20 years under Putin: a timeline

On June 26th, the U.S. Senate unanimously passed the Magnitsky Act, a bill prohibiting foreign human rights violators from entering the U.S. and giving the government the right to freeze their American bank accounts. While it was being developed, it became a source of tension in U.S.-Russian relations. As a result, in response to the bill’s passage, Russian authorities have aimed their ire at foreign-backed NGOs. Nonetheless, despite the bill’s symbolic significance, it will not seriously impact the bilateral relations between Russia and the United States, argues IMR analyst Olga Khvostunova.



A Victim of the Regime

One man’s tragedy can impact international politics. Moscow lawyer Sergei Magnitsky had hardly imagined that he would become that man. In 2007, his client Hermitage Capital, a foreign hedge fund that had once been Russia’s largest, hired him to investigate the raider attack on their assess. At the time, Magnitsky was the head of the tax and audit department at Firestone Duncan, a consulting firm that rendered legal services to a number of companies, including the UK-based Hermitage Capital Management. The dramatic story of the theft of billions of rubles from the Russian government was detailed in Novaya Gazeta. Hermitage Capital CEO William Browder then gave Snob magazine a controversial interview on the story.

During his investigation of the raider attack on Hermitage Capital, Magnitsky uncovered a tax-fraud scheme of epic proportions. A group of Ministry of Internal Affairs (MVD) officials colluded with judges and tax inspectors to use documents belonging to the fund’s subsidiaries (expropriated during illegal searches) in order to withdraw a staggering 5.4 billion rubles (230 billion USD) from the Russian state budget. Magnitsky submitted abundant evidence of this gross malfeasance to the Prosecutor’s General Office, the Russian Investigative Committee, and the MVD. Soon, the investigation turned into a mockery, and after a rapid trial, a man named Viktor Markelov, an ex-convict and lumber industry worker, was found guilty in organizing this sophisticated scheme and stealing the money. Naturally, Markelov was nothing but the fall guy.

Hermitage Capital lawyers couldn't accept the outcome of this trial and continued to submit claims and testify against those they considered guilty of the theft. Magnitsky was the most vocal, greatly irritating the corrupt government bodies he was exposing. His actions led to his arrest on November 24, 2008. He was charged with helping Hermitage Capital evade taxes. Magnitsky spent almost a year in a detention center of the Moscow Butyrka prison, awaiting a trial. During this time, he repeatedly filed complaints of the awful confinement conditions and his deteriorating health. He would say that investigators tried to force him give to false testimony against William Browder, Hermitage Capital’s CEO. By November 13, 2009, Magnitsky’s health had deteriorated drastically, but he was denied all medial treatment. Instead, he was secretly transferred to solitary confinement in Matrosskaya Tishina, another Moscow prison, where he died on November 16, 2009.

Magnitsky's death caused great public outcry. However, despite all the known facts of this outrageous case and numerous statements from his colleagues, William Browder, and a multitude of human rights activists and journalists pleading for justice, according to polls, the majority of Russians have never even heard of Magnistky. Or, even if they had heard about the case at some point, they had quickly forgotten him. The most recent poll (June 28, 2012) by the Levada Center demonstrates that this year, 44% of respondents knew nothing about  the Magnitsky case, while only a year ago, in August 2011, the percentage was 31%. Today, 12% of those who know about it think that the lawyer was taken out by top state officials threatened by Magnitsky; 11% said that he had been set up by the investigators he had accused of stealing the money. In 2011, 14% and 18% of respondents were of the same opinion respectively.



In a sense, it was the public’s indifference that legitimized the actions of the Russian authorities: silence implies consent. Vladimir Pastukhov, a political science scholar currently teaching at Oxford University, writes about this problem in a recent op-ed for Novaya Gazeta. He blames not only corrupt authorities, but the class of Russian society that accepted this kind of immorality as the norm in exchange for prosperity.

