Standard fare from London's most prestigious tabloid
This article originally appeared at Bloomberg
Here's a story that sheds some light on why Russian President Vladimir Putin is so firmly entrenched as his country's ruler and sole serious decision maker. It has to do with the vast wealth even his low-level allies -- not to mention his inner circle -- have been able to accumulate while he's been in power.
London tabloid the Daily Mail has been writing about Russian President Vladimir Putin's Spanish villa since 2012, when a British contractor working in the ritzy Marbella area attributed the palatial building, then under construction, to Putin. The last Daily Mail readers heard about it just a week ago was that the Russian leader was planting a vineyard on the estate. The Spanish press, too, has had a lot of fun with the Putin mansion story.
Now it appears that that the home and the vineyard had nothing to do with Putin: An investigation by the team of Russia's leading anti-corruption activist Alexei Navalny revealed that it's owned by Zoya Ponomareva, the daughter of Valery Ponomarev, a Russian parliament member from the remote region of Kamchatka. He never declared any foreign property -- that would have raised questions in a country that expects politicians to own assets only in Russia. He is, however, a wealthy man: His company makes car license plates and all kinds of official stationery used by Russian government agencies.
Ponomarev is not one of Russia's richest men, nor even one of the 15 "Government Order Kings" named annually by the Russian edition of Forbes magazine. That is perhaps good for him: Some of the people on top of that list are also on sanctions lists in the U.S. and Europe. Ponomarev's main business, fully dependent on the government's largesse, doesn't require exclusive access to Putin. It's enough that Ponomarev supports the pro-Putin United Russia party, and his fish business in Kamchatka is the party's major donor in the region. The parliament seat is just a tangible sign of his relative importance in the Russian establishment.
And yet his house on the Costa del Sol is, in the eyes of locals and British journalists, "fitting for a king... or Russian president," as the Daily Mail wrote.
Men like Ponomarev number in the thousands. Their names are hardly ever in newspapers. Many of the husbands of "The 50 Richest Wives of Russian Officials" are obscure men from the middle layer of the Russian government hierarchy who, according to their income declarations, aren't rich at all (owning property is what wives, sons and daughters, and often more distant relatives, are for). It is their Bentleys and Porsches that still zip through Moscow traffic in these lean times, and it's their villas that investigative reporters find in European resort towns and in walled compounds outside the Russian capital.
The reason they work as humble bureaucrats or sit in regional legislatures, wasting valuable time that could be better spent making money, is that the money-making part of their lives is dependent on the bureaucratic or political one. In a country where private property is protected only if its owner in in good standing with the right people, and where the state's importance both as a regulator and as the owner of the most lucrative assets keeps growing, these men know they have to be part of the system to keep and increase their wealth.
After 14 years of Putin's rule, such bureaucrat-burghers have a strong sense of entitlement. Yesterday, Vladimir Yakunin, a Putin friend who runs Russia's railroad monopoly, said he might quit his job and go into private business if the government follows through on its threat to have all state companies publish the incomes of their top managers. "This is illegal interference with my personal life, with my information," Yakunin told state television. he added: "We are a natural monopoly, we live according to decisions taken by the state, so we make as much as the state allows us to make."
That's quite a lot. According to a Navalny investigation, Yakunin's children control a network of firms that do business with the railroad monopoly.
It's tempting to theorize that these people could overthrow Putin in a palace coup now that Russia's a poorer country and Western sanctions threaten their wealth. Everything they own, however, is only theirs because "the state" has allowed them to have it. Any change that might upset the balance of "the state" would mean making new deals, forging new allegiances, and potentially losing lucrative commissions and assets to hungrier newcomers. The United Russia crowd already has its hands full taking care of what's already been built, seized, stolen or carved out. These palaces are, in a sense, all Putin's -- but he lets his people use them.
That's why there will be no palace coup even if all the "Putin mansions" are confiscated by hostile Europeans. The goose named Putin will lay more golden eggs. Without him, who knows.