Now THAT’s Chekist Chutzpah!

My response to the substance of the Russian spy ring story is a shrug.  It is not a surprise that Russia is engaged in espionage.  It has been well known that Russia’s foreign intelligence service, the SVR, has been extremely aggressive in recent years.  Many countries, including, if memory serves, the UK and Canada (Canada!) have complained about the intensity of Russian espionage.  I presume that the US is engaged in espionage against Russia as well.  Indeed, the main surprise is that these agents were not operating under official cover.  It’s hard to recall reports of the arrest of such a large number of such types by any country, even back in the days of the Cold War.

What has amazed me–and believe me, Mark A.’s opinion to the contrary, it takes a lot for anything Russian politicians do to amaze me–is the Russian response to the news of the arrest.  Putin’s crazed statement is priceless:*

“Back at your home, the police went out of control [and] are throwing people in jail,” Mr. Putin said. “I hope that all the positive gains that have been achieved in our relationship will not be damaged by the recent event.”

That’s so good, it bears repeating:

“Back at your home, the police went out of control [and] are throwing people in jail,” Mr. Putin said. “I hope that all the positive gains that have been achieved in our relationship will not be damaged by the recent event.”

I mean, to get lectured by Putin of all people about out of control police throwing people in jail is just too much.  After all, he comes from the land of out of control police throwing people in jail–and often leaving them there to die without medical treatment.  But it’s not only high profile cases like Magnitsky that point out the out of control nature of the Russian police.  Just look at the reaction of the authorities to any protest march, or even a gay pride parade, if you want to see out of control.  (To Obama’s gay supporters: how do you reconcile your support for him, given the “reset” and his being best buddies with Medvedev, and not saying a word about Russia’s routine persecution of gays?)

Indeed, arguably the greatest source of discontent of the Russian people is the lawlessness, arbitrariness, corruption, violence,brutality and just plain out-of-controlledness of the militia (police).

I guess the only possible distinction to make would be that Putin alleged that the US police “went out of control” (suggesting that this was an atypical development to transition from in control to out of control) whereas Russian police are always out of control.

(My most vivid memory of a trip to Moscow was that I’ve never been in any place where I was far more nervous when the police were present than when they weren’t.  They were, almost to a man (or boy–many being quite young), slovenly and unprofessional looking, their hats shoved back on their heads, staring at everyone with predatory, wolfish looks.  I saw police shake down people not once but twice in broad daylight.  In one case, a cop car drove by a street vendor, clearly from the Caucasus; the car flashed his lights and the vendor threw a wad of bills into the car’s open window.  This happened a block from Red Square.  In the other case, the cop just waved over a car at random.  I was sitting in a park, at a discrete distance, and watched the whole thing.  The transaction–and it was just that–ended with the driver shoving some bills in the officer’s hand.)

Other Russian responses had a fair share of chutzpah, but nothing in Putin’s league.  The Tarantula (Lavrov) complained about the timing of the bust: “The only thing I can say today is that the moment for [the arrests] has been chosen with special elegance.” He was whining that the arrests had been made so soon after Medvedev and Obama went on their all-but-holding-hands date.  From the WSJ:

Many Russian officials and analysts said they presumed that hawkish elements within the U.S. government had engineered and timed the arrests to embarrass President Obama and undermine the “reset.”

OK, Mr. Lavrov.  Please tell us just what time would be acceptable.  I’m kind of thinking that “never” would be your answer.  If the glow from a recent meeting of the presidents wasn’t a problem, something else would be.  Like some Russian holiday or Putin washing his hair.

Lavrov also said “They haven’t explained to us what this is about.  I hope they will.”

Uhm, Sergei.  Read the indictment.  That will tell you exactly what it is about.

The Russian reaction is especially rich given how they’ve howled at episodes of alleged western espionage in Russia.  Remember the shrieks of outrage over the rock in the park incident allegedly involving British intelligence?

Perhaps what has really got Putin’s shorts in more of a knot than usual is that (a) his peeps got caught, and (b) more importantly, it appears that the FBI thoroughly compromised the SVR’s communications:

The FBI operation represents the biggest penetration of the SVR communications in recent memory. The FBI read their emails, decrypted their intel, read the embedded coded texts on images posted on the net, bugged their mobile phones, videotaped the passing of bags of cash and messages in invisible ink from one agent to another, and hacked into their bogus expenses claims.

Ouch.  That’s gotta be a major kick in the stones to a proud Chekist like Putin.

This episode will probably provide some entertainment in the coming weeks, but is unlikely to have a major impact on US-Russian relations.  I do encourage, however, the FBI and the attorneys from the SDNY to continue to release details of the incompetence of these agents, and the way that the FBI apparently totally undressed the SVR.  Just for the pure enjoyment of watching Putin’s reaction.

* Putin said this in the presence of Bill Clinton, who laughed when this was translated.  I wonder what Clinton found funny: was he also entertained by the complete insanity of Putin’s remark?  Even if that’s the case, Clinton should have taken the opportunity to point out the difference between American and Russian law enforcement.

About Craig Pirrong 223 Articles

Affiliation: University of Houston

Dr Pirrong is Professor of Finance, and Energy Markets Director for the Global Energy Management Institute at the Bauer College of Business of the University of Houston. He was previously Watson Family Professor of Commodity and Financial Risk Management at Oklahoma State University, and a faculty member at the University of Michigan, the University of Chicago, and Washington University.

Professor Pirrong's research focuses on the organization of financial exchanges, derivatives clearing, competition between exchanges, commodity markets, derivatives market manipulation, the relation between market fundamentals and commodity price dynamics, and the implications of this relation for the pricing of commodity derivatives. He has published 30 articles in professional publications, is the author of three books, and has consulted widely, primarily on commodity and market manipulation-related issues.

He holds a Ph.D. in business economics from the University of Chicago.

Visit: Streetwise Professor

1 Comment on Now THAT’s Chekist Chutzpah!

  1. The only trouble with your theory is that the US imprisons many more of its citizens than the Russians do.
    I don't know weather this is because there are more criminals in the US or the US Government is more oppressive than the Russian Government. Also using prisoners for forced labor is exactly what the Soviets did in their Gulags.

    As for spying the US has so many spy agencies with so many employees the US must surely have the biggest espionage network in the world.

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