Wednesday, May 25, 2016


The Power Vertical

Putin's Mafia Statecraft

I'm going to make you an offer you can't refuse.
I'm going to make you an offer you can't refuse.
By Brian Whitmore

In the past couple years, Russian hackers have launched attacks on a French television network, a German steelmaker, the Polish stock market, the White House, the U.S. House of Representatives, the U.S. State Department, and The New York Times.

And according to press reports citing Western intelligence officials, the perpetrators weren't rogue cyber-pranksters. They were working for the Kremlin.

Cybercrime, it appears, has become a tool of Russian statecraft. And not just cybercrime. 

Vladimir Putin's regime has become increasingly adept at deploying a whole range of practices that are more common among crime syndicates than permanent members of the UN Security Council.

In some cases, as with the hacking, this involves the Kremlin subcontracting organized crime groups to do things the Russian state cannot do itself with plausible deniability. And in others, it involves the state itself engaging in kidnapping, extortion, blackmail, bribery, and fraud to advance its agenda.

Spanish prosecutor Jose Grinda has noted that the activities of Russian criminal networks are virtually indistinguishable from those of the government. 

"It's not so much a mafia state as a nationalized mafia," Russian organized crime expert Mark Galeotti, a professor at New York University and co-host of the Power Vertical Podcast, said in a recent lecture at the Hudson Institute. 

Hackers, Gangsters, And Goblins

According to a report by the FBI and U.S. intelligence agencies, Russia is home to the most skilled community of cybercriminals on the globe, and the Kremlin has close ties to them. 

"They have let loose the hounds," Tom Kellermann, chief security officer at Trend Micro, a Tokyo-based security firm, told Bloomberg News.

Citing unidentified officials, Bloomberg reported that Russian hackers had stepped up surveillance of essential infrastructure, including power grids and energy-supply networks, in the United States, Europe, and Canada.

Dmitri Alperovitch, co-founder of the security firm CrowdStrike, noted recently that the Russian security services have been actively recruiting an army of hackers.

"When someone is identified as being technically proficient in the Russian underground," a pending criminal case against them "suddenly disappears and those people are never heard from again," Alperovitch said in an interview with The Hill, adding that the hacker in question is then working for the Russian security services. 

"We know that’s going on," Alperovitch added.

And as a result, criminal hackers "that used to hunt banks eight hours a day are now operating two hours a day turning their guns on NATO and government targets," Kellermann of Trend Micro told The Hill, adding that these groups are "willingly operating as cyber-militias."

The hacking is just one example of how the Kremlin effectively uses organized crime as a geopolitical weapon.

Moscow relied heavily on local organized crime structures in its support for separatist movements in Transdniester, Abkhazia, South Ossetia, and Donbas. 

In the conflict in eastern Ukraine, organized crime groups served as agents for the Kremlin, fomenting pro-Russia unrest and funneling arms to rebel groups.

In annexed Crimea, the Kremlin installed a reputed gangster known as "The Goblin" as the peninsula's chief executive. 

And of course there is the case of Eston Kohver, the Estonian law enforcement officer who was investigating a smuggling ring run jointly by Russian organized crime groups and the Russian Federal Security Service. 

Kohver was kidnapped in Estonia September 2014, brought across the Russian border at gunpoint, and convicted of espionage. He was released in a prisoner exchange last month. 

The Geopolitics Of Extortion 

But Putin's mafia statecraft doesn't just involve using and colluding with organized crime groups. 

It often acts like an organized crime group itself.

In some cases this involves using graft as a means of control. This is a tactic Moscow has deployed throughout the former Soviet space, involving elites in corrupt schemes -- everything from shady energy deals or money-laundering operations -- to secure a "captured constituency." 

This is a tactic Russia attempted to use in Georgia following the 2003 Rose Revolution and in Ukraine after the 2004 Orange Revolution, where "corruption and shadow networks were mobilized to undermine the new leadership's reform agenda," according to James Greene in a 2012 report for Chatham House

This was particularly successful in Ukraine, where opaque gas deals were used "to suborn Ukraine's post-Orange Revolution new leadership," Greene wrote.

