Continuity of Government

“The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power. Not wealth or luxury or long life or happiness: only power, pure power. What pure power means you will understand presently. We are different from all the oligarchies of the past in that we know what we are doing. All the others, even those who resembled ourselves, were cowards and hypocrites. The German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives. They pretended, perhaps even believed that they had seized power unwillingly and for a limited time, and that just round the corner there lay a paradise where human beings would be free and equal. We are not like that. We know that no one ever seizes power with the intention of relinquishing it. Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship.” – Eric Blair (aka George Orwell), 1984

  Image cannot be displayed1984 was an auspicious year. While the world had not (yet) devolved into the dystopian nightmare forecast by Mr. Blair, the apparati of state in various parts of the world were making good progress on implementing that ‘blueprint’. The reason I bring up the date is because of the publication of an unassuming book by a virtually unknown author, Anatoliy Golitsyn. I had mentioned him in an earlier post, but felt his work was even more relevant and timely in the current context.

A KGB major, he had defected to the US in late 1961. Among other pieces of intelligence, he was one of those who provided confirmation that Kim Philby was a Soviet mole, and that the Finnish president at the time was controlled by the KGB. His book, ‘New Lies for Old’ made a number of (at the time) extraordinary claims:

  • "The 'liberalization' [in the Soviet Union] would be spectacular and impressive. Formal pronouncements might be made about a reduction in the communist party's role; its monopoly would be apparently curtailed."
  • "If [liberalization] should be extended to East Germany, demolition of the Berlin Wall might even be contemplated."
  • "The European Parliament might become an all-European socialist parliament with representation from the Soviet Union and Eastern Europe. 'Europe from the Atlantic to the Urals' would turn out to be a neutral, socialist Europe."
  • “It is more than likely that these cosmetic steps will be taken as genuine by the West and will trigger a reunification and neutralization of West Germany and further the collapse of NATO. The pressure on the United States for concessions on disarmament and accommodation with the Soviets will increase. During this period there might be an extensive display of the fictional struggle for power in the Soviet leadership. One cannot exclude that at the next party congress or earlier, Andropov will be replaced by a younger leader with a more liberal image who will continue the so-called "liberalization" more intensively.”
  • “It would be erroneous to attempt to separate the Sino-Soviet split from the four disinformation operations already described and those that will be described in succeeding chapters. The disinformation program is an integrated whole. […]The Soviet and Chinese lines on different issues should be seen as the left and right legs of a man, or better still, as the two blades of a pair of scissors, each enhancing the other's capacity to cut.”
  • All of the above would be undertaken as a massive disinformation ruse, to lull the West into a false sense of security – and to further the aims of installing a global communist government.

He followed up with another book in 1995, entitled ‘The Perestroika Deception’, which is (or claims to be) a collection of the memos he had sent to the CIA and other American security agencies and officials over the years, warning of the mis/disinformation efforts of the Soviet regime. It seems he felt that these disinformation efforts were successful, and had misled the analysts and strategists in the West to believe that the Russian bear had been mortally wounded – when in reality it had merely withdrawn to its cave to await an opportune moment to reemerge:

  • "The [Soviet] strategists are concealing the secret coordination that exists and will continue between Moscow and the 'nationalist' leaders of [the] 'independent' republics."
  • "The power of the KGB remains as great as ever... Talk of cosmetic changes in the KGB and its supervision is deliberately publicized to support the myth of 'democratization' of the Soviet political system."
  • "Scratch these new, instant Soviet 'democrats,' 'anti-Communists,' and 'nationalists' who have sprouted out of nowhere, and underneath will be found secret Party members or KGB agents."
  • “The essence of the special manoeuvre within this strategy is the creation of secretly controlled opposition movements (the secret within the strategy, which distinguishes it from a mere policy) and the use of them in the course of transition to new deceptive 'democratic', 'non-Communist' and 'nationalist' power structures which will remain in essence Communist controlled. It is these renewed regimes which are intended to achieve the world victory of Communism through the convergence on Communist terms of the Communist and non-Communist systems.”

