The Real Russia. Today.

The Kremlin’s real power, how Russians learned to distrust private property, and a hard look at the Steele dossier’s sources

Tuesday, November 3, 2020

• Meduza spoke to all the likely sources behind the ‘Steele dossier.’ The report that forever transformed Donald Trump into a ‘Russian agent’ looks less and less convincing.
• Special correspondent Andrey Pertsev answers all of your questions about Russia’s Presidential Executive Office
• Opinion and analysis: Zygar on loans for shares
• News briefs: Sberbank vs. Ozon, Khabarovsk gives up on Furgal, Charlie Hebdo gets its very own Chechen caricature, and filming a movie … in space!

Feature stories

🕵️‍♂️ Raw intelligence

The Guardian once described it as among “the most explosive documents in modern political history,” but the “Steele dossier” — former British spy Christopher Steele’s opposition research against candidate Donald Trump — has wilted under scrutiny since it was first published in January 2017. Official investigations by the FBI and U.S. Justice Department Special Counsel Robert Mueller either did not corroborate or simply dismissed major claims in the report. The uncertainty surrounding the dossier owes largely to the anonymity of Steele’s sources, though journalists and online researchers have identified several individuals who allegedly supplied the report’s intelligence. Meduza contacted all these people to find out what they actually claimed about Donald Trump, whom they told, and what they think now about their role in a political scandal that still haunts America to this day.

Here’s what we learned, in a nutshell:

• Virtually nothing verifiable was known about the Steele dossier’s sources until late October 2020, when The Wall Street Journal reported that a Russian public-relations executive named Olga Galkina provided key information that fueled some of the dossier’s most outlandish allegations against Donald Trump and his 2016 presidential campaign.
• Several months before the Journal’s report, a group of anonymous bloggers deciphered redacted FBI records to identify the Steele dossier’s likely sources, including its “primary subsource”: a Russian analyst named Igor Danchenko.
• Meduza contacted the individuals identified by these bloggers and asked them about their alleged roles in providing the intelligence contained in the Steele dossier. These people included two Russian journalists (not counting Olga Galkina, who previously worked for RIA Novosti), a former diplomat and intelligence officer, a former deputy mayor of Nizhny Novgorod, and a lecturer at the Moscow State Institute of International Relations.
• Nearly all these individuals confirmed that they are personally acquainted with Igor Danchenko, but they deny supplying him with any of the information that appeared in the Steele dossier.
• Igor Danchenko says he’s confident in his information-gathering, but he has declined to discuss his sources and methodology with journalists. He also denies any responsibility for how his contributions to the Steele dossier were ultimately presented in the report.

⚙️ Powerful, but not omnipotent

In Russia, everyone is used to the fact the government’s position on acute political, social, and even cultural issues doesn’t come from the departments that are supposed to be responsible for these affairs. The Kremlin always has the last word. Oftentimes, this doesn’t mean President Vladimir Putin himself, but rather representatives from his Presidential Executive Office. To get a fuller understanding of what Putin’s administration does, we asked Meduza political correspondent Andrey Pertsev to break down the what exactly the Presidential Executive Office is, the scope of its formal (and informal) responsibilities, and the limits of its influence over what happens in Russia.

Opinion and analysis

💰 Russians’ fateful introduction to private property

The newspaper Novaya Gazeta has published an excerpt from Mikhail Zygar’s new book, “You’re All Free to Go: The Story of How Elections Ended in Russia in 1996,” detailing how banker Vladimir Potanin navigated a Yeltsin administration divided between first deputy prime ministers Anatoly Chubais and Oleg Soskovets. Zygar describes how Potanin convinced Chubais that a private scheme was needed to reallocate Russia’s Soviet industrial infrastructure, taking the economy’s commanding heights from the “red directors” in power when the USSR collapsed and delivering these assets to the emerging business class. Most importantly, Potanin stressed the need to avoid a competitive bidding process, arguing that the country’s fragile economy and precarious situation couldn’t support it. Potanin needed the government’s help to claim Nornickel from its “red director,” Anatoly Filatov.

The “loans-for-shares scheme” was how Potanin and Chubais hid their agenda of reallocating Russia’s biggest industries behind a plan to prop up the government’s enormous budget shortfalls in 1995. Private banks owned by Russia’s future “oligarchs” loaned the state roughly $1.8 billion, secured by sharing in Norilsk Nickel, Rostelecom, Yukos, and several other big companies. Within the next year, when the government couldn’t repay the loans, the bankers claimed their collateral.

After Oleg Soskovets initially blocked their efforts to privatize Nornickel, Potanin and Chubais made an unwitting accomplice of Soskovets by baiting him with the promise of easy, risk-free money in the form of “loans-for-shares.” Alfred Koch, then an official at Russia’s Federal Agency for State Property Management, also vouched for Potanin, which paved the way to support for loans-for-shares from both Soskovets and Chubais — a rare showing of harmony that convinced Prime Minister Viktor Chernomyrdin to sign off on the plan.

In a note before the excerpt from Zygar’s book, Novaya Gazeta says the results of the loans-for-shares auctions sowed distrust not only in oligarchs but also in the institution of private property itself, helping to derail the nation’s liberal-democratic development.

Other news in brief

• 👩‍🚀 To infinity and beyond. The Russian state-owned television channel Pervyi Kanal has announced plans to cast a woman in the leading role of a new film that’s going to be shot in outer space.
• 💰 Breaking up is hard to do. The state-owned Russian bank Sberbank is demanding one billion rubles (about $12.6 million) from the online retailer Ozon for terminating an agreement between the two companies in September 2020. Ozon denies any obligations to pay “break-up fees.”
• 🏳️ End of the Furgalites. On Tuesday, for the first time in 116 days, Russia’s Far Eastern city of Khabarovsk didn’t hold a protest rally in support of jailed former Governor Sergey Furgal.
• ☪️ ‘Jokes.’ The Chechen newspaper Vesti Respubliki posted two caricatures of the French weekly Charlie Hebdo on its Instagram account, accusing the French publication of inciting Islamophobia and thereby aiding the cause of Islamic extremists. Instagram later removed the content.

⛸️ This day in history: 38 years ago today, on November 3, 1982, Evgeny Plushenko was born outside Khabarovsk. A four-time Olympic medalist who won a record total of 22 titles on the Grand Prix circuit, he is one of Russia’s greatest figure skaters. He also starred in an adorable commercial for the Spanish lollipop “Chupa Chups.”

Yours, Meduza