A new law that allows Russia to seize foreign-owned energy assets should be a final warning to Western firms to cut their losses and leave the market for good, one of the country’s most prominent exiled businessmen has cautioned.
“There are no guarantees for the safety of investments anywhere, but Vladimir Putin’s regime has demonstratively built an illegitimate and lawless state,” former oil and gas magnate Mikhail Khodorkovsky told POLITICO.
“The withdrawal of assets should have started a very long time ago, even before the war. And on February 24, 2022, the decision should certainly have been made,” he said.
Last Tuesday, Putin signed a decree that allows the government to take control of assets owned by foreign firms and individuals from “unfriendly nations” — a long list of apparently hostile governments that includes the U.S., the U.K., the entirety of the EU and all G7 member countries.
Ventures owned by Germany’s Uniper and Finland’s Fortum energy companies were the first to be targeted. While Kremlin spokesperson Dmitry Peskov claimed that Moscow was only assuming “temporary” control of their day-to-day management, he argued that it would help create a pool of assets that Moscow could expropriate in retaliation for Russian property sequestered by European governments.
German oil and gas company Wintershall, meanwhile, has warned that while it intends to divest its shares in Siberian oil and gas production, rules requiring Kremlin approval mean getting its funds out will be “difficult.”
“Everything can happen in Russia these days in terms of direct interference with our rights to our assets,” CEO Mario Mehren explained at a press conference this week.
A number of Western energy firms have already announced their complete departure from Russia in the wake of the invasion of Ukraine, including Norway’s Equinor and U.S. oil and gas giant Exxon Mobil. Others, including Shell, BP, TotalEnergies and Wintershall have announced their intent to fully or partially divest, but the terms of their exits are still being worked out.
While Khodorkovsky, who fled the country a decade ago, admitted that European firms might now find it “psychologically difficult” to accept making losses on their investments in major fossil fuel projects, he believes that as time goes on “foreign assets in Russia will continue to fall in price and the risk of their confiscation will increase.”
“Now the risks have become so high that they are no longer covered by profits from any legitimate activity,” he said.
As the founder of Siberian oil and gas conglomerate Yukos, Khodorkovsky was once believed to be Russia’s wealthiest man, having snapped up former state energy assets for a fraction of their worth after the fall of the Soviet Union. However, having emerged as a key political opponent to Putin, Khodorkovsky’s company was hit with a series of fraud charges, its assets were expropriated and he was imprisoned for almost eight years.
“That the Kremlin was not punished for this allowed Putin to conclude that this is an acceptable practice,” Khodorkovsky added, “and that the West is weak and ready to accept any lawlessness if he, Putin, is strong enough.”
Now, he is calling for Russian state assets to be confiscated as compensation for both the damage wrought on Ukraine and to pay back foreign investors.
“This will be fair, but the owners of private assets should be given the right to defend their innocence in court,” the exiled former oligarch said.
Jamie Dettmer is opinion editor at POLITICO Europe.
KYIV — “She’ll say whatever the FSB [Federal Security Service] wants her to say,” said Ilya Ponomarev, a former Russian lawmaker-turned-dissident who now lives in Kyiv.
Discussing who was behind the bombing of a St. Petersburg café earlier this month — which left 40 injured and warmongering military blogger Vladlen Tatarsky dead — the “she” in question was 26-year-old Darya Trepova who, until recently, was an assistant at a vintage clothing store and a feminist activist, and has been accused of being the bomber.
And the St. Petersburg bombing — as well as another carried out against commentator Darya Dugina — has now sharpened a debate within the deeply fractured, often argumentative and diverse Russian opposition, regarding the most effective tactics to oppose President Vladimir Putin and collapse his regime — raising the question of whether violence should play a role, and if so, when and how?
Russian authorities arrested Trepova within hours of the blast, and in an interrogation video they released, she can be seen admitting to taking a plaster figurine packed with explosives into a café that is likely owned by the paramilitary Wagner group’s Yevgeny Prigozhin. On CCTV footage, she can be seen leaving the wrecked café, apparently as shocked and dazed as others caught in the blast.
But Ponomarev says she wasn’t the perpetrator, instead insisting that it was the National Republican Army (NRA) — a shadowy group that also claimed responsibility for the August car bombing that killed Dugina, daughter of ultranationalist ideologue Alexander Dugin. Yet, many security experts are skeptical of the NRA’s claims, as the group has offered no concrete evidence to the outside world.