Perhaps Mr. Golitsyn was merely a very intelligent, but jaded man who felt compelled to construct very elaborate hypotheses on the functioning and methodology of the Soviet intelligence and security apparatus to give his life purpose, to elevate his sense of importance. In the words of CIA director Richard Helmsthe test of Golitsyn's thesis should be its utility. Could it be used to identify the deceptions of the Kremlin?” In my view, the parts of his predictions made public were indeed accurate enough to give one pause as to those not as yet proven correct. They may indeed merely be ‘early’, like so many of us investing in precious metals…

For those with a couple of hours to kill – interviews with the editor of Golitsyn’s second book:

Perestroika Deception Series 1 -Communist Long Range US Takeover Deception Strategy
The Perestroika Deception Series 2_2003

There’s been a lot of talk, maybe too much talk, about the personal wealth of the Russian president, and about the efficacy (and dangers) of Western sanctions targeting the financial relationships within Russia, as well as between Russia and its trading partners. Pundits are breathlessly guessing whether Putin has B or B stashed away in secret bank accounts. Lists of names and companies have been drawn up, triaged and added to those who are now officially ostracized by the Western financial system. The stated intent being to ‘increase the transaction costs’ for the Russian regime while it continues its purportedly expansionist foreign policy toward Ukraine. The idea being, by slowly strangling foreign trade and the influx of revenue and capital into the Russian economy, the West can force Russia to relinquish its desire for influence in Eastern Europe.

For all I know, some might even be acting under the impression that such pressure would force Russia’s acquiescence to a world order dominated by the US (and to a lesser extent, Europe) in ALL matters, including military, financial and ‘human rights’ matters. Perhaps there is a devout neocon out there who truly believes that forcing financial turmoil and lowered living standards on Russia will eventually lead to the strengthening of political opposition to Putin, and might force him to change his ways, or possibly be moved from a position of power.

U.S. Expands Sanctions, Adding Holdings of Russians in Putin’s Financial Circle -- NYTimes

U.S. imposes new sanctions on Russia -- WaPo

The Western news media is awash in tales of the sadly retrograde and primitive nature of Mr. Putin, and mockery of his power and influence.

I thought this would be a good time to revisit the question of who Vladimir Putin really is, and how Russia actually works. Is it meaningful to think of actors in the Russian economy in terms of companies and executives? Can economic ‘incentives’, both carrots and sticks, work to change the behavior of the Russian regime?

Vlad appears to me to be similar to a modern-day version of what was quaintly considered the quintessential ‘new Soviet man’, a distilled product of generations under a totalitarian Communist regime (despite his lack of true embrace of the post-nationalistic ideal envisioned by the ideologues of the era):

“The Soviet man was to be selfless, learned, healthy and enthusiastic in spreading the socialist Revolution. […]"

  Image cannot be displayed

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"This required intellectualism and hard discipline. He was not driven by crude impulses of nature but by conscious self-mastery. […]He treated public property with respect, as if it were his own.”

  Image cannot be displayed  Image cannot be displayed

(For more silliness, you can try here, here or here.)

Tracing his lineage is apparently a dead end beyond his grandfather [per Wiki], who was a “a chef who at one time or another cooked for Vladimir Lenin, Lenin's wife Nadezhda Krupskaya, and on several occasions for Joseph Stalin.” You don’t get much closer to the inner workings of the proletarian dictatorship, the nomenklatura than that. His father “served in the submarine fleet in the early 1930s, and later served on the front lines in the demolition battalion of the NKVD during World War II”.

