Here’s How Putin’s Russia Is Rebuilding the Iron Curtain
Hardliners in the Kremlin and the military imagine they can return to the supposed glory days of the Soviet Union by trapping people and money inside Russia's borders.
MOSCOW—In Russia’s long history of repressive regimes there has been many an exodus of talented people looking for greater freedom and opportunity.
After the collapse of the repressive Soviet Communist system in the early 1990s, even in the midst of a painful transition to freer markets, hopes grew that better lives would improve here and people would be more inclined to stay.
But once again, more and more Russian citizens are plotting an escape. According to recent polls up to 41 percent of young people say they want to live abroad. Rich Russians, well-educated young people, businessmen and bankers are running away, taking vast sums of money with them. Last year the outflow reached a record $67.5 billion.
And one of the answers being proposed to deal with this issue harks back to Soviet times.
To stop the hemorrhage of cash, deputy Vladimir Zhirinovsky, known as “Russia’s Trump” for his outrageous grandstanding, suggested to parliament that the country should renew the system of exit visas that for so long proved useful holding people behind the Soviets’ Iron Curtain.
Zhirinovsky proposed to start the travel ban with “dishonest bankers.”
Talk of exit visas immediately brings to mind a long-forgotten Soviet term, “nevyezdnoi,” a person barred from leaving the country.
Zhirinovsky is famous for loud populist statements. Shortly before Donald Trump won the US presidential election in 2016, Zhirinovsky, the leader of nationalist LDPR party (formerly the Liberal Democratic Party of Russia), told The Daily Beast that his thoughts were so similar to Trump’s it was as if the American politician was his twin brother. He was especially big on building walls and banning Muslims. Milking the moment, Zhirinovsky even took a blood test to see if he was related to the U.S. president. The test came back negative.
So, one might have thought Zhirinovsky’s proposal would be dismissed as so much political buffoonery. After all, freedom of movement out of Russia and into Russia is every citizen’s constitutional right, and one of those most cherished after the Soviet experience.
Yet nobody in Moscow’s elite seemed surprised to hear about Zhirinovsky’s “exit visa” plan, because it is part of a larger pattern. It is far from the first isolationist idea born between the eyebrows of Russian authorities.
When the parliament voted for internet isolation legislation earlier this month, some leading analysts concluded the return of the Iron Curtain is the Kremlin’s long-term goal, or at least its cherished fantasy.
Yevgeny Roizman, the former mayor of St. Petersburg, predicted the direction of the political wind: “Our armored train is slowly getting on the railroad to North Korea,” he told the independent radio station Echo of Moscow, alluding to the well-deserved reputation for isolation of the so-called “Hermit Kingdom.” “Nobody should have illusions, first they cut us off from the internet, then they will seal our borders.”
The Kremlin is like a giant octopus whose myriad suckers crack open some doors and close others. While Zhirinovsky developed his Iron Curtain ideas at the parliament, Foreign Minister Sergei Lavrov spoke before members of the Association of European Businesses about Russia’s intention to “open new positive opportunities for foreign business.”
But the most positive opportunity, given recent events—and arrests—is to get the hell out.
President Vladimir Putin did nothing to encourage confidence when he made his annual address to the nation and portrayed modern internet communications and social media as some sort of Western plot. “It is their invention, they can see and hear everything you say, so they collect information about you now; but then they will lose their opportunity,” he said, once Russia cuts itself off from the web.
One might well ask if he’s serious, or if this is just posturing. But the last few years have taught us that all sorts of unthinkable extremism can erupt and then settle into common discourse and then become almost banal.
Putin also reminded the West about the Cuban crisis, suggesting he was ready for another thermonuclear showdown, as if in an old Clint Eastwood western, eyeball to eyeball, nuke to nuke, to see who draws first. Addressing the U.S. ruling class specifically, Putin said: “Let them count the range and speed of the weapons systems we are developing.”
Or, as Donald Trump would put it, whose nuclear button is bigger.
Paying the price for this macho drama are two American citizens now behind bars in Russia.
Paul Whelan, a relative nonentity accused of spying, is facing 20 years in Russian prison.
After a hearing on Thursday, Whelan's defense lawyer Vladimir Zherebenkov sounded frustrated. "We found an apartment, asked the court to move Paul into house arrest, but our appeal was turned down again," Zherebenkov told The Daily Beast. He said the only thing the investigation has against his client is a flash drive. "Whelan's friend passed him that memory card. They had been on vacation together in May, so Paul thought there were photographs on it," Zherebenkov said. "My client was arrested before he even had a chance to see what was on the card."
Michael John Calvey, the most famous and famously Russia-friendly investor in the country, is facing up to 10 years in jail. On Thursday a Moscow court officially charged him with fraud.
On the same day Whelan’s detention pending trial was extended until May 28.
Many see Calvey’s arrest as a key case for Russia’s future relations with the Western business world. Calvey was arrested together with three other executives of his fund, Baring Vostok.
Speaking before European businessmen on Wednesday, Lavrov admitted that Calvey’s arrest “lies at the center of a very lively political discussion.” At the epicenter, is more like it. Or maybe financial ground zero.
Putin’s Commissioner for Entrepreneurs’ Rights, Boris Titov, said that Calvey’s arrest was “illegal.” Russian officials of the liberal block, including chairman of Russia’s Accounts Chamber, Alexei Kudrin, supported Calvey, saying that the prosecution of the Western investor was a critical blow to the Russian economy.
But this is a moment when even the Kremlin’s own voices supporting a free economy, the rule of law, and human rights echo down an empty well.
“Russian military generals and conservatives seriously believe that it would be great just to seal the borders, control the money flow, ban businessmen from traveling,” Moscow-based political scientist Dmitry Oreshkin told The Daily Beast. “To those, including President Putin, who dream of reconstructing the USSR regime, it is still unclear that the Soviet economy failed not because of Mikhail Gorbachev’s pro-Western policy but because the country was isolated from the free market.”
The American investor Calvey denied his guilt. Foreign Minister Lavrov, given the thankless job of speaking before Western business people, stressed that Europe remains Russia’s biggest trading partner, and that all points in Calvey’s defense would be taken into the account.
“As far as I understand he was not a very visible person in the public realm. But of course I’ve heard what people whom I deeply respect have said about him, and I think many people have heard this,” Lavrov said.
Meanwhile, direct foreign investments just keep melting away.
One might note just how reluctant many investors were to pull out as recently as last year. In the third quarter of 2018 they decreased by $4.2 billion, but Western business partners continued to work with Russia, in spite of the economic sanctions, in spite of the facts revealed by Special Counsel Robert Mueller’s investigation about Trump-Russia ties.
As everyone knows, however, the key to getting big money into Russia is the ability to get big money out—and that includes oligarchs close to the Kremlin. Which is why Russian bankers experienced in dealing with the state institutions are skeptical about Zhirinovsky’s plan.
“The Kremlin’s bankers get out of the country with billions of dollars and nobody stops them,” Aleksei Kozlov, a banker and financial expert told The Daily Beast.
Nobody doubts that. And nobody is going to make them get exit visas.