And Putin is clearly hoping to repeat this success in eastern Ukraine today -- especially after elections are held in the rebel areas of Donbas.

"His bet in the eastern Ukraine local election, if it ever takes place, won't be on the rebel field commanders but on local oligarchs who ran the region before the 2014 'revolution of dignity.' Through them, he will hope to exert both economic and political influence on Kiev." political commentator Leonid Bershidsky wrote in Bloomberg View. 

In addition to graft, Moscow has also effectively utilized blackmail -- making the international community a series of offers it can't refuse.

It's a neat trick. First you create instability, as in Ukraine, or exasperate existing instability, as in Syria.Then offer your services to establish order.

You essentially create demand -- and then meet it. You get to act like a rogue and be treated like a statesman.

It's how protection rackets operate. And it has become one of the pillars of Putin's foreign policy. 

"It’s the geopolitics of extortion, but it’s probably working," Galeotti told Voice of America in a recent interview

"He’s identifying a whole series of potential trouble spots around the world, places that matter to the West, and is essentially indicating that he can either be a good partner, if they’re willing to make a deal with him, or he can stir up more trouble."

NOTE TO READERS: The Daily Vertical will not appear on October 28, due to the public holiday in the Czech Republic. We'll be back on October 29.

This forum has been closed.
Comment Sorting
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by: Yanal Sago from: Istanbul
October 27, 2015 18:45
When people see someone who is unjust and do not stop him,their punishment is imminent.

by: Yoshua
October 27, 2015 20:01
The only problem with this extortion racket theory is that it costs more than they will ever gain from it. Sure... Russia will use anything in its arsenal when it feels threaten (corruption, hackers, the mafia), but only because Russia is a weak nation. The NATO expansion will in the end suffocate Russia and bring her down on her knees.
In Response

by: Helen from: Russia
October 28, 2015 19:27
Never Russia will be on knees!NEVER!U never understand this/
In Response

by: J Karna from: Free Poland
October 29, 2015 07:13
You'll be on your knees as you cannot see the threat from the East.

In Response

by: Alfredo from: Canada
October 29, 2015 11:10
Russians have already bent their knees. To Putin and to the Chinese!

by: Rick
October 27, 2015 21:16
Hilarious to read this article
on a website sponsored by the US government
that
good to remember
spy middle world , allies governments included
In Response

by: Anonymous
October 29, 2015 12:01
western ideology is easy
"what we do is always right"
"if others do the same it's disgraceful!"
Remember the Nazi expression "Gott mit uns"
"God is with us "

by: Brent from: Winnipeg
October 28, 2015 00:10
And why do our leaders want to keep "doing business" with this mafia government? Shut down their access to international banking and access to our technology and treat them like North Korea.
In Response

by: Robert from: Moscow
October 29, 2015 17:34
There is a problem with you idea Brent. Russia is not in danger of bankruptcy like the U.S. and Europe or Japan. They do have enough corporate debt to the west that if they all, and there is talk they just might do it. They could pay their debts to an escrow account. Then we watch the Western banks collapse like a bunch of Dominoes for insolvency. Last I heard there were 7 or 8 such black swans Russia could loose on the West.
Don't make the mistake like so many and think because the West is strong in an area means an enemy will hit them there. If the West makes an enemy of Russia, Russia will hit them where they are weakest.
In Response

by: jojnjo from: Dublin
October 30, 2015 02:31
And where might that be, Robert? Putin doesn't care about Russians because he's feeding yous with garbage (propoganda) he's starving yous of the truth (again media) he's making yous feel poor (economicially) he's robbing yous of billions (and has been doing that since KGB days, he has the Russian Mafia working for him (or as good as) he also has the little thugs gouging for him (those that attack LGBT etc) & also he is a two faced liar (who practices this trait daily) A Dictator, who out shines even Hitler & a Criminal for his crimes against Ukraine, Syria & more importantly his owm people. There!
In Response

by: brent from: Winnipeg
October 30, 2015 04:37
Keep dreaming "Skippy"....Russia needed an IMF bailout in 1998 when it devalued the 'rubble' and Western assistance in 1992 when the USSR collapsed.

