-european-american journalists, activists and many government officials, but i only used those documents that were publicly available. the reason that i did this is that there's quite a number, many, many books on putin that assure us of their sources.

what i'm trying to establish is that it's there. what we know about this episode, it's there in their written source material. we just need to do the work of discussing it, of researching it. bringing it to light. and the book is dedicated to free russian journalism because it was russian journalists who followed this story, first and foremost. and they wrote this story when there was free journalism. they covered it extensively. they were on putin's tail from the very beginning. they couldn't write this now, but they were writing it in the 1990s. so i believe the account provides a baseline of accusations and information known and discussed in the 1990s and its contemporary

import. you won't find in the book any repetition of, you know, hot rumors that we all hear about; the participation of a certain high russian government official in the bunga parties of berlusconi. you won't find anything about a penchant for taking baths for their natural viagra effect in a bloody velvet drawn from siberian reindeers. it's not in the book. [laughter] but there's a lot in the book. [laughter] trust me, there's enough. so the book dines major sections -- book contains major sections on the food scandal in st. petersburg in the early

'90s, on putin's involvement in the control and emergence of the gambling industry in st. petersburg, putin's involvement as a member of the board of the st. petersburg real estate holding company, a company that was registered in germany and that was investigated by interpol and bnd for its involvement in the laundering of money from the cali cartel. his giving of a monopoly position to a gang in the petersburg fuel company, his involvement in creating and using source -- money from the mayor's contingency fund through a company called 20th trust which led to a criminal case, number 144128, and the up authorized use of funds -- unauthorized use of funds from the mayor's contingency fund in getting a apartment for himself

in st. petersburg. which led to a criminal case, 8-238278-95. what i'm doing can just by mentioning these numbers is to say there is the data. there is the data. it's presented in the book, but there is a lot more. and i'm going to spend the rest of my time talking about only four things; two people, a place and a document. the two people, vladimir smirnoff and victor smolinov, two people that are not in the public eye that much. vladimir smirnoff is regarded by russian opposition figures as one of the cutouts between the mayor's office and putin's committee in the 1990s and the mafia gang.

smart guy, he's rained as frizz cyst -- trained as a physicist, but nevertheless, he's said to have been the person who was involved. in the early 1990s, there was a food crisis in st. petersburg, and the very first thing that putin got himself involved in was giving licenses to various companies, some of whom only were established weeks before the contract was awarded. one of them was headed by vladimir smirnoff called -- [inaudible] when the st. petersburg legislature investigated these contracts in which the minimum amount that went missing was $122 million but the total number of, the total amount of contracts awarded was a billion dollars. but they had access to the documents governing $122

million. their conclusion was that the committee on foreign economic relations, putin's committee, distributed contracts in the interests of licensees and not the city. this is a quote from the documents. and that vladimir putin should be removed from his post and the case should be sent to the prosecutors. the prosecutors sought to pursue this case, but it was closed down by -- [inaudible] vladimir smirnoff should have been cast to the curb, but was he? no. he then became, in 1996, the person listed as the leader of the cooperative. he's listed as the leader. smirnoff. and most people focus on this gated community that they established without asking the much more important question,

why did they set it up as a cooperative? there's private property. just get the property, establish your -- build your cottages next to each other and have, you know, saunas in each other's saunas. they were doing this all over russia at the time. why did they establish a cooperative using the gorbachev cooperative laws? because, in my opinion, they were able to establish a cooperative bank account number. and according to the gorbachev laws, all for one and one for all under the cooperative arrangements. so bank account number -- you said i couldn't, we didn't know the number. 180461008. it was established, it's listed in the documents, and all those people whose names we know as being close to putin from the very beginning had access, according to the law. it's very important under putin

to a joint bank account from 1996 onward. so you would have thought that smirnoff would settle down. i mean, he's in with the big guys. you would have thought putin would settle down too. but they went on to be on board, and in smirnoff's case to direct the st. petersburg real estate holding company. and spag was also -- also on the spag board was the head of the mafia. spag was investigated by the bnd for laundering the cali cartel money and, of course, russian mafia money too. but bnd wasn't looking at that time for russian mafia money. they were looking for cali cartel money, and that's how they found it. so there were bnd raids, there were alet'ses, and then ger hart

schroeder came to power, and the case against putin was suppressed. however, the u.s. government leaked documents, well, leaked results of their own investigation in which they said this was a sheaf of intelligence reports linking putin to spag. and as a result of that, they succeeded in getting russia placed on an international money laundering list. 2000. all right. smirnoff is certainly rich enough by now, so why doesn't he go abroad and live out his life? no, putin goes to moscow in '96, he becomes president in 2000, and he appoints smirnoff as head of tanex. tanex is responsible for up to 50% of the world's trade in nuclear materials.

