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What Are the Russians Buying?

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By Anne Applebaum
Wednesday, December 14, 2005

Even here in Washington -- a city populated by lobbyists who once held political office and government officials who once worked as lobbyists -- it's hard to top the story of Gerhard Schroeder. Last week the former German chancellor announced that he'd accepted a job offer from Gazprom, the state-controlled Russian energy mega-company. As one of his last acts in office, Schroeder signed an agreement to build a diplomatically and environmentally controversial Baltic Sea gas pipeline from Russia to Germany. Now he's working for the company that will build it. It's as if Jimmy Carter had negotiated the return of the Panama Canal to Panama -- and then signed a lucrative contract to manage the shipping lanes.

But there's more here than just the former German chancellor's quest for personal enrichment -- or funds to pay alimony to his three ex-wives. The story also reflects the growing international power of Russian money. Much like the Saudis, who spent the 1970s buying up London real estate, the Russian tycoons spent their first decade of billionaire-hood sunning themselves in southern France and crowding the slopes at Gstaad. And just as the Saudis eventually learned to make more fruitful use of their money -- putting prominent Americans on lucrative boards, donating money to their favorite causes, even befriending their wives -- the Russians, too, have now realized that petrodollars go a long way.

What they've been seeking so far is respectability of the sort that will help Americans overlook their murky origins and will win Russian companies coveted listings on Western stock exchanges. Mikhail Khodorkovsky, the oil tycoon in prison in part because he got too good at this sort of thing, gave big chunks of money to the Library of Congress. In return, the librarian of Congress hosted a party for his foundation. A similar desire for respectability compelled Vladimir Potanin, another Russian magnate, to become a patron of the arts. In return, the Guggenheim Museum in New York put him on its board.

This year the Woodrow Wilson Center -- a federal institution that raises some funds privately and that encompasses the Kennan Institute for advanced Russian studies -- even gave a "Corporate Citizenship" award to Vagit Alekperov, chairman of Lukoil, another energy mega-company. At the award dinner, James Langdon of the D.C. law firm Akin Gump Strauss Hauer & Feld lauded Alekperov as "an innovator and leader," which suited all concerned. Alekperov, a man who with amazing speed acquired 10 percent ownership of a company whose reserves may match those of Exxon Mobil, got his credibility. The Wilson Center raised some $400,000, mostly from U.S. oil companies, at that dinner. Fred Bush, chief fundraiser for the center, says of the new Russian billionaires that he's "happy to have their money" and wishes they'd give more.

Others point out that it's better for Russian moguls to support Russian scholars than to fritter their money away buying lift tickets. The suggestion of influence does cause some discomfort, particularly since many Russian companies aren't exactly independent of the Russian state. Last week Paul Saunders, executive director of the Nixon Center, furiously denied a Russian newspaper report of Kremlin plans to set up a think tank, funded by the Russian government and Russian oligarchs, in conjunction with the center, which is affiliated with the Richard Nixon Library and Birthplace. Saunders admits that the Nixon Center accepts "small" amounts of money from Russia, but he issued a statement calling the Russian journalist who wrote the story a "specialist in black PR." Blair Ruble, director of the Kennan Institute, also worries that some might think his scholars are influenced by Russian money, and he admits to having questions about donations from Lukoil and other Russian companies. He says he doesn't allow donors to have any influence over research. Besides, when someone such as Schroeder goes to work for Gazprom, Ruble says, the argument against accepting Russian money "becomes harder and harder to make" to fundraisers and boards of directors.

Generalized paranoia -- and in particular the assumption that anyone expressing an opinion about anything is being paid to do so -- is probably the least attractive attribute of Russian political culture, and I'm not going to indulge in it here. But Schroeder's new job should raise awareness that there may be some mixed motives out there: If nothing else, Russian companies, like their Saudi and indeed American counterparts, have now made it known that they'll reward their friends.

applebaumanne@yahoo.com


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