“The rationalization of evil is impossible without the “disengagement effect,” he writes. “[Georgian] philosopher Merab Mamardashvili once said that people can integrate only the facts that fit in with their mentality and essentially ignore everything else. We can see this in people’s reaction to the Magnitsky case. With it, we have an example of a brutal crime, although dozens of even more brutal crimes are committed in Russia every day, and a great deal of evidence that supports the narrative he died for. However, it turns out that those who are loyal to the current administration are capable of disregarding the evidence; they can read about it without grasping what it means, listen to the story without hearing the words. Their ability to draw their own conclusions based on the information is essentially blocked. Thus, the way they understand this case is shallow and based on the prejudices concomitant with their political attitudes and not the facts.”

Justice from the U.S.

Regardless of the Russians who ignore the case and its implications, it has proved impossible for authorities to completely hush it up. Here we see the rare case when an individual tragedy affects the trajectory of international politics.

After Magnistky’s death, William Browder launched a campaign for bringing those responsible for his death to justice. One of his initiatives was lobbying for a bill in Europe and the U.S. that would prohibit those guilty entry to specific countries and also freezing their bank accounts. Browder compiled and distributed the so-called “Magnitsky List” which included the names of all the people involved in the lawyer’s death from prison doctors to top MVD officials.

In the U.S., the bill is called the “Sergei Magnitsky Rule of Law Accountability Act,” and it received broad, bipartisan support. Its chief sponsors were Senator Benjamin Cardin (D-MD) and Senator John McCain (R-AZ). Although the bill was first introduced in September 2010, it took almost two years to pass, as it met resistance from the State Department, which didn’t want to deal with the negative impact it could have on U.S.-Russian relations.


American Senator Benjamin Cardin, D-MD (on the right) is one of the authors of the new law. According to an online Russian political newspaper Evro-SMI, immediately after the vote, a satisfied Cardin told reporters that "our main goal in not only to fight for justice in the Magnitsky case, but to fight for human rights worldwide by not allowing those who violate them into our country, or to use our banking system." At the same time, the Senator did not deny that the Magnitsky case had served as the impetus for the creation of this bill.


Finally, this year, after Russia joined the WTO, supporters of the Magnitsky Act made it clear that passing the bill would be an essential condition for repealing the Jackson-Vanik amendment. The latter had been passed 1974 in order to restrict trade relations with countries limiting freedom of migration, mostly targeted at the USSR. Many U.S. officials had long been calling for the repeal of this obsolete amendment in order to optimize trade relations with Russia.

Eventually, on June 7th 2012, the Magnitsky Act was unanimously passed by the House Committee on Foreign Affairs. The vote in the Senate Committee on Foreign Relations was scheduled for June 19, but was postponed following the meeting of President Obama and President Putin in Los Cabos. Then, a week later, the Senate Commission approved the Act, also unanimously.

The Senate's version of the Act is slightly different from the one approved by the House. Initially, the Magnitsky Act was supposed to be adopted as a measure against human rights violations in Russia and could not be applied to other countries. In addition, the list of violators was meant to be made public. In the new version of the bill, its area of application has been extended to other countries, while violators’ names can be classified for the purposes of national security upon the request of the Secretary of State.

Many experts point out that the adjustments were made to minimize the negative effects of the Magnitsky Act on U.S.-Russia relations. It is possible that this was discussed by Vladimir Putin and Barack Obama. Nevertheless, Senator Cardin managed to introduce one more amendment to the bill that obliges the administration to submit a detailed justification to Congress for why the names must be kept confidential.

So what does the U.S. bill have to do with restoring justice for the dead lawyer in Russia?

Right before the House voted on the bill, a Brookings Institution fellow Robert Kagan together with Freedom House director David Kramer published an op-ed in the Washington Post explaining the bill. «The proposed legislation is not about one man, however. It is about a Russian system choking on corruption, illegality and abuse. <…> The Russian people today live in a system where corrupt officials spirit their ill-gotten gains to safe havens outside the country, where they can neither be taxed nor accounted for. <…> This corruption, and the forces who defend it by imprisoning or killing those who expose it, are gnawing away at Russian society from the inside. What the people of Russia need is a free and open public discourse where government officials can be held accountable. That kind of climate will attract the foreign investment Russia needs to grow and to diversify its economy.”

"Symmetrical Response"

During the two years when the Magnitsky Act was being debated in the U.S. Congress, Russian authorities repeatedly called it a heavy-handed interference in Russia's internal affairs. Despite the fact that the more lenient version is the one being adopted, many Russian officials have threatened a “symmetrical response.” These threats range from the introduction of a Russian black list for U.S. citizens entering the country to terminating Russia’s cooperation on the missile defense shield and START treaty.