it was also the u.s. partner of, in megatons to megawatts, and it received $3.5 billion in u.s. aid. it provided nuclear materials for the bushier reactor in iran. serious stuff. so when we talk about, you know, putin being concerned about iran's nuclear potential, well, i mean, he's having saunas with this guy. this guy's the leader of cooperative. so he should be concerned, but he certainly could control can it. could control it. that's smirnoff. the other person. when putin became deputy mayor of st. petersburg, of course, deputy mayors in all cities have security is. have security. and putin of all people could rely on his friends in the former kgb to help provide

security. so why was it, why is it that he chose to hire a private firm to provide security? that firm was baltic escort. it still exists today. and the head of the -- the two people who were head of baltic export, section olotov -- zolotov was regarded by st. petersburg journalists as the person who provided the muscle to protect the -- small the black cash that made the world turn in st. petersburg. and particularly when gambling was controlled and brought legally, brought into the legal sphere, zolotov and baltic escort controlled access and

took the tribute. so baltic escort. what happened to those people? well, victor zolotov became putin's personal bodyguard in 2000, and he was his personal bodyguard until 2014. he is now the head of all the ministry of interior internal troops. in the event of any massive outbreak of trouble against putin, zolotov is the one who would mobilize the forces. zolotov is the one who brought us that horrible scene in the last inauguration of the troy ca of -- troy ca of black cars going through moscow, a moscow

that had been emptied for the inauguration. all those cars going through a -- not dark, it was a brilliant day -- an empty moscow, basically giving the message you rose up before, so what? we can, we can maintain this regime without you. he's an interesting story about zolotov, and i'll just tell you that and then move on. zolotov came to new york in 2000 to do the security prep for putin's first trip to the united nations. and, of course, in that regard he met with the resident in the new york consulate at a time when lavrov was the ambassador. one assumes unknown to zolotov

and his colleague who was with him, the resident defected at the end of 2000, and he wrote a very interesting book called come raid j. -- comrade j.. very interesting book in which he said in brighton beach they went to natasha's, and they talked about how they had hoped to be able to implement a plan to kill at that time presidential chief of staff -- [inaudible] because he was standing against putin. and blame it on the chechnyans. but realized when they decided, you know, okay, the let's was so long -- the list was so long that there would, quote, be too many to kill even for us.

zolotov and murov are the chiefs of the two agencies that are in charge of the black box. all right. if you're feeling happy, then we'll just go on to the place. [laughter] so the place is spain. spain. always been interested by why it was that putin went so many times abroad and so many times to spain. so i started to investigate this and to talk to people and so forth, and there's quite a lot on his trips to spain. the accusations that are in the book that are repeated from russian sources -- and i can go into these sources -- is that property was built in spain with money from the st. petersburg mayor's contingency fund. initially for reservists, but it

turns out they're all reservists when it comes to a free trip in spain. that this skimming off of money started with the leningrad communist party executive committee money and that the first hotel was built in spain, and it's still standing. the lead investigator in a case that was brought by federal authorities into the activities of putin -- remember, sochok pled to paris, and it's often forgotten, rarely mentioned that putin was named in that investigation. so the lead investigator has stated in nine interviews that

putin made 37 trips to spain on false papers including when he was the head of the fsb. that the investigators, the prosecutors gathered 110 volumes on this case before it was shut down when he became president. and 110 volumes, he states, were handed over to radio liberty for insurance. i've confirmed with radio liberty that they were in receipt of those volumes, and unfortunately for all of us, they passed them on to an agency that likes to classify things. but it does mean -- [laughter] that people in the u.s. government had 110 volumes. what happened in spain?

in spain after putin went to moscow, the group within the organized criminal world who had benefited from him up until that time and those who were in power left the country. and they went to spain. so petrov set up in spain. others in the putin circle bought properties that have adjacent. now the head of the dumas anti-corruption committee -- [laughter] leonid raymond who became the minister of communications and was regarded even by the russians as the most corrupt of all the ministers and the spanish authorities acting on a request from interpol started to

tap phone calls coming from these places. and as we know from wikileaks, they had phone calls from petrov to four sitting ministers in the putin government including especially one who regarded was in his speech patterns regarded petrov as his own boss. ..