(As a helpful reminder, NKVD stands for Narodnyy Komissariat Vnutrennikh Del, aka People's Commissariat for Internal Affairs, or Department of Homeland Security, in today’s terms. It was later reorganized into different ministries, and became the predecessor to the Ministry of Internal Affairs and the Committee for State Security, known more frequently by its Russian acronym of KGB. )

Coming to the current generation in the Putin family, Vlad joined the intelligence family immediately upon graduating from university in 1975, rising to the rank of lieutenant colonel in the KGB before resigning in the ‘chaos’ of the 1991 attempted coup against Gorbachev. Having chosen his position carefully and well, he was ultimately appointed the head of the KGB (sorry, renamed to FSB) in 1998, before ‘ascending’ to Prime Minister. After Yeltsin’s ‘resignation’ on the last day of 1999, Putin became acting President under the Russian rules concerning Continuity of Government. Convenient, how that worked out. Pardoning the outgoing Yeltsin from any investigation or prosecution for corruption, Putin neatly tied up his first presidential election in the spring of 2000 within three months of gaining that office via administrative rules, and emerged onto the world stage as the current leader we all know and love.

After a decade of being sidelined, kept away from the levers of power, ‘re-organized’ and splintered into different Ministries and Agencies within the post-Soviet bureaucracy, the vigilant keepers of the flame of Russian (Soviet) state security once again firmly held the reins.

The mass privatization of the state-owned and operated economy that had taken place in the 90’s under Yeltsin was quickly reversed. Oligarchs who had gained access to vast political and financial power were reined in, either by pledging allegiance to the ‘new sheriff in town’, or being forced to divest Russian holdings and fleeing the country.

“Just before he became president, Mr Putin told his ex-colleagues at the Federal Security Service (FSB), the KGB's successor, “A group of FSB operatives, dispatched under cover to work in the government of the Russian federation, is successfully fulfilling its task.” Over the two terms of Mr Putin's presidency, that “group of FSB operatives” has consolidated its political power and built a new sort of corporate state in the process. Men from the FSB and its sister organisations control the Kremlin, the government, the media and large parts of the economy—as well as the military and security forces.” – Economist, 2007

The concept of oligarchs was not completely dismantled, for the idea of private ownership and enterprise had to be paid lip service to. Russia was to be the new frontier for free enterprise, the land of opportunity. Plus, the State – having learned the lessons of the inefficiency and inherent fallibility of completely centrally planned economies had no intention of trying to fully recreate the Soviet conditions. So long as strategic industries (energy, metals, agriculture, banking, telecom, weapons) could be kept under the CONTROL of the state apparatus, it was beneficial to entrust MANAGEMENT of these industries to the tycoons who had earlier swindled/wheeled-and-dealed their way into owning them. These trustees could be counted on to drive efficiency, profitability, longer-term development and growth insofar as they could enrich themselves and their families. The arrangement that was ultimately arrived at was a simple one: these barons should and could maintain their MANAGEMENT of the resources at their disposal, and accrue fabulous fortunes (after an appropriate haircut, in most cases). They had demonstrated their business acumen and financial talents, after all. The common people needed to have role models for success to look up to and emulate, even if they were looked upon with an admiration mixed with disdain and envy. So long as they existed, they exemplified the ‘new Russian dream’ where a courageous, entrepreneurial man might become a billionaire if he worked hard and played his cards right.

Just so long as these figureheads understood that they were merely the custodial holders, and not true owners of the resources and means of production. They were to make no attempt to influence, subvert or control the apparati of the State (unlike some other places we know where vast swathes of strategic economic power is concentrated in a handful of hands). Those who strayed from these guidelines (and presumably even some who had merely fallen afoul of the controlling group in other ways) were swiftly and decisively dealt with.

“Today, Kremlinologists estimate that 78 percent of Russia’s government, business and social leadership is currently linked to the Federal Security Service, successor agency to the Soviet-era KGB. […]Because of the financial crisis and government consolidation, the once-powerful oligarchs no longer have a say in their future and are merely along for the ride. Indeed, they no longer constitute a powerful and distinct business “class.” Some oligarchs will survive the shakeout, but not with their independence. To some degree, they all will become part of the Kremlin machine so carefully engineered by Putin. As copper oligarch Iskander Makhmudov said in a rare interview: “The oligarchs now have mixed fortunes, but we will all end up being soldiers of Putin one day.” – Stratfor, 2011 (via WikiLeaks)

Billionaire ex-KGB top ten list:

So you see, in my view it’s a little pointless to argue over WHO owns companies like Rosneft, Gazprom, Severstal or Sberbank. The private wealth of Putin, or his lieutenants, or that of all the oligarchs in and connected to Russia is completely irrelevant. They ‘own’ these assets to the extent and in the timeframe it is deemed by the Russian state to be beneficial that they own them.

