The Book that Predicted Putin’s Invasion of Ukraine
If only the world had heeded this and other warnings. In 2019, Anders Aslund published Russia’s Crony Capitalism, which not only highlighted the mafioso nature of the Russian state economy, but also predicted Putin’s invasion of Ukraine.
Aslund, a Swedish economist who worked for years in official government positions within Kyrgyzstan, Russia, and Ukraine, warned throughout the book of Putin’s obsession with Ukraine. He emphasized Putin’s risk calculation, describing with almost certainty that an invasion will occur if Putin thinks he can get away with it.
One of the biggest factors, according to Aslund, was not NATO provocation, but western indifference and enablement. And that’s coming from a guy who has been a vocal critic of Ukrainian President Volodymyr Zelenskyy long before the 2022 Russian invasion.
For Aslund, Russia is a mafioso state with Putin as its puppetmaster; an economy that thrives on corruption and western enablement. In his book he painted a vivid picture of Russia’s plutocratic economic system, reliance on offshore (western) money laundering havens, and use of military force to mask persistent stagflation.
It was precisely this need to distract Russians from their domestic realities that prompted Putin to invade Ukraine in 2022.
Putin’s plutocracy
Similar to the mafia, no major economic initiatives in Russia can proceed without Putin’s blessing. Oligarchs cannot so much as sneeze without his permission. He has made many of them insanely wealthy, and in return Putin has reportedly become the richest man in the world.
Russia’s Crony Capitalism describes how Putin has worked to consolidate power since taking office in 2000. From false flag events like the Moscow apartment bombings, to forcing oligarchs to bend the knee to his authority, Putin has achieved great success in consolidating control over Russia in the last twenty plus years.
Aslund details how he keeps a small circle of confidants to achieve his goals. Many of his childhood friends hold positions of power in state-owned enterprises and government. The Rotenberg twins, for example, were handed inflated no-bid contracts to build most of the facilities for the Sochi Winter Olympics. A cellist friend from Putin’s days in St. Petersburg is a multimillionaire per the Panama Papers. As are many other close Putin confidants.
Just as loyal lieutenants and soldiers benefit from the success of their mob boss, Putin’s loyal cronies receive ample rewards for their efforts. Given that many of the most powerful Russian plutocrats owe Putin for their immense wealth, most have unwavering loyalty.
They also live in fear. The fear that one day, following one wrong move, it could all disappear. Which is why most of these plutocrats keep significant amounts of wealth offshore. Their favorite spots? The United Kingdom and the United States.
Western enablement of Putin through money laundering
Too many western critics focus on weak NATO provocation arguments. That somehow a defense alliance provoked Putin to invade Ukraine. These arguments ignore the reality that NATO has largely demilitarized along Russia’s border for years. Not to mention that Putin once even considered joining NATO in the 2000s.
The better anti-western and Putin apologist argument – for those intent on taking that approach – is western enablement of Putin through money laundering. From tax havens like Cyprus to the willfully blind like the U.K. and U.S., numerous western jurisdictions enable Russian oligarchs and even Putin himself to spread their wealth around the world and profit from their corruption.
Banks have historically turned a blind eye to Russian attempts to wash money. Take a look at these mirror trades executed for years by Deutsche Bank in London as a perfect example. Many other U.S. and European Banks are at fault too.
Some have yet to learn their lesson.
In addition, western law firms – who are largely exempt from anti-money laundering scrutiny – happily take in client money into escrow accounts. It’s nearly impossible to review these transactions as most are currently protected by attorney client privilege. Once the funds leave escrow – for the purchase of real estate, for example – it’s much harder to trace the source of funds.
These institutions are pivotal cogs in the global economic machine that have enabled Putin and his plutocrats to use and profit on dirty money for decades.
One downside of this corruption is the fact it’s hard to grow a domestic economy when excess capital immediately goes offshore or for the purposes of bribes and kick-backs. This is a large reason why Russia has experienced consistent stagflation, especially since sanctions were enforced following Putin’s annexation of Crimea in 2014.
Putin knows that in order to distract Russians from these economic realities, he needs to direct their attention elsewhere. Nationalistic movements are the perfect antidote.
Putin’s military adventurism is designed to mask unending Russian stagflation
This brings us to one of Putin’s main motivations for attacking Ukraine. War is good business. It’s an even better distraction when the quality of life for most Russians has not improved on paper in almost a decade.
By framing the issue in an “us v. them” context, Putin can blame western aggression for the average Russians’ woes. By claiming – without evidence – that Ukraine is overrun by Nazis and oppressing Russian speakers, Putin can stoke nationalist fervor.
It’s eerily similar to the Nazi rhetoric when Hitler tried to justify annexing Austria, Czechoslovakia, and Poland. Those territories also “threatened” the German people according to the Fuhrer. We saw the extent his nationalist ambitions took Germany in the 1930s and 40s. Like Alexander and Napoleon before him, there’s a certain point of no return with dictators intent on conquest.
Their economies have to adapt to war time conditions. There’s no simple off button to war. Any form of retreat could appear like an admission of defeat.
For Aslund, Putin’s periodic wars, from Chechnya to Georgia, Crimea, and Ukraine, are necessary conditions for his plutocracy. Not only does it power the petro-centric Russian economy by inflating oil prices globally, it distracts Russian citizens. They have to unify to fight for a common cause.
Any dissenters receive the full force of the Russian state. So far it appears to be working. But as the history of autocrats before Putin indicates, plutocracies and war dependent economies do not survive forever.
To stop Putin will require more than Putin beating himself. It will require an end to western enablement and indifference. Something that finally appears to be ending now.
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