so one hopes that it does, but he is stated that this group wanted billions of your russ from russia and not only russia. so that is the document. that is my last point. the document that i found very chilling when i found it, i was happy to find is, but it was -- it did not make me very happy to my comes from commerce on to

may 3rd to face 2000. three days of articles on a document that had been leaked from the presidential administration prepared in 1999 entitled the reform of the presence of ministration . this document was admitted to exist by the kremlin, but they claim that it was all the draft. however, everything that was in it was implemented to plan my opinion. in this document, which is about 44 pages long and only part of it appeared command i should say immediately disappeared from the archive and i was able to find it. in this document each department is given open and public tasks. the department of the presidential administration

as well as secret or actual tasks so that the presidential administration could tangibly and concretely influence of political processes that are occurring in society. and this is a quote, is the president really wants to ensure social order and stability in the country during his rule then the self-governing political system is not needed. that is something we would call democracy. instead, you will need a political authority that will create the necessary political situations in russia and in europe. it goes on to state, all the special and secret activities to counteract the opposition will be entirely in the hands of the special forces. opposition leader alice will be driven to financial crisis.

and this is the lab particularly loved, and an early indication of their cynicism and seriousness, the open functions of the presidential administration emulations with the opposition is to lock in constitutional norms and join forces with the opposition in the fight against extremism. but the closed functioned is, it is necessary always to run the coordinated plans of opposition in general and each oppositionist personally. this was written in 1999 so, in conclusion, while the book certainly goes up to the present day, it's real focus is on the basis of this regime.

and i believe seesaw on asked, 2000. the group that he brought in with him from the 1990's is the same group that is in power today. the failure by the west to confront this was a political failure, not an intelligence. everything in the book was known and noble. and clearly the intelligence services of britain and the united states in particular, but germany as well knew much more. this was a failure of policy from looking into puente and his eyes and seeing his soul under one president to a reset under another. the same introduced in april represented closing of the circle and the admission of the u.s. government has known this and they know what they're dealing with. the russians would like a second reset.

i hope we are not so foolish as to think that any reset with this group would be to our advantage. thank you very much. [applause] >> thank you very much. >> and just when to sit here because i want to be brief because i think the normal role of the discussant is to liven things up in case nobody has any questions. i am quite certain that you are very likely to have comments. i'm going to keep my remarks brief. i have to start by saying, i think this is a stellar performance, an amazing book have been reading for two years since you i first talked about it. i also want to commend publicly the daring that is going into this book. the document not as they would say in russian, not just a few people have died. and i think we as an

audience and we as a country have very indebted to you for taking this very, very, very brave step and for researching and meticulously i mean, i think the research is absolutely of the top caliber. i am particularly interested in this book, and i think perhaps i've been working on the putin regime and the appearance of power that i think masquerades this kleptocracy. none interested in the pretense that one man rules when in fact what i think it is it's a network. and also, the society of democracy because this is a man of the people, regular guy, a guy who uses tough language. some must be speaking the truth. he must be authentic. interested in the ways that was constructed in the same

time to make it look like he is that guy. he's a real person and it's not being manipulated, control from below. that said, i wanted to five of giving a talk can at the woodrow wilson center in january. but also interested in the port that can makes but doesn't tell them to one who. in medieval documents when discussion program about the russian worker attributes and officials feeding themselves pretax collection procedures. they worked perfectly legitimate. think it's also very interesting as a historian

plans that there are a number of soviet parallels to the creation of organizations. even though real power was in the party, the creation of a shell organizations. and also the ways in which from the beginning where organs, as they were called, the kgb, were connected with the powers and also i'm interested in the ways in which they absorbed the third section. you know, the famous move, the russian idea. he failed first. up to and also tried initially to figure out a russian idea. he figured out a few. but he could not come up with the russian idea. in the sad thing is how does this relate to the russian practice?