Think about it – they have EVERY reason to drive and lead their companies in the most forward-looking, profitable manner they can, for the worth of their own fortunes will be driven up. They have no reason to gut, defraud, inflate or otherwise short-change their companies (like the CEOs of some western TBTF entities have been known to do) for two reasons:

  1. they would be cutting off their own wealth and revenues
  2. they would be on the receiving end of dead-of-the-night visits from surly gentleman without compunctions, corruptibility, humor or mercy. Family members, in-laws, pets, friends and acquaintances too, depending on the size of the infraction.

These ‘business leaders’ serve completely at the pleasure and whim of the state security apparatus (however one might choose to define it), and are immediately and completely interchangeable and replaceable. Most recent case in point: the founder of Vkontakte (the Russian equivalent to Facebook) was forced out of his company and days later, the country – due to failure to comply with the terms dictated by the true powers that be in Russia. Whether it’s the consolidation of the banking sector, the mergers of the oil/gas industry (see TNK/BP affair, dismantling of Yukos and imprisonment of Khodorkovsky), the examples abound. I think they have all learned how to spell Damocles along the way.

Now, of course we can argue about who ultimately controls the state security apparatus – is it Putin? His handler, some new Grey Cardinal of the Kremlin? The ultimate master(s) behind the Soviet experiment? And of course the question remains as to the ultimate goal in this grand chess-game. Whatever the answers to the above questions, it seems clear to me that the Communist dictatorship first implemented on a massive scale across the erstwhile Russian Empire has become an evolutionary force to be reckoned with. It is highly adaptable, responsive to change and able to withstand the buffeting of history and time. I believe it has survived the first Cold War more or less intact (if not strengthened and expanded), and is currently making the opening moves in a new match. Or just the continuation of the old one, for this game never ends.

The Russian establishment has been playing the game of manipulating the opinions of the masses just as long as their modern Western counterparts, and they have become arguably just as adept at it, if not more so. Just like people anywhere, most Russians are also subject to the axioms of human nature:

“Architect : [N]early ninety-nine percent of the test subjects accepted the program provided they were given a choice - even if they were only aware of it at a near-unconscious level.”

“Merovingian: Choice is an illusion created between those with power and those without.”

“Oracle: What do all men with power want? More power.” -- Andy & Lana Wachowski

None of this is to imply that Russia is not within her rights to advance her own interests to the extent of her resources and the abilities of her countrymen. Nor to conclude that the country cannot be a benevolent force in the world, or that Putin does not hold Russia’s welfare as his primary goal. Neither is this meant to presume truly free, fair, democratic Western societies with an educated, enlightened and humanist populace (let alone leadership). Not to mention implying that the Western course of action in this (and related) matters is correct, or moral, or beneficial. But in calculating and forecasting the historic events unfolding before our eyes in these truly interesting times, I believe we should not discount the possibilities that:

  • A large part of the events on stage in Eastern Europe may have been foreseen, or even facilitated by the Kremlin (up to and including the Maidan & subsequent 'regime change').