Still, Ponomarev insists they shouldn’t be doubtful and says the group does indeed exist.
“I do understand why people are skeptical. The NRA must be cautious, and for them, the result is more important than PR about who they are. That’s why they asked me to help them with getting the word out, and whatever evidence they show me cannot be disclosed because that would jeopardize their security.”
But who, exactly, are they? According to Ponomarev, the group is comprised of 24 “young radical activists, who I would say are a bit more inclined to the left, but there are different views inside the group, judging from what I have heard during our discussions” — which have only been conducted remotely.
When asked if any of them had serious military training, he said he didn’t think so. “What they pulled off in St. Petersburg wouldn’t require any, and what was done with Dugin’s daughter? We don’t know the technical details but, in general, I can see how that could have been done by a person without any specific training.”
Yet, security experts say they aren’t convinced that either of the apparently remotely triggered bombings could have been accomplished by individuals without some expertise in building bombs and triggering them remotely — especially when it comes to the attack on Dugina, who was killed at the wheel of her car.
Regardless, the bombings are intensifying discussions within the country’s fragmented opposition.
On the one hand, key liberal figures, including Alexei Navalny, Vladimir Kara-Murza — who was found guilty of treason just last week and handed a 25-year jail term — Mikhail Khodorkovsky, Garry Kasparov and Dmitry Gudkov, are all critical of violence. Although they don’t oppose acts of sabotage.
Alexei Navalny is among those who are critical of violence, though aren’t opposed to sabotage | Kiril Kudryavtsev/AFP via Getty images
“The Russian opposition needs to agree on nonaggression because conflicts and scandals in its ranks weaken us all,” Gudkov, a former lawmaker, said. “We need to stop calling each other ‘agents of the Kremlin’ and find the points according to which we can work together toward the common goal of the collapse of the Kremlin regime,” he added in recent public comments.
Gudkov, along with his father Gennady — a former KGB officer — and Ponomarev became leading names in the 2012 protests opposing Putin’s reelection, and they joined forces to mount an act of parliamentary defiance that same year, filibustering a bill allowing large fines for anti-government protesters.
On the issue of mounting violent attacks and targeting civilians, however, they aren’t on the same page. “There are many people inside the Russian liberal opposition who are against violent methods, and I don’t see much of a reason to debate with them,” Ponomarev told POLITICO. There are times when nonviolent methods can work — but not now, he argues.
Meanwhile, inside Russia, Vesna — the youth democratic movement founded in 2013 by former members of the country’s liberal Yabloko party — led many of the initial anti-war street protests observing the principle of nonviolence, though that didn’t prevent the Kremlin from adding it to its list of proscribed “terrorist” and extremist organizations. Nonviolence is likewise observed by the Feminist Anti-War Resistance (FAR), which was launched by activists Daria Serenko and Ella Rossman hours after Russia invaded Ukraine.
“We are the resistance to the war, to patriarchy, to authoritarianism and militarism. We are the future and we will win,” reads FAR’s manifesto. The organization has used an array of creative micro-methods to try and get its anti-Putin message across, including writing anti-war slogans on banknotes, installing anti-war art in public spaces, and handing out bouquets of flowers on the streets.
Interestingly, scrawling on bank notes is reminiscent of Otto and Elise Hampel in Nazi Germany during the 1940s — a working-class German couple who handwrote over 287 postcards, dropping them in mailboxes and leaving them in stairwells, urging people to overthrow the Nazis. It took the Gestapo two years to identify them, and they were guillotined in April 1943.
But such methods don’t satisfy Ponomarev, the lone lawmaker to vote against Putin’s annexation of Crimea in the Russian Duma in 2014. He says he’s in touch with other partisan groups inside Russia, and at a conference of exiled opposition figures sponsored by the Free Russia Forum in Vilnius last year, he called on participants to support direct action within Russia. However, he was largely met with indifference and has subsequently been blackballed by the liberal opposition due to his calls for armed resistance.
Meanwhile, opposition journalist Roman Popkov — who was jailed for two years for taking part in anti-Putin protests and is now in exile — is even more dismissive of nonviolence, saying he talks with direct-action groups inside Russia like Stop the Wagons, who claim to have sabotaged and derailed more than 80 freight trains.