and it is the absence of a russian in the elegy in part because there's so much concentration on these processes? 1n or distress what's remarkable, the tangled web of interrelations, mafia, oligarchs, there are utterly interconnected cotton. i think karen has identified a number of mysteries that we knew about it was creating these licenses with no signatures. they would not stand up and the court of law. this is deeply shocking. comandantes, finishing a piece right now i'm, just a week before the 2000

election he said, is really about temperatures necker's? there was a blatant disregard for elections. but that there was also this blatant financial manipulation is new, important, and will raise many, many questions. the question i want to flag is, i think there is a very interesting tension in the book that i'm sure you're aware of. but i want to push you. i think that's the function of a commentator. you alternate between talking about the malevolence of putin on page five, putin as an arbiter, putin as the one who keeps the figurehead for the structures and the criminal element. you talk of then working for the purpose of strengthening its hold on power. so i have -- i am interested to see to what extent do you

think this one man was seeking to be the center of power? verses the possible alternative interpretation of the will leave pre soviet blairs thinking to find one man that they could hold up as the top guy. in other words, is there one person looking to arab bowstrings are is is actually a we'll where they have identified the ones often we pool will be challenged this. i still think there may have been dunce -- fadel we read all the strengths? which would you put it. in a sense they created case the figurehead because you

need one. and so what extent has he pull their strengths and made in this way? that is, think of a hard question number one. number two is about sources. and i don't want to for a second suggest that you have use anything less than the best sources you could find, but you got a big range of sources. you have get everything from lawyers and insiders to opponents and people who live on now with the regime. that's the source for anyone, but how do we -- is there a way you can characterize that spectrum from -- in know, everyday logitech other questions if you don't want to answer mine, but how would you define what would you city

of the sources that you're really, really rock-bottom trustor's is the ones that could be plants, could be death then sells dissatisfaction, muckrakers are looking for things. i am convinced that your argument holds because of the sheer volume of the sources, but i still think you're going-somebody. i might as well go and then ask. i call this the immigrant problem. u.s. foreign policy has often been criticized for listening to afghan immigrates is said to me know, you've got to go into afghanistan iraqis to say you have to get their him in the gulf war, poland, whenever. not content because we can't entirely take the u.s. government's knowledge as our talisman.

there is u.s. government investment in cold war thinking. so that would be, you know, how would you characterize the most trustworthy, if you want to take that and then the last thing or a couple of smaller questions. i'm curious about your view of the sanctions. to what extent, if we name these individuals do we continue the trend of personalizing power in russia? have been very hard and that political scientists have started to talk about the regime and said of the weasel of a hybrid. and going to get in trouble, but i think a hybrid is really fundamentally the peter and we need sarah tried to understand how this works. a kleptocracy is a good term , i think, but if this is a kleptocracy, is the sanctions -- does that change it or does that just

go after these individuals and still leave the problem? in other words from if we had regime changed tomorrow and putin were toppled, have been having a recurring nightmare. when things change? does the question. and then another -- is seen to be having no such easy questions. are we seeing also know i knew time in russia where they have given out all the goodies and the recent arrest could signal the beginning. is the terror, is the attack and individuals related to, okay, we have given out all the goodies and now there will be reprisals to try to go after them. in the last thing i will say is, it is very interesting to me that this pattern you identify which of the term nationalize the rest from privatizing their word, i think in eastern ukraine with setting these fake

green actors. they have deep money connections with one of the orthodox oligarchs who is france. they pride themselves. and so you create these shell orthodox oligarchies. i'm wondering whether you think there's a possibility that there during the same thing? enough. >> no, i am going to turn to karen to take the first five questions. [laughter] at least five, i think. >> maybe a couple. i am sure and i have to say will open up to other questions and we don't want to go on too long. vladimir putin in my opinion is malevolent. he is also the harbor between groups. he is also the creative of this has to my spirit and in my opinion why i came to really break him completely

was he is a person of some significant talent. he had sources. he could have done better for soles society. he could have done better for the population of russia. he chose not to. these are all services in may. so i personally don't feel the need to choose between those characters attributes. well, i think that when you have people who work, let's say, sherpas for putin for five years, when you have people who were deputy ed masters or deputy prime ministers, one would have to say that their views are worth considering. and when they present data as has been the case in the

very detailed study on corruption or in testimony to congress, it is imperative upon us to look at this seriously. i just regard this as a data mining operation. so it is not to say that another example of something that we should believe in, absolutely not. i mean, some of the things that are said about the cover letter of putin, really? god forbid that any of us should have that private life. any of the people i know anyone. i will say also because it comes to a point that i was going to mention any way about sources, or of the things about i have done for this book from which is going to make certain people even more so with me, i have

uploaded all the documents i used so if you, i-, and maybe put in their something it will come out. i have -- this excellent person who is now working in d.c. really pretty bureaucratic in a very elegant russian.

