Tuesday 14 June 2016
Oral evidence, 14 June 2016.
Witness
Vladimir Ashurkov, Executive Director, the Anti-Corruption Foundation
Chair
Please identify yourself for the record.
Vladimir Ashurkov
My name is Vladimir Ashurkov. I am a Russian civil and political activist, currently living in London owing to political persecution on the part of the Russian authorities.
Chair
We have about half an hour for public evidence from you, Mr Ashurkov. May I start by asking what you think the outcome of the September Duma elections will be?
Vladimir Ashurkov
In the past 10 years, Russian authorities have been suppressing political freedoms, and that comes from several fronts—legislative, and pressure on independent politicians and civil activists. That has led to the situation where the political field is quite bulldozed. The independent parties that have the right to participate in the elections—it was made more difficult, during this electoral term, for parties to participate in elections—are unlikely to be able to get the number of votes, over the threshold of 5%, that would secure them a place in the Duma. In most likelihood, it will be the four parliamentary parties that are currently present in the Parliament, with United Russia, the party of power, having the majority.
Chair
Alongside the elections, do you think there is a possibility of large-scale unrest, as there was in 2011-12?
Vladimir Ashurkov
Definitely, these elections will be a point of pressure and a point of tension for the authorities, because we have the background of the deteriorating economic situation. We have living standards of people deteriorating, so one can expect a lot of protest voting, and we have seen the ratings of the United Russia party go down quite substantially over the last month. Whether this will translate into mass protests, as happened in December 2011, it is really difficult to predict. There are factors that would point to the unlikeliness of this scenario. A lot of laws that regulate mass protest have been made stricter. People are afraid because a number of activists who participated in mass protests have been persecuted. Some of them are still serving jail sentences for the mass protest that happened in May 2012, so the overall sense of intimidation from the Government to the people who are likely to participate in protests has increased.
Mr Holloway
Do you think the single-mandate constituencies will make a difference to the character of the Duma?
Vladimir Ashurkov
Russian electoral legislation has changed continuously over the last 20 years. Every election, parliamentary or presidential, has been done with changed legislation. In these elections, the single-mandate constituencies were re-introduced, and half of Duma deputies will be elected through single-mandate districts. Often, the authorities use single-mandate elections to put forward candidates that represent the system—the administrative resource—but that are distanced from United Russia, which has quite a negative rating. That can happen, for sure, during these elections. There are a number of independent, democratically minded candidates who are running—or intend to run, because registration should start maybe in a few weeks. It is difficult to predict the chances of their success, but if they can be elected, there will be just a few democratic candidates in the new Duma.
Mr Holloway
How popular are the non-communist opposition parties outside big cities?
Vladimir Ashurkov
In many cities, the elections do not fall along party lines. In many regions, there are strong leaders who are quite popular, and those are likely to present, in some regions, significant opposition to the candidates of the party of power. They will not necessarily be from the Communist party. Indeed, the Communist party is the second most popular party in Russia, but there are other parties that have quite strong candidates, such as A Just Russia, the liberal democratic party.
Mr Holloway
What are those liberal parties doing to increase their popularity?
Vladimir Ashurkov
One of the important developments over the past year was an attempt to create a democratic coalition around a party called PARNAS. One of the leaders of PARNAS was Boris Nemtsov, who was killed a year and a half ago. For some time, there was hope that several political parties, including the Progress party, the leader of which is Alexei Navalny, and PARNAS, the leader of which is Mikhail Kasyanov, would create a coalition. Such a coalition would give them the chance to overcome this 5% threshold. That did not happen. Personal rivalries prevailed, and currently the Progress party, headed by Alexei Navalny—the most popular party, even though it is not registered—will not participate in these elections. So the state of the opposition is quite fragmented.
Mr Hendrick
My colleague Ann Clwyd mentioned earlier that she went to see the first Duma elections, and she said that she thought they were pretty fair, and international observers though they were pretty fair. I actually went to the 2012 elections as an observer, and I think they were anything but fair. The OSCE delegation that I was with tried to produce reports; they fed them into a computer and the security services fed a virus into the computer, so a lot of the observations were destroyed. Leaving aside the unfairness that I think is there with the Duma elections, let us say a liberal party, or a coalition of liberal parties, as you mentioned, could get above the 5%. What practically do you think is stopping it? On our delegation visit a few weeks back, I thought Mr Yavlinsky from the Yabloko party was very enlightening, and very progressive in terms of his views. You mentioned PARNAS, and obviously Nemtsov has gone, but hopefully PARNAS is still around, and if Navalny’s party could legitimise themselves to the point where they could get registered, what do you think is stopping a coalition of liberals coming together to get themselves above that 5%?