On Telegram, Popkov mocked liberal opposition figures for their caution and doubts about the St. Petersburg bombing. “The Russian liberal establishment is groaning in fear of a possible ‘toughening of state terror’ after the destruction of the war criminal Tatarsky,” he wrote. Adding, “It is difficult to understand what other toughening of state terror you are afraid of.”
According to Popkov, who is also a member of the Congress of People’s Deputies — a group of exiled former Russian lawmakers — the opposition doesn’t have a plan because it is too fragmented, but “there is the need for an armed uprising.”
However, several of Putin’s liberal opponents, including Khodorkovsky, approach the issue from a more cautious angle, saying that people should prepare for armed resistance but that the time is nowhere near right for launching it — the result would almost certainly be ineffective and end up in a bloodbath.
European Commission President Ursula von der Leyen has declared Europe’s dependence on Russian oil and gas “history.”
But others, from senior Ukrainian officials to MEPs and industry insiders, say that chapter of history is still being written.
Significant quantities of Russian hydrocarbons, particularly oil, are still flowing around sanctions and into the European market, they say, earning payments that fund Vladimir Putin’s war machine.
“I had a friend in New York in the 1990s who complained cockroaches would get into his apartment through any available hole — that’s what Russia is doing with its energy,” Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelenskyy, told POLITICO. “We have to fix these holes to stop Russia receiving this blood money they are using to finance the military machine that is destroying our country and killing our people.”
Crude oil is notoriously difficult to track on global markets. It can easily be mixed or blended with other shipments in transit countries, effectively creating a larger batch of oil whose origins can’t be determined. The refining process, necessary for any practical application, also removes all traces of the feedstock’s origin.
A complex network of shipping companies, carrying the flags of inscrutable offshore jurisdictions, adds a further layer of mystery; some have been accused of helping Russia to hide the origin of its crude exports using a variety of different means.
“Unlike pipeline gas, the oil market is global. Swap and netting systems, and mixing varieties are common practice,” said Mikhail Khodorkovsky, a prominent exiled critic of Putin and the former CEO of oil and gas giant Yukos.
“The result of the embargo is a significant increase in Russian transportation costs, a significant redistribution of income in favor of intermediaries, and some additional discount due to the narrowing of the buyers’ market.”
Crude workarounds?
The EU has largely banned Russian fossil fuels since the invasion of Ukraine in February 2022, with exceptions for limited quantities of pipeline crude oil, pipeline gas, liquefied natural gas (LNG), and oil products.
But large volumes of Russian crude oil — a bigger source of revenue than gas — are still being shipped onto global markets, leading some experts to suspect they are finding their way to Europe’s market through the back door.
“Since the introduction of sanctions, the volumes of crude oil Russia is exporting have remained more or less steady,” said Saad Rahim, chief economist at global commodities trading firm Trafigura. “It’s possible that Russian oil is still being sold on to the EU and Western nations via middlemen.”
Crude oil is notoriously difficult to track on global markets | Image via iStock
One potential route into Europe is through Azerbaijan, which borders Russia and is the starting point of the Baku-Tbilisi-Ceyhan (BTC) pipeline, operated by BP. The port of Ceyhan, in Turkey, is a major supply hub from which crude oil is shipped to Europe; it also receives large quantities from Iraq through the Kirkuk-Ceyhan pipeline.
François Bellamy, a French MEP and member of the European Parliament’s Committee on Industry, Research and Energy, aired suspicions about this route in a recent question to the Commission. Data show that Azerbaijan exported 242,000 barrels a day more than it produced between April and July last year, he said — a large margin over domestic production, which stood at 648,000 barrels a day last month and is in long-term decline, according to ministry figures.
“How can a country diminish its production and increase its exports at the same time? There is something completely inconsistent in the figures and this inconsistency creates suspicions that sanctions are being circumvented,” Bellamy said.
A spokesperson for the Commission said it is working to crack down on loopholes in sanctions regimes and has appointed the EU’s former ambassador to the U.S., David O’Sullivan, as a special envoy tasked with tackling circumvention. The official also pointed out that data cited by Bellamy on Azerbaijani oil transactions, the most recent publicly available, “happened before the sanctions entered into force so there is no question of evasion of sanctions there.”
“Azerbaijan does not export Russian oil to the EU via the BTC pipeline,” said Aykhan Hajizada, spokesperson for the country’s foreign ministry, adding that while “Azerbaijan continues to use all non-sanctioned oil regardless of source,” it “remains committed to conducting its supply and trading operations with the utmost care and diligence, in line with relevant laws and regulations.”