you can read that document in english. judge for yourself but there were planning. all of the documents from the food prices i have uploaded. all of kalashnikov documents i have uploaded. i have uploaded the youtube video, but i don't know who put it on youtube. but it is putin in 2000, the night of his election to my preening like vendors are in front. a private video. and you can decide for yourself whether he planned. >> the night of the election. they were looking at the end coming results. sergei, i mean camino the cast of characters.

so 2500 footnotes in the book. the entire building activity was live links on the website. so please judge for yourself fit. this is what we should be doing been in addition, the lead prosecutor for especially important cases that was cowed and the being silent for 12 years and came out fighting in st. petersburg and put nine testimonies of the details of his investigation on youtube. some of those are no longer there. un youtube. but i can assure them all, and they are transcribed. and that is a lot of work. but there are there for all of you to look at. i have told the university

that i hope that they have the capability to withstand a ddf, but i think they do. we will see. so i think that the arrest and the refusal, i think more importantly the refusal to release him from house arrest despite the petition from the industrialists is a signal that we will come after if needed. and, of course, there were internal reasons, you know, green and so forth while others close to putin might want. but i think for putin to allow it to continue suggests that like all that he does, signals to the other 110. you brought your money home. thank you very much. now we will be needing it.

so very publicly has said that all the money made is available to return if required. well, i have written a lot of mess. all i will say is that there is now a colonial class that has arisen in russia. these are people who go around from oliver the new head came from dressed in the step. he had been the chief in latvia in 1990. not a good person. so there is a whole group coming out of fsp comanche are you, kind of middle rank people who are capable of making good money doing this kind of predation on a local basis. and i think that they are, of course, also helping the

mafia to establish their domain in these places. in the great thing about these places is that we don't have embassies there. transparency international will not be setting up an office in these places. they have diplomatic relations with each other, but not with anybody else. so this is important for offshore banking operations, for counterfeiting and all those things are happening. >> well, i see a lot of fans going up, but i do want to take another question. it is kind of just touching on what elizabeth was talking about as to who created putin, who was pulling the strings been reading your book you talk about the rise of him and his career. but really, the most puzzling aspect is how he became yeltsin's successor. white is yeltsin this side of all the people that putin

was going to be he successor? still a relatively obscure person. but when he raced in the prime minister in the only reason the prime minister he said to me strong to be the next president as whelks and no one believed him because he was a complete unknown at the time. certain events would transpire that will play to his strengths, but i want to go back to the question, why did yeltsin decide that putin was the one who was going to be his successor? >> we spend a lot of time in the book on the subject bid half of the book is st. petersburg and have this book is moscow. so why did he decide that he should be the successor? and why did bears out ski decide? and i think the answer to both those questions, which they sold to yeltsin was that he did not give out and he won't give us up.

he was very important in preparing the white house for their coming presidency. we know that. so they talked about it openly. he came and got a meeting. even though he was not trusted. said that, you know, this guy is the real deal. you know, he is going to be a great guy, continue on a path. and the san three days of his inauguration, the tax police rappelled down a building and crashed into the media offices. three days. and he said, i don't give him any credit for honesty and all. he did say, and i think he honestly believed it. what have we done? he realized that this was a

mistake. at the time he did not realize that there were two parallel tracks that putin was on, i track of getting yeltsin to name him and giving a signal to the oligarchs that he was going to protect their wealth and attract the fsb people. and he immediately when he came to power through the oligarchs out. he gave them a signal that they had to play by his role . >> okay. we will take some questions. right here. >> my name is steven perry dry understand that his former boss is now an american citizen and works a few blocks from here? and he was under a death sentence in russia. see you mentioned the relationship and how he was

able to sort of leapfrog up and advance in what was then the kgb? >> how putin the product? let me just start with putin . they sell out. a sellout. from the early 90's he had identified himself as somebody who wanted to modernize and westernize the security apparatus. and that was not on the agenda of most other people. so he found safe haven here. he certainly openly accused, talked about the stench of corruption coming from st. petersburg very

specifically in writing. so what did you expect from that? >> american foreign policy council. the very end of your presentation you raised rather tantalizingly the question of the united states government policy which he described as a political failure, not an intelligence failure. he did not describe what you meant by the failure what you thought the united states should of down to talk could have done. and in your very final sentence is sort of apply the united states government should not now conduct a relationship with this russian government. i would like to ask you what specifically you think the government like ours should, could, would do with the government like this one and then when you apply that to other plot to credit governments in the world of which i think i could name you 3040.

