Monthly Archives: December 2017

Browder, Putin, Congress, and the Magnitsky Act

William F. Browder - World Economic Forum Annual Meeting 2011.jpgWilliam Browder was born in America, made billions in Russia during the 1990s, renounced his American citizenship in 1998, and then persuaded the Congress to pass the Magnitsky Act in 2012, punishing Putin and his friends after Putin barred Browder from Russia in 2006.  

The Magnitsky Act was the subject of the famous meeting between Donald Trump,Jr., and the Russian lawyer Natalia Vishnevskaya, that Trump famously said was about adoption, which it was.  After the US Congress passed the Magnitsky Act, in retaliation Putin passed a Russian law banning US adoption of Russian children.  

Of course, the main, underlying issue for Browder, Putin, and the Congress is money, particularly Jewish money.  Born in Chicago, Browder is Jewish.  His grandfather, Earl Browder, was the head of the Communist Party of the USA in the 1940s, when he was also a spy for the Soviet Union, according to Wikipedia.  

When the Soviet Union began to self-destruct under Yeltsin in the 1990s, Browder was there to grab some of the old Communist government assets that were being sold off for pennies on the dollar.  He was then still an American, but many of his Jewish colleagues were native Russians who also grabbed the opportunity to buy up these assets.  Several of the original Russian oligarchs were ethnic Russian Jews — Mikhail Khodorkovsky, Boris Berezovsky, Vladimir Gusinsky, Mikhail Fridman,  and Alexander Smolensky.  Under Putin a new group of Russian oligarchs has been created, which according to Wikipedia includes Roman Abramovich, Alexander Abramov, Oleg Deripaska, Mikhail Prokhorov, Alisher Usmanov, German Khan, Viktor Vekselberg, Leonid Mikhelson, Vagit Alekperov, Mikhail Fridman, Vladimir Potanin, Pyotr Aven, and Vitaly Malkin.  About half of the Putin oligarchs are also ethnically Jewish Russians.  Browder did not make the cut under Putin.  

In 1996 Browder founded Hermitage Capital Management with wealthy Jewish banker Edmond Safra to invest in Russian businesses.  As time passed, Browder felt that the Russian government was illegally taking or extorting money from the companies he had invested in, and he began exposing this Russian corruption.  In 2006 Browder was blacklisted by the Russian government.  A Russian raid on Hermitage offices found papers that the government said showed Hermitage had engaged in illegally claiming tax deductions.  In the process, they arrested Sergei Magnitsky, Hermiatage’s auditor, who died from mistreatment in prison.  Browder then persuaded the Congress to pass the Magnitsky Act, which targeted people around Putin who had been connected to Magnitsky death, preventing them from traveling to the US or using its banking system.  Putin then banned US adoptions, which was sort of a target of opportunity because it was a divisive issue in the news when Putin wanted to punish the US.  

I don’t understand why the US Congress was so quick to act on the request of a man who had renounced his American citizenship.  Browder couched his request in human rights terms, punishing Russia for torturing his auditor, but in fact it was largely Browder’s personal revenge against Putin for banning him from the Russian cookie jar where he had been making millions.  He essentially said, if you punish me, I will punish you by banning your buddies from the American cookie jar.  It was tit-for-tat financial retaliation, under color of human rights legislation.  It was probably a politically useful weapon as the US-Russian relationship deteriorated and Putin and Obama developed a personal animosity towards each other.  However, it made Browder appear to have enormous power over the US government, pushing the US into open hostility towards Putin.  I would think that if the US were going to do an enormous financial favor for someone, that person would at least be a US citizen, but Browder was not.  He had such contempt for the US that he had renounced his citizenship, but Congress still fawned over him and pandered to him.  You would think he was in the DACA program.  

Now this huge mess, which mainly affects  Browder and Jewish Russian oligarchs, threatens to envelop the whole Trump presidency.    

Income Inequality and Public Relations

Gilbert Stuart Williamstown Portrait of George Washington.jpgMartin Wolf’s column in the Financial Times on “A Republican Tax Plan Built for Plutocrats” raised an interesting issue for me as a former Southerner.  Wolf wrote:

The pre-civil war South was extremely unequal, not just in the population as a whole, which included the slaves, but even among free whites. A standard measure of inequality jumped by 70 per cent among whites between 1774 and 1860. As the academics Peter Lindert and Jeffrey Williamson note, “Any historian looking for the rise of a poor white underclass in the Old South will find it in this evidence.” The 1860 census also shows that the median wealth of the richest 1 per cent of Southerners was more than three times that of the richest 1 per cent of Northerners. Yet the South was also far less dynamic….

The South was a plutocracy. In the civil war, whose stated aim was defence of slavery, close to 300,000 Confederate soldiers died. A majority of these men had no slaves. Yet their racial and cultural fears justified the sacrifice. Ultimately, this mobilisation brought death or defeat upon them all. Nothing better reveals the political potency of tribalism.