Vladimir Ashurkov
First of all, everyone who participates in Russian politics understands that the results of elections—especially this election; there is about three months left until it happens—will be to a large extent determined by the Russian authorities. There are several factors that lead to that. The most obvious is the vote-rigging, of which we were witnesses in the Duma election of 2011. That permeates all electoral institutions in Russia. Even in the primaries of United Russia, which were conducted about a month ago, there were wide reports of violations, vote-rigging and so on. When we talk about liberal parties—let’s take Yabloko. It has been around for over 20 years. It has an accepted role within the party structure of Russia. It receives Government funding, because it was able to secure about 3% of votes at the last parliamentary elections, and its leadership, which has not changed for the same 20 years, is very careful in extending this position, with Government funding and a place on the ballot—something that is denied, for instance, to the Progress party, which is more popular. That is why they are quite reluctant to create an electoral bloc or put on their ballot candidates from other parties that are also democratically minded. This is an example of this bulldozed political system, which does not allow free registration of parties and does not allow independent candidates to run. For instance, probably the most popular opposition politician who has emerged in Russia over the past few years is Alexei Navalny. The pinnacle of his career so far has been getting 28% in 2013 in the mayoral elections of Moscow. He is banned from being a candidate because he was convicted in a politically motivated criminal case that is widely seen as rigged—as falsified. By using different methods, the authorities are able to limit the number of eligible candidates and eligible forces, such as parties, participating in the electoral process.
Mr Hendrick
So you are saying it is not practical for those reasons?
Vladimir Ashurkov
With the current leadership of Russia, it is quite difficult.
Mr Hendrick
Could Navalny’s party do it without him at the helm?
Vladimir Ashurkov
It is ironic that the Progress party, which was created just three years ago, is not registered, even though it fulfilled all the cumbersome requirements of the Russian Ministry of Justice. The party has branches in over 50 regions, we have more than 500 people on our party list, and the party has submitted documents for its registration three times to the Ministry of Justice. We are sure that there are no technical reasons to deny it, but at the same time we are denied it. In contrast with the Yabloko party, which has existed for 20 years and has participated in elections, in the polls the Progress party is above all other parties that are not present in the Parliament—without Government funding and without registration. This gives you an idea of the methods that the authorities use to ensure the parties that can make a difference do not make it to the ballot.
Chair
It does seem remarkable that you have got this shattering of the liberal centre. Russia does not strike one, overall, as a place where the liberals are going to storm to victory and a majority in an election. The need to coalesce in order to produce a liberal-centre politics would, you would have thought, be blindingly obvious to all the leaders of these parties, yet they have all chosen to push off in their own different directions and not coalesce. Can you explain that?
Vladimir Ashurkov
I think the main explanation is that they believe that in the current power structure, even if they create an electoral bloc, it will be crushed by the authorities. So what is their motivation to do it?
Chair
Well, they won’t know that until they do it. If you have Progress, Yabloko, Mr Khodorkovsky’s backing and all these forces in the centre of Russian politics, you have to be pretty dim not to work out that they need to pitch their tents together.
Vladimir Ashurkov
It’s true, and such attempts have been made, including the democratic coalitions with PARNAS and the Progress party, which I talked about. But there was the personal agenda in this case of the leader of the PARNAS party, Mr Kasyanov, who did not want to submit to being one of the candidates in the primaries, which would select the top candidates who would go on the ballot. He wanted to secure the top space for himself, and that created tensions with the support base of the Progress party and of the PARNAS party. Eventually Alexei Navalny and his Progress party had to pull out of the coalition.
Mike Gapes
May I take you to what might happen at the next presidential election in 2018? Would there be any significant economic or political reforms after that, given that Vladimir Putin is constitutionally limited to doing two terms—well, each time, two terms? Is there any thought as to how things might then develop?