>> you know, i spent two very interesting years in the state department when gorbachev came to power. in one thing that i learned was that this is a group of people who are expert and think very deeply about these things. so i am not really interested in criticizing government policy%. but i do think that when we have a situation, since you mentioned dead general problem with kleptocracies in which it is possible to open up the council without the names of beneficial owners, then this is something that could be changed. the former media minister left who is now the new

meters are was revealed by the l.a. times to have three properties and a leg which were registered in the name of numbers. despite the fact that these properties are inherited, two of them are inhabited by his children. selling anyone, whether russian non-russian to buy a property with a number, and elsie which has the title only as a member, and @booktv o.c. number 4203 strikes me as something that perhaps is not in our interest in the long-term. i don't know if anyone here have been to miami recently. we'll have a problem with people buying real estate. but in miami, florida the landscape of miami florida has been really transformed

by the purchase of real estate for the sole purpose of money under. people are living in these apartments. there are apartments that are completely empty and that are exchanged in payment for debt because they're worried about, you know, the reliability of the banking system so there are things that i think our generalized problems that could definitely be dealt with, and i do think that the u.s. government is aware of them and is now going to become even more committed to dealing with this problem . >> first of all, congratulations.

questions related to each other. he named the book kleptocracy. my the system that you have described, mafia, thugs, kgb , you have chosen exactly this particular feature justin in the book. equally important. some other reasons specific you can discuss what was the reason. and another one properly for both karen and elizabeth. he think about the classification of political regimes around the world historical. where would you put this particular example?

which particular regime what the similar to this one? historically or internationally. >> well, i do say that in the book many words have been used to describe it, whether it's corporation or kleptocrats back. i am a great admirer of the book, for example. but i think that the work kleptocracy directly conveys evaluation. this is a system that we shouldn't in any way condone by calling it something that does not travel. amin, the russian elites call the system themselves sister emma.

and i am fine with that. and not saying it should be called out, but i do think that when a book is published in the state's conveying a sense of what we're really talking about here in the major future of the system is theft. it is theft. from the state to private individuals. and when i say this state, i mean that includes all russians. so when we talk about 110, how did they get to a 71? because of the 110. so i think it is important to convey that. it is historically a system without parallel. i mean, in the size of the effort. now, i have had long

discussions with many friends and panels and so forth about fascism. should we start using the f word to describe russia. well? the difference between the fascist prius in germany or elsewhere, but in particular in germany and russia is that in russia the creed is much more important to them than the ideology. the ideology is the kernel that their rapid all of bin, that they feed to the propaganda machine so that people, ordinary people can feel that they have come me know, that they are contenders. that they could go off and fight somewhere, that russia is back and so forth. so i don't -- one, could, of

course, use that. but that has been so debased by the russia-ukraine crisis. that is really why i chose the word plutocracy. >> very briefly. i am interested in the term because i think what is interesting is the absence of raise public, an absence of an understanding, commonwealth. and part of that is to my think russia was extremely difficult to rule. the more i study russian history and teach it, the more i think it is going to always have pockets of corruption. the united states was 13 small colonies with a bunch of white men who own their slaves. they did not have to contend. they had to make relations with each other that allowed them to build a sense of trust. that is changing in this global world premiere of the things that is so interesting about karen's work is the ways in it which they could create in the economy. that could create a liberal economy within russia while

getting rid of their contenders and storing the money globally. so i really think that's important. for me to determine keep coming back to his the term that one of the historians developed, the societal autocracy. you create the appearance of top-down control even though anybody who observes russia at length knows, the clans were fighting under the rug. their is a constant tension over who can control which piece of the pie. but it is very hard to be a junior in a situation where the games are too easy to hide. i mean, the long-term question is going to be, how you build an institution of checks and balances, and those have not or -- the soviet union created a moral system, a civilizing system, whole lot of pressure on individuals, but it did not

create the right institutions because they undermine law. so unless they find ways to rebuild those institutions, it is going to come down constantly to individuals trying to make money. that is where i'm at. >> i see a lot of fans, so we're going to take three questions. please keep them short. one, two, three. go ahead. >> since you ask the one about yeltsin, could you say something? the late gorbachev years, a year or two later he was portrayed in the west as a liberal. how did he think and why did he break? and do you have anything in the book about the apartment house bombing? >> a question right here. >> thank you. you already sort of touched on this. greed is sort of paramount to this regime.