BP has previously been forced to deny that the BTC pipeline carries Russian oil, and data seen by POLITICO for crude shipments from Ceyhan shows a recent dip in the volume of exports to the EU, from around 3 million tons per month (about 700,000 barrels per day) in early 2022 to around 2 million tons a month this year.
Slick operations
At the same time, though, Turkey doubled its direct imports of Russian oil last year and has refused to impose sanctions on Russian crude despite simultaneously offering military and humanitarian support to Ukraine.
Finland’s Centre for Research on Energy and Clean Air (CREA) warned late last year that “a new route for Russian oil to the EU is emerging through Turkey, a growing destination for Russian crude oil,” where it is refined into oil products that are not subject to sanctions and sold on.
“We have enough evidence that some international companies are buying refinery products made from Russian oil and selling them on to Europe,” said Ustenko, the Zelenskyy adviser. “It’s completely legal, but completely immoral. Just because it’s allowed doesn’t mean we don’t need to do anything about it.”
On Monday, British NGO Global Witness released a report that found Russian oil has consistently been sold at prices far exceeding the $60 cap imposed by G7 countries in December last year.
“The fact Russian oil continues to flow round the world is a feature, not a bug, of Western sanctions,” said Mai Rosner, a campaigner who worked on the report. “Governments offered the fossil fuel industry a wide-open back door, and commodity traders and big oil companies are exploiting these loopholes to continue business as usual.”
A picture shows the moon over Saint Basil’s Cathedral on the Red Square in Moscow on May 28, 2018. … [+] (Photo by Mladen ANTONOV / AFP) (MLADEN ANTONOV/AFP via Getty Images)
AFP via Getty Images
Reading Twitter threads is fine, but if you want a deeper understanding of an issue, it’s a good idea to read books. Below is a look at books to read on Russia and Ukraine that will enhance your knowledge of the war and both countries.
Vladimir Putin: Many experts agree that without Vladimir Putin, Russia likely would not have launched its large-scale invasion of Ukraine on February 24, 2022. An excellent place to learn more about the Russian leader is Syracuse University Professor Brian D. Taylor’s The Code of Putinism, which explains the worldview of Putin and his closest supporters. Another outstanding book about Putin is journalist Catherine Belton’s Putin’s People, subtitled “How the KGB Took Back Russia and Then Took on the West.” In All the Kremlin’s Men: Inside the Court of Vladimir Putin, Russian journalist Mikhail Zygar paints a vivid portrait of those around Putin and the influence of the security apparatus.
In Weak Strongman: The Limits of Power in Putin’s Russia, Timothy Frye argues that Putin is similar to other autocrats—much weaker than he appears, in part because he must rely on weak state institutions. Journalist Shaun Walker’s The Long Hangover: Putin’s New Russia and the Ghosts of the Past gives context to what became Putin’s ultimate plan for Ukraine. He writes that Putin used “a simplified narrative of the Second World War to imply Russia must unite once again against a foreign threat.”
Peter Pomerantsev’sNothing is True and Everything is Possible, Adventures in Modern Russia is an inside look from a former TV producer at the early freedom on Russian TV in the post-Soviet period—and how Putin and his allies snuffed out that freedom. In Between Two Fires, New Yorker Moscow correspondent Joshua Yaffa explains Putin’s control of Russian media, the belief in the need for a strong central leader, the compromises many Russians make and events that hinted at the wider invasion of Ukraine.
The lost opportunity of Russia becoming a Western-style democracy with an economy not encumbered by corruption—if that opportunity existed—can be found in several books about reforms during Boris Yeltsin’s rule before Putin became president. These books include Chrystia Freeland’s Sale of the Century: The Inside Story of the Second Russian Revolution, Anders Åslund’s Russia’s Capitalist Revolution and Karen Dawisha’s Putin’s Kleptocracy, where she argues that a “kleptocratic tribute system [is] underlying Russia’s authoritarian regime.”