Vladimir Ashurkov
The general perception of President Putin is that he is a brilliant tactician, rather than a strategist. People say that he has always a folder for a variety of scenarios, and when he thinks that the time has come, he just pulls out a folder that gives him a scenario of how to play the situation. This was the case when the Crimea annexation happened. He probably has these folders for economic reforms, too. His appointment of Alexei Kudrin as a top economic adviser—it is an unofficial title; he doesn’t have any Government post—signals that he wants to have that option, and Mr Kudrin is tasked with creating a sort of blueprint for reforms. How likely it is that this blueprint will be implemented is quite unclear, given that the current system is based on corruption. When I talk about corruption, it is a mixture of economic and political corruption. For instance, central Government turn a blind eye to the regional governor diverting money that was earmarked for road improvement to the pockets of his crony, and in return, on voting day, he uses all his considerable resources to ensure that victory goes to the candidate of the party of power.
Mike Gapes
Given that system, is there any indication yet as to who might be a potential successor as President to Vladimir Putin?
Vladimir Ashurkov
There are a number of people from his inner circle who could be considered possible successors. In the run-up to the elections in 2008, there were also a lot of rumours about who could be such a successor, and it was decided that it would be Dmitry Medvedev, who served one presidential term only quite shortly before the elections—a few months before them. It is likely that this situation will repeat itself with a possible new successor for Putin. One thing that can be said for sure is that when Mr Putin is replaced by somebody, inevitably there will be a start of changes. Inevitably it will lead to some sort of process of political liberalisation, because Mr Putin has been the architect of this system of corruption, and he has unrivalled authority. He has this close circle of cronies, and he has practically unlimited financial power. Any new person would not have this much clout or this much authority, and he would need to account for the interests of various constituencies. There are many constituencies that are quite powerful in Russia: the bureaucracy; the security apparatus; and the business elite, who have seen the valuation of their companies decimated due to economic mismanagement and the international assertiveness of Russia, and they would like to get back access to international capital markets. In any case, this new person will have to be more inclusive, which will lead to political liberalisation.
Mike Gapes
So are you saying that Putin won’t necessarily select his preferred personal successor, and that it will be more mediating the interests of the people around him, so that he chooses the one who will be more acceptable from within that group.
Vladimir Ashurkov
That also. These interests have to be accounted for in the selection process, but also after such a person is elected or legitimised by elections. In order to survive and govern the country, he will have to account for many more interests than Mr Putin has to right now.
Mike Gapes
And he would of course also want to protect his own position after anyone else came through, as Yeltsin did when he put Putin in.
Vladimir Ashurkov
Yeltsin basically resigned from his post, so he did not do what Putin did: employ this loophole in the Russian constitution to be able to come back after one term of a different President. It is unclear what the new person will do. Since he will have to be more inclusive, I think it will be more difficult for him to repeat Putin’s trick.
Chair
How effective have EU sanctions been in changing the behaviour of the Russian Government?
Vladimir Ashurkov
Well, they haven’t been effective in changing—
Chair
So not at all?
Vladimir Ashurkov
No.
Chair
How would you make them more effective?
Vladimir Ashurkov
The sanctions consist of three parts. One is personal sanctions against about 200 individuals. I think those personal sanctions can be extended, because there are many more people who are directly responsible for the annexation of Crimea, which was this brutal redrawing of European borders—the first one on such a scale after the Second World War. On the meddling in Eastern Ukraine, the death toll is being counted, but it is around 10,000 people now. So personal sanctions can be extended, and I think they have been quite effective because, for Russian kleptocrats, it is very important that the money and the wealth that they obtain in Russia can be legitimised in the West for property purchases, business interests and so on. Another aspect of sanctions has been financial restrictions on attracting finances in a number of Russian state-owned companies. They have not been quite effective against these companies because they can obtain financing within Russia from the Central Bank and other financing sources. So I am a little bit conflicted. As a Russian citizen, I would have to be against any sanctions, because any sanctions against Russia lead to some deterioration of life for Russian people. But these sanctions have been quite mild, in that it is self-inflicted damage that Russian authorities have imposed on their population by introducing so-called counter-sanctions, which limit the import of foodstuffs from the European Union and the US into Russia. That has led to deterioration of food quality and food inflation, and this has had a much more negative effect than the western sanctions.
Stephen Gethins
In terms of corruption in the UK, do you think that Russian business people or public officials are using the UK to conduct corrupt business practices? If so, how?