the russian economy is not in tremendously good shape and will be getting only worse. that's all well and good to say that is money is of the government's disposal, but what does happen when the money starts to disappear and you can't necessarily buy every one of? >> and last question right in front here. >> thank you. >> no. >> you will start the next one. promise. it will be in next round. >> for representation in your book to say that it is time to move the study of russian politics, seminal studies. the center for advisement. had the guts of the fbi. the u.s. foreign policy is

concerned, the feelings of the middle east, corrupt leaders. your conclusion, it seems that is irrelevant, i mean. is that fair to say? >> thank you. >> okay. well, yes, i do deal with the apartment bombings. in my opinion the explanation for why his ratings went up from 2% to over 70 percent was because he became the war president. i also believe that the evidence suggests strongly that the bombs that were planted which led to fsb employees being arrested, it was an fsb operation and was

planned when putting was head of the fsb. it's a very serious charge to make because it means that this is a massive false fire operation organized by a group close to yeltsin to bring someone the power that downed by bombing three apartment buildings in moscow. it is just our run this thing. while the residence were sleeping. this is no way to win an election. so chuck was the darling of the west, and he left to travel here. then he got many invitations to travel here command he always got very, very good press when he did. interim so he was involved

in corruption. he was willing to recede guess which, of course, in russia is not necessarily corruption. he and putin received a mercedes each in a very early 90's. and when the american consulate called for and said, we notice that the elite is starting a drive mercedes to my wonder if you could recommend a dealer, the next day putin stop driving his mercedes and did not drive it again. that's the difference. so he was protected by the aura of being a liberal democrat. he was one of the big democrats. he continued to be that way. i think he died under very mysterious circumstances. i will say anything more about that.

there were two autopsies. we will say one thing. there are two autopsies, one that was held in kaliningrad in which the prosecutors said there going to open a case of death and a mysterious circumstances. the body was taken to the medical academy, run by the san to become minister of health, was given a second autopsy, he had died of heart attack and was buried the next day. what happens when the money runs out? well, i think that this is the message. what happens when the money runs out is that they will go around and take it from however has it been him money is now back in russia and. and i agree that even that money might run out. think it will be hard to shake some of this bill.

but there already have started to in detention funds fadeyev announced that for the next two years of growth the budget for health will be cut in double digits. so they will just take more out of the population. should the fbi get involved? well, they have been involved dry fbi officers in moscow and had been there for some time, treasury people. this has become a multi agency challenged him as should be. good question, though. >> here, here, here. >> i appreciate if he would elaborate on match comments at the opening about their not being one big account, which i assume you agree with. it is, in fact, a common solution being pushed here in washington coming if we did just shut down the bank accounts, we know what they

are. they seem to know. >> hi. i am a journalist from voice of america. my question is about ukraine to more than ukraine. why do you think that he bothered himself with this? was change in ukraine as threats to his system? or did he just want to play and nationalistic cards to pursue political reasons? was it really a threat to him? >> he was about sanctions, are they going to do any good. >> bank accounts. if i need a bank account, i would be sitting in the south of france in july and myself. i think the tragedy of putin

is that from his point of view the state department or the treasury announced when the announced sanctions, there is one sentence is more important than all the others. the one sentence is that vladimir putin owns shares. it is in the state department. it is in the treasury department's actions, less. so they really good are signaling -- i mean, this is a signaling gain. there really are signaling that we know a lot about this. i don't think they know everything, but then a lot. so when he sold his share the day before the sanctions came down, sold his own shares, did he also sell putin? what is happening to his money? i don't know. think it's interesting. he is supposed to have a

large portion in bearer shares. if you and a piece of paper and it is a bearer share, you on that. and if you give it to lose his pontians it. well, what if you are in moscow and you can't get out are you want to cash the stephan. yet in a bank. they used to manage the private money. how are you going to cash that. shares that you can at kaytoo. -- cannot get too. >> why did putin bother himself with ukraine? i think that there have been folks -- i think he would probably himself regarded the situation there has not an ideal situation. one would hope so, anyway.

