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12.02.10

Berlusconi and Putin Pillow Talk

Putin is lashing out against the U.S.. But new diplomatic cables released by Wikileaks reveal that he has another close international partner to turn to—Silvio Berlusconi. Julia Ioffe reports on the high-level bromance.

Putin is lashing out against the U.S.. But new diplomatic cables released by WikiLeaks reveal that he has another close international partner to turn to—Silvio Berlusconi. Julia Ioffe reports on the high-level bromance.

When Vladimir Putin blasted the Obama administration on Larry King Live yesterday, he was posturing, letting Obama know that a “reset” and a red button won’t make them buddies. It was a stark reminder that Putin still does business—both political and economic—the old way: through personal friendships.

What camaraderie with Putin entails can now be easily gleaned from the fresh bash of diplomatic cables released by WikiLeaks. One cable especially, apparently sent to Washington last year from the embassy in Rome, reveals the Berlusconi—Putin definition of Paesano. The decade-old connection thrives on the personal chemistry between the two politicians but also on billions of dollars in energy contracts, helped along by “lavish gifts” and a “shadowy” intermediary, who has helped keep the money flowing between the two countries, according to the cables as well as political observers.

“I think it’s interesting that Russia and Italy have this strangely close relationship,” says Alexander Kliment, a Russia analyst with the Eurasia Group. “And I think it has to do with three things: One is the personal connection between the two leaders; two, energy deals and banking, and three, thesimilarity in political cultures.” As Kliment describes it, it’s an “extremely personalized” way of doing politics and business, often as a way around the extreme bureaucratization of society.

So how close are Putin and Berlusconi? In a word: Very. The most recently released cables portray Berlusconi as a man desperate for the lasting friendship of Putin, who seems a bit more cautious. “Berlusconi admires Putin's macho, decisive, and authoritarian governing style, which the Italian PM believes matches his own,” writes the author of one diplomatic cable, adding that Berlusconi sees a fellow “tycoon” in Putin—a strange categorization for a man who, last year, claims he made just $120,000. (Unofficially, Putin is thought to be one of the richest men in the world.) “From the Russian side, it appears that Putin has devoted much energy to developing Berlusconi's trust,” notes the cable. According to the cables, it is energy well spent: Berlusconi is shown repeatedly flouting his NATO and E.U. obligations in order to press Putin’s interests in the region.

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It is a relationship that goes back to Putin’s arrival at the wheel of the ship of state. For his first foreign trip as president, he decided to go to Italy and, a year later, Berlusconi, who had just been elected (again) to the post as prime minister, flew to Sochi, a resort on the Black Sea. There the two men strolled down the boardwalk, talked of big things (probably), and drank Russian tea. Whatever it was they discussed at their first meeting, it is clear that the connection they forged was far stronger than that which Putin simultaneously built with British Prime Minister Tony Blair or President George W. Bush in those first heady years of his presidency. But whereas their friendships with Putin quickly and fatally unraveled, Silvio and Vlad have seen their relationship go from strength to strength.

By the time Putin joined Berlusconi on his n-th trip to Sardinia, in 2003, they were already on hugging terms. In times of crisis, Berlusconi talked to Putin on the phone daily, and Italian diplomats in Moscow complained that, because of this direct line between the two men, decisions got to them ready-made, with little explanation. Berlusconi was even rumored to be the only foreign leader to have been given the honor of spending the night in the Kremlin. He reciprocated by naming one of his beds “Putin’s Bed,” made famous by some secretly recorded pre-business banter between Silvio and Patrizia the Prostitute. (Putin’s Bed was, of course, the place where the business got done.)

“Berlusconi admires Putin's macho, decisive, and authoritarian governing style, which the Italian PM believes matches his own.”

There were other touching moments, too. Last fall, Berlusconi ditched the visiting King of Jordan and, bearing “fine wines,” flew to St. Petersburg to celebrate Putin’s 57th birthday. Their offspring have also been bonding: one summer, Putin’s daughters, Maria and Yekaterina, hung out with Berlusconi’s daughter, the Russian-speaking Barbara, on her father’s yacht and in her father’s nightclubs.

During the last decade, the two men—one young, blonde, and wiry; the other a broad shovel of tanned antique leather—have enjoyed all manner of presidential pastimes. They have, for example, attended extreme fighting events (the eye-gouging kind) together with their other bud, Jean-Claude Van Damme. They have also tested emergency aircraft, yachted together, and holidayed in Berlusconi’s private villa in Costa Smeralda and at Putin’s dacha near the Black Sea. “By our reckoning, Putin has held more bilateral meetings with sitting Italian PMs in the recent past than any other world leader,” quips the cable.