The first real Russian counter-measure came as surprise. On June 29th, Deputy Alexander Sidyakin of the pro-Kremlin United Russia party introduced a package of amendments to the law on NGOs and the Criminal Code. The amendments push for registering NGOs that receive financial support from abroad and participate in political activities as “foreign agents.” The definition of “political activities” in the bill is very vague, citing participation in public events with the purpose of influencing government bodies and changing their policies.

According to this legislation, “agents” will have to report on their activities every six months (instead of annually, like all other NGOs) and submit financial reports every three months. Their bank transactions exceeding 200 thousand rubles (approximately $7,000 USD) will be subjected to obligatory government control. If an “agent” doesn’t register with the Ministry of Justice, it will be penalized up to 1 million rubles, or  about $30,000 and its activities will be suspended for six months. The director of an “agent” organization found in violation of the new NGO legislation, will be penalized 300 thousand rubles ( about $10,000) or sentenced to up to three years in prison.

The proposed legislation is about a Russian system choking on corruption, illegality and abuse.

David Kramer

In effect, the new amendments can be applied, if necessary, to any of 260,000 NGOs registered in Russia today, such as Greenpeace Russia or Chulpan Khamatova's Grant Life Foundation. The legislation would institute stricter government control over NGOs participating in protests and opposition activities, such as Golos and the Moscow Helsinki Group. Lyudmila Alexeyeva who presides over the latter told the New York Times that she would rather shut down her 36 year old organization than agree to the term “foreign agent.”  “We are not agents of foreign governments. We protect the rights of our citizens when their rights are violated,” she said.

Newpaper Vedomosti published an editorial criticizing the United Russia bill. With sarcasm, they noted “Finally, we can find out what organizations the notorious State Department and other foreign agencies are financing in Russia.” After listing a number of positive changes that happened in Russia because of NGOs financed from abroad, the journalists gloomily concluded, “Indeed, there is xenophobia in Russia society. But it might turn out that all the good in the country is being paid for with foreign money.”


In her New York Times blog, Russian-American journalist Masha Gessen compared the current situation in Russia with the final days of Slobodan Milosevic’s regime in Yugoslavia. “Toward the end of Milosevic’s rule many NGOs in Yugoslavia had to close or go underground because of special regulations concerning foreign funding. I doubt the Russian government has been boning up on the Yugoslav experience and deliberately reusing the late dictator’s old tricks. Like most of what the Russian regime does, this brewing attack on “foreign agents” is undertaken instinctually. <…> In the Kremlin’s world view, those who want change are enemies and enemies are foreign: if only the country could be cleansed of foreign nationals and their money, popular discontent would go away.”

Russian political history of the past ten years shows that criticism coming from the few remaining independent media outlets and human rights organizations have no impact on the Kremlin's policies whatsoever. The regime that has effectively isolated the public from the decision-making process while taking over vast natural and human resources and depriving people of their basic rights tends to view criticism as the result of a misunderstanding. Officials ignore it until someone becomes dangerously annoying, like Sergei Magnitsky, and then the offending party is doomed to be destroyed. The key tool of this system is not the force of the best argument, but simply force. Putin’s regime has been falling back onto the path of a geopolitical stand-off like the Cold War, seeing the U.S. as a hostile adversary, but a much stronger and more powerful one. This doesn’t stop the Kremlin from picking on the U.S. In that sense, adoption of Magnitsky Act by the American Congress can be viewed as the manifestation of their greater power, although it is only argument that Russian authorities are capable of understanding which doesn’t let them ignore the West’s opinion.

In the end, one thing is clear: with all its symbolic power, the Magnitsky Act will not have much real impact on the bilateral relations of the U.S. and Russia. The White House has done everything in its power to show its unwillingness to pass the bill. As for Vladimir Putin, he is a practical man who is more interested in cooperation with America than in confrontation. Unfortunately, as it often happens in Russia, high level political bickering trickles down. This time it’s the NGOs that suffered. What is sadder is that the majority of Russians remain indifferent to the fate of Magnitsky and other victims of Putin’s regime.