What are you going to hit the west with? Are you going to throw all that bulldozed EU cheese at us? Your economy has shrunk in the last year and is smaller than Italy. India has more aircraft carriers than Russia. The only thing you have in abundance in your navy is a bunch of tugboats to tow back your rusting hulks left in your navy

Let me guess, you believe Putin's threat of using his nukes? What you don't realize is you'd have to nuke numerous U.S. cities to wipe out America...and also London, Paris, Berlin and all of its allies. All the U.S. has to do is nuke Muscovy and you cut the head off the Russian snake....then whatever is left is back living in the Dark Ages or subservient to your new Chinese masters

Go back to your video games and 'black swans'....you have become a pariah nation and the only thing separating you from North Korea is what is left in your reserves that Putin hasn't already stole from you and your children....

by: Олег from: Тернопіль
October 28, 2015 00:42
The name of Putin's mafia is FSB.

by: Danram from: Houston, Texas, USA
October 28, 2015 01:44
The only reason that Russia has been able to get away with its fun and games in places like Syria and Ukraine is because of the weakness and stupidity of the west's current crop of "leaders", chief among them Obama and Merkel.

by: Carlos Lober from: Ukraine
October 28, 2015 07:37
this is correct .. and worse now because of Barack Obama .. he is the most powerful man in the world .. yet he has refused to use his power to get rid of international criminals like Assad .. and refused to treat Putin for what he is ..
In Response

by: Anthony C
October 28, 2015 15:07
The concept of "PEACE THOUGH STRENGTH" doesn't jive with the Liberal Progressive establishment now in power in the U.S. and Western Europe who do not or worse, will not learn the historical lessens of the past hundred years.
This so-called "Post History" illusion is going to get us all killed. Putin is playing the game by the old rules and the old rule is "There are no rules" He is a hard ball gamer while our "so-called" leaders couldn't even make the little league team in the game of Geo-politics. Bismark, Disraeli, Churchill would know exactly whats going on but not the dithering so-called leader of the free world, our "One red line after another" President Barack Obama.

He should have stayed on the South side of Chicago fighting the good fight instead of pretending to be a national leader. He is not an historian, nor is he a Geo-politician. He is a "Community organizer". and That's where he should have stayed. God help us all if, God forbid, Billary Clinton wins the next election. I didn't misspell Billary. That would be substituting one blind fool for another and the one person on Earth who will fall to his knees with tears of Joy will be Vladimir Putin.

by: J Karna from: Free Poland
October 28, 2015 14:50
It's time the West stopped pussy footing around with Russia and
other dictatorships and retaliate with a major cyber-attack.
Putin and his gangsters only respect strength.

by: Саша from: РФ
October 28, 2015 16:51
Strangely why Putin could not keep the same game as the leaders of the Western countries?
In Response

by: Helen from: Russia
October 28, 2015 19:31
A very good ?

by: sandy miller from: usa
October 28, 2015 20:42
I' have to wonder what's going on in USA media. Yesterday AM Charlie Rose show Ted Koppel was interview about a new book he just released. Koppel said the USA needs to worry about North Korea and Iran taking down our electrical gird. We have all kinds of proof about Russia's activities all over the world and not at word about that in USA media. Why? North Korea will do nothing unless they get China's approval and Iran probably doesn't have the capability. So my question is why is American mass media protecting Putin's Russia? Can anyone answer that?
In Response

by: Gor Don
October 29, 2015 01:27
Charlie Rose is a corrupt lie peddling puppet. Why would Iran or North Korea want to take down US power grids? That is ludicrous. Iran is very technologically advanced despite what the mainstream news media would like you to believe. Iran has never Attacked a country while the USA has attacked and meddled with the politics and economics in nearly every country in the world. Who would benefit from taking out power grids in the US? How would Iran or North Korea beneifit from doing something like that? Its absurd. Its hysteria-generating to demonize Iran and distract you from the real issues. You are being fed nonsense by mainstream "news".
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The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It offers Brian's personal take on emerging and developing trends in Russian politics, shining a spotlight on the high-stakes power struggles, machinations, and clashing interests that shape Kremlin policy today. Check out The Power Vertical Facebook page or