Their favorite activity, however, seems to be holding joint press conferences. At one of their most memorable appearances together, in Moscow, in 2008, a Russian journalist named Natalia Melikova asked Putin about his apparent marital trouble and rumored romance with the young and indecently plastic gymnast-cum-parliamentarian Alina Kabaeva. When asked about the liaison, Putin’s face hardened. “There is not a word of truth in this story,” he said. Berlusconi, giggling, regarded the exchange. When Putin had finished answering, Berlusconi cocked his hands, and, imitating a gun, fired with a silent “Pow! Pow!” at Melikova. It had only been a year and a half since Anna Politkovskaya, an investigative journalist, had been shot in her Moscow elevator, and Melikova was reduced to tears. On the dais, Berlusconi laughed, and Putin nodded.

Somewhere near the nexus of the Berlusconi and Putin relationship is a 48-year-old former translator named Valentino Valentini, from Bologna, described in one the cables as a “shadowy figure.” Valentini, according to one cable, is “Berluscon's [sic] key man on Russia, albeit with no staff or even a secretary.” 

Now a lawmaker from Berlusconi’s People of Freedom Party, Valentini has served as the prime minister’s foreign policy advisor since 2001. “Valentini, a Russian-speaker who travels to Russia several times per month, frequently appears at Berlusconi's side when he meets other world leaders,” says the cable. “What he does in Moscow during his frequent visits is unclear but he is widely rumored to be looking after Berlusconi's business interests in Russia.”

And those appear to be extensive. As the relationship between Putin and Berlusconi has blossomed, so have the shared business interests of their respective countries. There is, for example, the southern Russian city of Lipestk, a special economic zone, which is dominated almost entirely by Italian companies. “The bureaucrats down there even speak Italian!” says Russian parliamentarian Sergei Markov.

Italian banking and finance in Russia has also grown considerably in recent years. The biggest Italian bank in the country, UniCredit, alone has over $17 billion in Russian assets. There is now talk of a Russian entry into the sacrosanct Italian telecom sector, particularly a buy-in to Mediaset, the ailing media company Berlusconi founded in the 1970s. 

And Italy’s gain has sometimes been America’s loss.

“Back in 2007, there was an unspoken rule to give American banks here a fight because Americans were seen as anti-Russian,” says Ivan Ivanchenko, who heads investment strategy research at VTB, a major Russian government bank. “Whenever there was a big deal going down, we could give it to the global franchises, but not the Americans.” The Italians, he says, were often the beneficiaries of this informal embargo.

Critics of the closely aligned business interests of Russia and Italy also point to the case of Alexei Golubovich, an executive of Yukos–the company of jailed oil tycoon Mikhail Kodorkovsky. Golubovich was seized and placed under house arrest in Rome in 2006. According to sources familiar with the case, the arrest came “with a phone call. No warrant, no court, nothing.” A year later, with Khodorkovsky languishing in a Siberian jail, Yukos was dismantled and sold off to Putin-friendly interests. Eni, the Italian energy company with ties to Berlusconi, got one of Yukos’s major gas fields. They were the only foreign company to get such a plum prize.

In 2006, after the Russian state-owned gas behemoth Gazprom, had begun to build two crucial pipelines to fill in the energy vacuum in Europe, Russia needed a partner for the southern branch (called South Stream). It found a perfect collaborator in—you guessed it—the Italian Eni, a company that has a bigger staff in Moscow than the Italian embassy itself. According to the Rome cable, the company funds most of Italy’s think tanks and allegedly has several journalists on its payrolls. And Eni’s director has more access to Berlusconi than the Italian foreign minister. Two years after the deal between the companies had been signed, Eni was singing Gazprom’s tune. “ENI's view of the European energy situation was disturbingly similar to that of GAZPROM and the Kremlin, and at times laced with rhetorical flourishes reminiscent of Soviet-era double-speak,” says the cable.

Berlusconi’s personal financial interests also appear to be a critical factor in the mix. According to Russian and Italian press reports, when Gazprom set about finding an Italian partner to deliver its gas to Italy, they picked Central Energy Italian Gas Holding, owned mostly by Gazprom’s subsidiaries. One third, however, belonged to one Bruno Mentasti-Granelli, widely believed to be a stand-in for Berlusconi’s financial interests. (The deal was later scuttled by a major outcry, but apparently there is now a quiet effort underway to put it back together with the help of some conveniently located intermediary companies.)

As for the “shadowy” interloper, Valentini tends to pop up whenever there’s an important meeting for Silvio’s interests. Pictures show Valentini hovering uncomfortably close to the participants, scanning the action, sizing people up. When Berlusconi flew to St. Petersburg for Putin’s birthday party, Valentini was the only one to accompany Berlusconi other than some bodyguards and a valet. Why? In the whirl of dancers and booze, said Berlusconi aids, the two pals had some energy deals to discuss. Said Putin’s spokesman, “I can’t exclude that they certainly will be somehow celebrating his birthday, but it’s not the main reason for the visit.”

Julia Ioffe is a journalist living in Moscow. She has written for Foreign Policy, The New Yorker, The New Republic, and Bloomberg BusinessWeek. Read her blog, The Moscow Diaries at True/Slant.