Why wasn’t the antebellum South more upset by income inequality.  My great-grandfather, who fought in the Civil War as a colonel in the 21st Alabama regiment, moved to Mobile, Alabama, from Iowa just a few years before the war started.  He worked for a Mobile silversmith, James Conning, and had no slaves.  During the war, he was often so short of money that he asked to Mr. Conning to help out  his wife while he was away fighting.  (See From That Terrible Field by John Folmar.)  There were, no doubt, some in the South who resented the wealthy plantation owners, but as Gone with the Wind brings out, most Southerners looked at the aristocracy favorably, while the aristocracy exercised a sort of benevolent dictatorship that cared for the lower classes, even if they didn’t do much to improve their situation.  

The lesson for me then is that income inequality is less of a problem if there is a friendly relationship between the classes.  The aristocracy had a sense of “noblesse oblige.”  In the South, this relationship had been built up over generations, and was made easier to bear because income and class inequality was widespread and accepted in in Europe at that time.  The US was much more democratic than Europe, which lessened the perception of differences in America.  We had rebelled against the British royalty and their decrees: “No taxation without representation.”  We declared that “All men are created equal.”  There was a softening at both ends, with the aristocracy showing sympathy for the lower classes, and the lower classes feeling empowered by their power in the democracy.  

Alexis de Tocqueville was apparently not as impressed with the South as he was of the Northern United States.  He thought that slavery and the agrarian economy made the South less responsive to the democratic trends sweeping the North.  But this view ignores the fact that many of the leaders of Revolution and creation of the new country were Southerners, particularly from Virginia , the bastion of the plantation aristocracy, or plutocracy as Martin Wolf calls it.  Most of the early Presidents came from Virginia, starting with Washington, as did many other political leaders.  The fact that Southern secession was widely supported in the Southern states is evidence of the support by the lower classes of the slave-holding aristocracy.  

Today, one problem of the aristocracy of the 0.1 percent is that they are not widely liked by the lower classes particularly by the white middle class.  Many of the upper one percent are recent arrivals in the US — Jews, Indians, Asians — who have made no effort to ingratiate themselves with the broader population.  If anything, they have isolated themselves in Manhattan or Silicon Valley.  Mark Zuckerberg went on some sort of a tour of the US, which turned out to be mainly a joke.  Buzzfeed reports that the trip increased Zuckerberg’s Q Score, a popularity rating, from 14 percent to 16 percent, about the same as Ashton Kutcher, Rachael Ray, Charles Barkley, Warren Buffett and Mark Cuban.  Elon Musk’s Q Score is 24%.  Tom Hanks has a Q Score of 46%.  Billionaires are not particularly well liked.  

The billionaires’ contempt for everybody else explains the resentment against them, and thus the rising concern about inequality.  The public perception is that these people don’t deserve the wealth and privilege they hold, that they gained it dishonestly, even if they came up with some brilliant new invention.  I would guess that Steve Jobs is viewed much more favorably that Bill Gates, because Jobs was concerned about the beauty and functionality of the products he built, while Bill Gates pretty much only cared about the money.  He is trying to make amends by giving money away now, but he has lots of evil to atone for.  Today’s billionaires might take a lesson in public relations from the plantation owners of the old South.  

Italian Fisheries

Following up the last post, on my last full day in Rome, I had to accompany the Ambassador to meet with the Italian Agriculture Minister.  The swordfish issue that my office was sued over was such a big issue that the US had sent a delegation of 15 or 20 Americans to meet with even more Italians to decide on a course of action on limiting Italian use of driftnets to catch swordfish.  They came to an agreement that was pretty restrictive.  Among other things, the Agriculture Ministry would send enforcement officers out with fishing boats to make sure that the fishermen were following the rules.  

My American assistant took the lead on the fisheries issue.  She had served in Venezuela, where she had been responsible for fishing matters.  I had never dealt with fishing policy, and was less interested in it than in other functions of the office, such as nuclear non-proliferation and space.  She took the lead in the big bilateral meeting, which ended with both sides being pretty happy.  

When the results of the meeting reached Sicily, however, things did not go as well.  Most of the fishermen affected by the agreement lived in Sicily, and they felt that the agreement damaged their livelihood.  As a result the took out hit contracts with the mafia to kill Agriculture enforcement officers were controlling them.  In addition, the organized a huge sit-down demonstration against the Ministry in downtown Rome that tied up traffic for hours.  Thus, the Minister called in the Ambassador to request that the restrictions be eased somewhat in order to appease the fishmen, and hopefully protect his enforcement officers from being killed by the mafia.  

I told the Ambassador that because of the suit that the government had lost against the environmental groups, he was not in charge of US policy on the issue.  A district judge in New York was.  Anything the Ambassador agreed to would have to be approved by the judge, and that often meant consultations with the environment groups, who in turn always asked Greenpeace Italy for its recommendation.  

We agreed to a slight relaxation of the rules, which I then sent to Washington for approval.  As far as I know they were approved.  The fishermen cancelled the mafia hit contract and quit tying up traffic in Rome.  However, I was gone before the changes were implemented.