The Panama Papers are a wake-up call for anyone who may have doubted how deeply cronyism and corruption are rooted into Russia’s leadership. But for those who have followed the inner workings of Putin’s presidency for the past 16 years or so, they are as much confirmation as revelation.
What will be truly fascinating is watching how this new mass of information is dealt with by the Putin regime over time, and how this might affect an already tense relationship between the Kremlin and the west.
The first time a large amount of information was leaked about Russia’s power system was in 2010, when a trove of US diplomatic cables obtained by WikiLeaks described a “virtual mafia state” and a system in which the Russian president allegedly used proxies to hide “illicit wealth”. These documents were damaging enough, detailing a kleptocratic authoritarian system where Russian officials, oligarchs and organised crime came together to amass large fortunes. At the time, the Kremlin dismissed this as “nothing interesting or worthy of comment”.
Casting Russia as a fortress resisting external onslaughts is key to Putin’s domestic political narrative
One key difference today is that the Panama Papers have emerged at a time when relations between Russia and the west are at an all-time low. When the WikiLeaks documents were published, the US and Russia were still officially in a “reset” phase, with pledges of cooperation on issues ranging from Afghanistan to nuclear disarmament. But since then, it’s all been downhill. The Russian government spoke earlier this year of a “new cold war”. Russian strategic bomber planes have flown over parts of Europe. Nato and the US are deploying new forces in the east of the continent. Russia’s annexation of Crimea and the war in Ukraine have led to western sanctions.
Along with low oil prices, this has put Russia’s economy under severe strain – with many analysts wondering whether that might lead to more aggressive ultra-nationalism in Moscow. Arguably, one key turning point, in this deterioration of relations with the west, came when the Russian regime accused Washington of stoking street demonstrations against the regime in 2011-12.
Because of this context, it’s likely the Panama Papers will be used by Moscow’s propaganda machine as another illustration of western attempts to discredit and damage Russian power. Casting Russia as a fortress resisting external onslaughts has become a key feature of Putin’s domestic political narrative. There will also be attempts to minimise, if not silence, media coverage of the scandal inside Russia itself. Putin’s spokesman, Dmitri Peskov, who is himself mentioned in the papers, clearly tried to pre-empt the fallout by recently warning that Russia was “in a state of information warfare” with the west.
The fact that Putin’s name does not appear in the Panama Papers will not calm the paranoia and conspiracy theories that his regime thrives upon. Indeed, these revelations will be seen in Moscow’s ruling circles as part of a CIA-led operation involving the manipulation of the “Anglo-Saxon” media.
All of this is very sensitive for Putin. Russians know corruption is rampant. They tend to give their president the benefit of the doubt. But it is no coincidence that the fight against corruption has been a central theme of opposition activists who, like Alexei Navalny, enjoy a strong following in Russia’s social media.
So the Kremlin will seek to put a lid on the story – it has already dismissed the revelations as “Putinphobia” – and it can do so. The newspaper Novaya Gazeta, which is part of the worldwide Panama investigation, is certainly well respected, but its distribution – and reach – is extremely weak. Unsurprisingly, Russian state TV, the main source of information for Russian citizens, made no mention of the offshore scandal on Monday.
But how long can this hold? Putin will be uncomfortable. He may be all over Russian TV, but he is a very secretive character who has gone to great lengths to hide his private life and intimate networks. That one of his childhood friends has been revealed at the centre of a web of offshore activities which benefited the president’s close circle is hardly something that can remain entirely without consequence.
The backlash from the Kremlin will be more anti-western propaganda, certainly with intensive trolling – perhaps worse. It would be a mistake to rule anything out. One of the first Russian voices to denounce Putin for financial misdeeds was Marina Salye, a St Petersburg city councillor who had tried in the 1990s to launch an investigation into dubious contracts signed by Putin when he was deputy mayor there. She went in to hiding shortly after he became president in 2000, and she died in 2012. She would have found the Panama Papers interesting indeed.