Ukraine: An excellent history of Ukraine accessible to Western readers is The Gates of Europe: A History of Ukraine by Serhii Plokhy. Another well-written book on Ukraine is Anna Reid’s Borderland: A Journey Through the History of Ukraine, where, like Plokhy, she details tragic events in Ukraine that include Russian suppression of its culture, language and aspirations, Stalin’s famine, the Holocaust, World War II and Chornobyl, followed by its vote for independence and Russian interference and aggression in the years after that vote. Robert Conquest’s Harvest of Sorrow and Anne Applebaum’s Red Famine: Stalin’s War on Ukraine provide comprehensive examinations of the Soviet-created famines that caused the deaths of millions of Ukrainians.
Yale Professor Timothy Snyder’s book Bloodlands: Europe Between Hitler and Stalin describes how Ukrainians (and others) suffered before and during World War II: “In the middle of Europe in the middle of the twentieth century, the Nazi and Soviet regimes murdered some 14 million people. . . . This is a history of political mass murder.” He separates these 14 million from the casualties caused by military conflict. (Snyder has made his course lectures on Ukraine available free online.) In The Devils’ Alliance: Hitler’s Pact with Stalin, 1939-1941, Roger Moorhouse rejects “the Kremlin’s postwar exculpatory line that Stalin was merely buying time by signing the pact.”
For a longer frame of reference on Crimea, which Russia annexed in 2014, there is The Crimean War: A History by Orlando Figes, who writes, “As for the Tsar, Nicholas I, the man more than anyone responsible for the Crimean War, he was partly driven by inflated pride and arrogance, a result of having been tsar for 27 years, partly by his sense of how a great power such as Russia should behave towards its weaker neighbors, and partly by a gross miscalculation about how the other powers would respond to his actions.” Readers will find parallels to the present.
Journalist Tim Judah (In Wartime: Stories from Ukraine) writes, “For too long Ukraine, the second-largest country in Europe after Russia, was one of the continent’s most under-reported places.” That is no longer the case.
Books about Ukraine’s post-Soviet period make clear that Russia’s war against Ukraine started in 2014, not in February 2022, as many in Western countries may think. In A Loss: The Story of a Dead Soldier Told by His Sister, Olesya Khromeychuk tells a heartbreaking story about her brother. He died fighting in the Donbas for the Ukrainian Armed Forces in 2017. The book reminds us how many lives a war can damage.
Ukrainian journalist Stanislav Aseyev, author of In Isolation: Dispatches from Occupied Donbas, writes about the “underground torture chambers in Donetsk” where he found himself: “It was here, in prison, that I witnessed dozens of lives broken . . . but also the power of human will in situations that seemed entirely hopeless.”
Ukraine vs. Darkness: Undiplomatic Thoughts by Olexander Scherba, a Ukrainian diplomat and former ambassador to Austria, is a prescient analysis of Russia’s intentions toward Ukraine written before the large-scale February 2022 invasion.
Russian and Ukrainian Literature: Russian authors have contributed to the world’s culture even though Russian and Soviet leaders have killed, nearly killed and censored many of the country’s greatest writers.
Soviet authorities killed Isaac Babel (born in Odesa), tormented Boris Pasternak for publishing Doctor Zhivago abroad and winning the Nobel Prize for Literature, prevented Mikhail Bulgakov from publishing his best novel (Master and Margarita) during his lifetime, and the list could go on. Fyodor Dostoevsky survived a Russian prison camp, and Alexander Solzhenitsyn lived through the Soviet Gulag. Leo Tolstoy was fortunate not to die during the Crimean War.
Modern-day Russian writer Sergei Lebedev has written stories, such as about the poisoning of regime opponents, that hit close to home. Another contemporary Russian writer, Vladimir Sorokin, author of Day of the Oprichnik, lives in exile due to his opposition to Russia’s war in Ukraine.
Russia ruled over Ukraine and suppressed the Ukrainian language. As a result, writers such as Nikolai Gogol typically wrote in Russian, even though he was born in Ukraine. He moved to Petersburg as a young man and wrote short stories set in Russia and Ukraine. His most well-known novel is Dead Souls.
Taras Shevchenko (1814-1861) is Ukraine’s most famous poet. He wrote in Ukrainian and is credited with promoting Ukrainian culture, although Russian authorities suppressed his writings. There are several books available that translate his works. Contemporary Ukrainian writers include Andrey Kurkov (Grey Bees), Oksana Zabuzhko (Fieldwork in Ukrainian Sex), Serhiy Zhadan (Voroshilovgrad) andothers.
This list of books about Russia and Ukraine is not comprehensive, but a good place to start.
