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The Big Picture: Kleptocracy and Capital Flight

Nor has anyone related these cases to one of the most central facts about modern Russia: its emergence since the 1990s as a world-class kleptocracy, second only to China as a source of illicit capital and criminal loot, with more than $1.3 trillion of net offshore "flight wealth" as of 2016.

This tidal wave of illicit capital is hardly just Putin's doing. It is in fact a symptom of one of the most epic failures in modern political economy--one for which the West bears a great deal of responsibility. This is the failure, in the wake of the Soviet Union's collapse in the late 1980s, to ensure that Russia acquires the kind of strong, middle-class-centric economic and political base that is required for democratic capitalism, the rule of law, and stable, peaceful relationships with its neighbors.

Instead, from 1992 to the Russian debt crisis of August 1998, the West in general--and the U.S. Treasury, USAID, the State Department, the IMF/World Bank, the EBRD, and many leading economists in particular--actively promoted and, indeed, helped to finance one of the most massive transfers of public wealth into private hands that the world has ever seen.

For example, Russia's 1992 "voucher privatization" program permitted a tiny elite of former state-owned company managers and party apparatchiks to acquire control over a vast number of public enterprises, often with the help of outright mobsters. A majority of Gazprom, the state energy company that controlled a third of the world's gas reserves, was sold for $230 million; Russia's entire national electric grid was privatized for $630 million; ZIL, Russia's largest auto company, went for about $4 million; ports, ships, oil, iron and steel, aluminum, much of the high-tech arms and airlines industries, the world's largest diamond mines, and most of Russia's banking system also went for a song.

Combating capital flight from developing countries (1986)
Closing Developing Countries' Capital Drain publication in 2016 by Joseph E. Stiglitz, Hamid Rashid  

Russian mafia finds a home in promised land | The Independent - March 1995 |
The 1995 Gangster Meeting in Israel: Who was Kremlin's point man on the Trump campaign?
Israel's dirty trade in Africa: Diamonds, weapons and settlements

Lev Leviev, a global tycoon known as the "king of diamonds", was a business partner of the Russian-owned company Prevezon Holdings that was at the center of a multimillion-dollar lawsuit launched in New York.

My earlier diary ...

During Yeltsin Era, UK and US Stripped Assets Off Russia
Globalisation: Katsyv links Moscow - London - NY - Tel Aviv
Russian Oligarch or FBI Rat?

'Sapere aude'

by Oui (Oui) on Thu May 24th, 2018 at 10:40:46 AM EST

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