In short, resisting a more powerful opponent will result in your defeat, whilst adjusting to and evading your opponent's attack will cause him to lose his balance, his power will be reduced, and you will defeat him. This can apply whatever the relative values of power, thus making it possible for weaker opponents to beat significantly stronger ones.” – Jigoro Kano, founder of Judo (柔道 jūdō?, meaning "gentle way")

  • The silent network of the steel hand in a velvet glove might extend throughout Russia’s sphere of influence (e.g. throughout all of Central Europe to the old Iron Curtain line), and sometimes beyond, when it comes to controlling or defending its economic and political interests (just ask Litvinenko, Berezovsky, or Rozhetskin).
  • To assume that oligarchs controlling vital elements in Ukraine’s economy (and of course its political affairs) are not within reach of Moscow may be hubris. For an interesting look at the REAL structure of power beneath the veneer of Ukrainian political and economic life, here is an interesting lecture from Andrei Fursov for those interested enough to watch a bald older man orate in Russian for an hour (with subtitles).
  • [LATE EDIT:] Professor Fursov's presentation was transcribed into English on WikiSpooks, and is currently featured on ZH as well. Check the links for full text.
  • Russia and China may be working together in strategic alignment, in a much closer partnership and in a much deeper alliance than the vast majority of Western observers may assume, and more so than many could even fathom. The famous Sino-Soviet split would not even come close to being the biggest lie sold to the world populace, should it turn out to be untrue.

“We're gonna do 'good cop, bad cop'. Okay? It's the oldest game in the book for a reason - it works.” – Terry Hoitz, The Other Guys

  • The actors who may yet have the largest overt role in changing the face of the current farce of our world order may not hold the welfare of the Western population very high on their list of priorities, nor may their methods and ultimate objectives differ that much from those of the forces currently pulling the strings. Heck, depending on one’s viewpoint, the latter may very well be much the same.
  • The mindless pundits opining endlessly over whether the current state of global affairs is a new Cold War are right for reasons they themselves do not understand. The Cold War never ended, we merely experienced a pause in overt action from the Russian side. It now continues with a heckuva lot more allies on the non-US side, with weapons having shifted from direct kinetic action to softer political, intelligence and economic tools of the trade.

"The devil's finest trick is to persuade you that he does not exist." Charles Baudelaire

The enemy of your enemy is not always your friend. Be mindful of information, but be aware of whence it comes, and why you are presented with it and by whom. While of course current developments ARE historic in many ways, and apparently that history is speeding up as we speak, there is also a need to consider the longer game. If even a fraction of what I posit above is true, GENERATIONS have been spent in patient preparation and waiting for the next few years. Timelines will be dictated by those who have chosen the battlefield, not those who have stumbled onto it.

PS: For a detailed, and arguably closer-to-the-flame article on Vladimir, modern Russia and Ukraine, please check out Dmitry Orlov’s viewpoint in The Madness of President Putin:

“Putin came along and, using his experience in the KGB and connections with other post-Soviet “power ministeries,” he crafted a new order, which first decimated and either supplanted or absorbed the gangsters, and then imposed what Putin has termed “the dictatorship of the law.” This is the first important piece of the new Russian ideology: law matters and nobody can be above it—not even the United States. […]

Putin's second innovation is what he calls “sovereign democracy.” It is a system of representative democracy that is completely impervious to foreign political manipultion. Well, not completely impervious: just as it's good to have a low-level inflammation somehwere once in a while to keep the immune system humming along, it's considered healthy to have Moscow's and St. Petersburg's hipsters—many of whom, in their youthful folly, still worship the West—to go and get themselves roughed up by the riot police periodically.”

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Key Economic Events Week of 6/24

6/24 8:30 ET Goon Ghoulsbee
6/24 2:00 ET Goon Daly
6/25 7:00 ET Goon Bowman
6/25 9:00 ET Case-Shiller home prices
6/25 10:00 ET Consumer Confidence
6/25 12:00 ET Goon Cook
6/25 1:30 ET Comex option expirations
6/26 10:00 ET New home sales
6/27 8:30 ET Q1 GDP final guess
6/27 8:30 ET Durable Goods
6/28 8:30 ET PCE and Core PCE
6/28 8:30 ET Personal Inc and Spend
6/28 9:45 ET Chicago PMI
6/28 10:00 ET UMich final
6/28 12:00 ET Goon Bowman again