but one should not overlook the extent to which the oligarchs around him owned huge assets in ukraine, especially in southeast and south ukraine. of course in crimea, but also in odessa. for any of you are interested i really do command talks of them the details of people who, you know, one of the very major allies who was with him in dresden. and how he owned major parts of the port in odessa and of learn of the arms that go to syria are going through his operation in east ukraine. arms production.

and then through odessa. so there is a big financial interest that the people around putin have in ukraine. it is very, very important. in a think that when any code which fled which are obviously was not planned by the kremlin, they wanted him to stay in, but when he fled a lot of those interests for extremely exposed. >> sanctions. anything? >> and i wanted to add to that. >> add to that, and then we will -- >> we remember, arrested in 2003. the other oligarchs all came about down. yes, we will do this and that. what about the chance that -- this is a shell game anyway. to a certain extent it is

let the soviet union. ownership does not matter. connections matter. putin as all the connections and they have an interest in him staying in power, you can't have -- may be as sanctions -- none military. but the chance that the oligarchs going to keep barreling down, especially giving signals. does not matter who owns it. not going to get putin. >> i think there are two pauses of possible outcomes to sanctions in addition to a range of negatives. because of possible outcomes to sanctions. one is that we will set them against each other. i would imagine that the u.s. government in talking about sanctions doubt that this was a positive thing be instead of having a stable, unified leaders why don't we stirred up and see what happens. so there is that.

it will decrease the stability of his stolen power. thing that that is regarded by those governments that have gone through with sanctions as pulse of the. there is also a second. maybe this is just a fanciful positive outcome be in the book i talk a lot about these ideas of the transition from authoritarian to democratic regimes and how he need to create an incentive for rule of law. the rule of law emerges from property rights. when people have property they will become interested in protecting it, and they're well helped shape loss. we call it k street. so they will protect themselves. that is our loss emerged. in russia it is different read in russia up in town

now predation and looting is what happens in russia. so the money leaves russia and is put into european banks. in those people who have eluded russia protect their gains in europe believe so the rule of law is not emerging in russia because they don't have an interest in emerging. now, do they now have an increased interest in rule of law? it is entirely possible that when the industrialists petitions for his release from house arrest, one of their efforts was to say to my but the owners illegally. get approval for the purchase of the line bury that own a bit -- not only did the owners legally but it was approved.

we can't go back on these type of agreements. the messages, guess what, there are new set of rules. so from that point of view i am a little discouraged by the message. rule of law, c'mon. but he should not completely this mess the power of the 110. >> well, we have come to the end of our session, but i have one last question. falls on this message of property rights. and isn't the money when the wind. you talk about this as a russian story, but in light of what you talk about, how complicitous the west? pawlenty talk about offshore accounts commercial companies, non beneficial owners of accounts, bearishness. they seem to have learned a lot over the last 23 years. in this seems to be focused

on how one can ducks offshore banking in many ways. again, what lessons have they learned and how complex it is the west in teaching knows? >> the west is -- well, western banking is extremely complex it. there's no question. the bank of new york. i mean, this was a yeltsin story. why is this continuing? bank of new york was a yeltsin story. so there is a lot of money to be made in russia. when we see that is thinking about closing its 50 offices in russia, well, okay. so but has -- what of the new rules for loans, bonds, ipos, how much money has been made from russian ipos

the work already prepared and introduced in london? plea prepared from a legal sent. and who is benefiting from that? well, who is preparing the ipo? who are they at counting? welcome i know this is a subject close to your hard. but chuck -- >> and accounting firm. >> but the accounting firms, holding and noses and signing off on bottom lines. i mean, how much money was made when they turned the other way and did not look at the quality of the numbers and a lack of transparency? but then, you know, bank of america is a whole forest or made up. so there is a big problem with the banking industry as a whole.

certainly russia was the place to be. extremely brave and tell 2003. he was making a lot of money in russia. he was looking the other way when he became head of many companies. >> welcome on that note thank you very much. [applause] the book is available outside and thank you for coming. [inaudible conversations] [inaudible conversations] >> interested in american history? watch american history television every weekend. forty-eight hours of people and events that helped documents -- that helped document the american story. visit c-span.org / history for more information. ..

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