Vladimir Ashurkov
London is an international financial centre, probably the most important in the world, especially for Russia. Most Russian money that comes to the UK is a product of legitimate business, but obviously some portion of money that comes to the UK is the proceeds of corruption and crime. Within our own organisation, which is called the Anti-corruption Foundation, we have been bringing cases of Russian-related corruption with a possible nexus in the UK to the attention of the UK authorities for a number of years. We have submitted a number of cases to the Serious Fraud Office and financial regulators, and unfortunately our words have been falling on deaf ears. Hopefully, this will change now because, over the last two years, more and more people have realised that the system of corruption in Russia is not just enriching bankers, lawyers and real-estate agents in countries such as the UK. It is a menace to European security, because it is this system of corruption that enabled Russia to annex Crimea and to meddle in Ukraine. One of the aspects that directly affects European security is of course the downing of the Malaysian plane, which, I think it is more or less confirmed, was done by Russia-backed separatists in Donbass region.
Stephen Gethins
I want to talk to you in a moment about the connections with the UK authorities, because that is quite interesting, what you just said there; but also, how do you connect what is happening in London, in terms of corrupt practices in London, with the annexation of Crimea? I wonder if you can just expand on that comment.
Vladimir Ashurkov
I gave an example of how economic and political corruption works in Russia—the fact that Mr Putin is able to make decisions which are unchecked by a democratically elected Parliament; the fact that he controls vast financial resources, he and his cronies, which can be used to finance, for example, separatists in eastern Ukraine. The connection is as follows, that he can do that because there is no political freedom; there is no political freedom because he built this system of corruption; and this system of corruption, naturally, is exported into the UK. There are three avenues—three issues that I can name in that respect. One is Russian companies which are used to using corruption in their business in Russia are exporting these practices to the UK. So for UK banks it would be more difficult to compete on the international financial markets when there are Russian banks—for example, VTB, the second largest Russian bank. I can talk, if you are interested, a little bit more on the example of VTB and corruption there. So one is disruption of international competition. The second is security. Corruption permeates security services in Russia, and one can only imagine—it is easy to predict that dangerous materials and dangerous information can fall into the wrong hands, especially in these times of tensions in the world. It is quite dangerous. The third thing is that the unchecked flow of corrupt money into the west and the UK brings with it the corrupt practices with which this money was earned in Russia and other countries. For instance, political meddling: there was a widely publicised example of financing by a Russian bank of Marine Le Pen’s National Front party in France. It was a loan of, I believe, about €20 million—as if that is the right way to finance a political party, through loans. So we hope that the British Government will take a more principled stance against corruption. I think it is in Britain’s interests. We have seen over the last months some steps in that direction, especially in the aftermath of the anti-corruption summit which happened in London in May. We have seen measures that proposed increasing transparency in the property market; making the register of foreign beneficiaries of properties in the UK available to the public; and also efforts to increase the transparency of offshore jurisdictions which have some connections with Britain, like the BVI, the Bahamas, the Caymans, etc. So we would hope that by helping Britain get rid of corrupt money, or at least stem the flow, that would have a positive effect on international security.
Stephen Gethins
So you are seeing some progress from the UK authorities, from what you were referring to earlier on, when you were saying that it had fallen on deaf ears.
Vladimir Ashurkov
At least rhetorically, yes. There is another issue that have been tasked with fighting corruption, such as the Serious Fraud Office under the Bribery Act, are quite understaffed and under-resourced, so it is difficult for them to take on big cases. At the same time, the US agencies such as the Department of Justice, which is enforcing the Foreign Corrupt Practices Act similar—similar legislation in the US—was able to turn the prosecutions of corrupt companies into a money-making machine by agreeing to punitive settlements, so this can be self-financed for UK agencies.
Stephen Gethins
How well do you think the UK policy-makers who are making these policies understand the internal politics of Russia?
Vladimir Ashurkov
It is difficult for me to say. Probably not that much. Russia is a significant player, but it is not critical to UK interests. The trade is not that high. I do not think one needs to understand the internal politics of Russia to make co-ordinated efforts in fighting corruption.
Chair
Mr Ashurkov, thank you very much indeed. We have run out of time. We are extremely grateful for your evidence. Oral evidence: The UK’s relations with Russia, HC 120 5