As in past instances involving allegations of corruption within the Russian political elite, the Kremlin had a stock response ready for its Western critics about the revelations contained within the Panama Papers. 

Russian President Vladimir Putin's Press Secretary Dmitry Peskov (pictured) was also included in the Panama Papers list that revealed large-scale fraud, tax evasion and corruption of the world’s high-profile officials and celebrities. Photo: RIA Novosti

The Panama Papers scandal, which the media has already dubbed “the international Watergate,” has raised troubling questions about potential fraud and corruption within the highest ranks of Russian society, and especially within President Vladimir Putin’s inner circle. 

The list of names included within the Panama Papers contains those of Russian regional governors, members of parliament, and even Kremlin spokesperson Dmitry Peskov. The most controversial revelation was the information about a Panamanian offshore company belonging to President Putin’s close friend and cellist, Sergey Roldugin. The total sum of monetary transactions completed through these offshore firms is close to $2 billion. Roldugin himself could not explain where this money originated.   

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The obvious question becomes: What are the implications of the Panama Papers for the highest echelons of the Russian governing elite? And what will those individuals cited in the documents do to save face, or at least, their positions and political power? 

As a rule of thumb, the response of society and the political elites to accusations of corruption is an important indicator of a nation’s stability, the sustainability of the political system, and the nation’s overall economic development potential. If the accusations of corruption about high-profile government officials are confirmed by documents, it is supposed to lead either to their resignation or court prosecution.

Case in point: consider what is happening now in Iceland, where Prime Minister Sigmundur David Gunnlaugsson was forced to step down after damaging allegations in the Panama Papers led to protests and public outrage.

However, the more obstacles that emerge for the prosecution of corrupt officials, the worse the implications will be for a country that creates such hurdles. This statement seems to be very obvious, but Russia appears ready to dispute this idea as well as the controversial revelations of those officials and businessmen involved in purported corruption schemes.

As indicated by the experience of previous scandals (for example, last year’s exposure of the business empire of Russian Prosecutor General Yuri Chaika’s sons and their links to high-profile mafia members), many ordinary Russians are pessimistic about fighting corruption. They don’t believe it is possible to root it out in Russia. At the same time, they think that Russia, driven by the current leadership, will be able to play a relevant role among the great powers despite any accusations directed toward their country from “external enemies.”     

Why corruption thrives in Russia 

Such a paradoxical mindset is partly the result of the ongoing job of the Kremlin’s spin-doctors and propagandists. This outlook also partially stems from the background and mentality of the Russian people: It is a deep-seated idea passed down via generations – the idea that powerful officials can use state property for their own use. In short, Russia’s leaders still view their country in feudal terms.  

The 21st century development of Russia confirms the thesis of prominent Polish-American historian Richard Pipes about the specific understanding of private property by Russians. They have never seen it as a natural and inalienable right. From the times of the Grand Principality of Moscow (1283-1547) to the current period, state officials have been finding easy ways of restricting the rights of ordinary people and, concurrently, legitimizing their own capital earned by dubious means.        

There is a widespread belief in today’s Russia that corruption is possible to root out only through ironclad and tough measures, like it was the case during the tenure of Soviet dictator Joseph Stalin. When the Soviet authorities stopped curbing these activities, gave up large-scale repressions and boosted economic and political freedom, bribery and embezzlement started blooming again. 

So, Russians make conclusions from this experience that life without either corruption or repressions is impossible. That’s why one should choose between the former and the latter. Obviously, when faced with such a choice, the majority prefers corruption to repressions as something inevitable, as the lesser of two evils.   

Another important aspect of the mentality of modern Russians, which helps to alleviate the urgency of these corruption scandals, is the conviction that the country’s current political leadership, headed by Putin, is confidently and effectively conducting foreign policy, which, they believe, earns greater status for Russia in the international arena.   

The Kremlin’s response to the revelations 

Remarkably, none of the countries involved in the Panama Papers scandal has proclaimed the International Consortium of Investigative Journalists (ICIJ) investigation – the result of the work of hundreds of journalists from all over the world – to be “an external conspiracy,” intended to undermine the stability of their state. However, there was one exception: Russia’s official response. Kremlin spokesperson Peskov said that “Putin, Russia, our country, our stability, our upcoming elections – this is the key target of the international consortium [ICIJ].”  

In addition, Peskov said that the ICIJ consists of not only journalists, but also “many representatives of the U.S. State Department, the CIA and other intelligence services.” Moreover, he says that the consortium is funded by several sources that the Kremlin finds dubious and suspicious, including the Soros Foundation, recognized as an “undesirable” organization in Russia.       

It remains uncertain if ordinary Russians took seriously the version of Peskov, but one thing is clear: They won’t demand alternative versions from the authorities; they won’t make them accountable. To make their life easier and prevent Russians from asking inconvenient questions, Russia’s state-controlled TV channels didn’t broadcast any programs about the involvement of Russian officials in the Panama Papers scandal. Instead, they just briefly mentioned the fact that the name of Ukrainian President Petro Poroshenko was listed in the Panama Papers.   

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For those interested in the details of the ICIJ investigation, the Kremlin has a well-prepared response, the same response, in fact, that it used during the corruption scandal involving Prosecutor General Chaika: Putin himself is not mentioned in any documents and he doesn’t have any business links to those mentioned.   

In fact, they say that Panamanian law firm Mossack Fonseca’s documents don’t contain anything new previously unknown to Russian special services. Moreover, the Kremlin doesn’t rule out that these revelations are fabricated. “We are disappointed that the traditions of high-quality journalistic investigations sank into oblivion,” Peskov said ironically.  

Implications of the Panama Papers scandal for Russians

While the Panama Papers scandal doesn’t affect the positions of the Kremlin’s inner circle, it will have certain negative implications for Russia and for the life of ordinary people within Russia. First, the Kremlin might start restricting access to Western information channels with greater tenacity. All channels that spread unfavorable information about Russia could be restricted or even blocked. This means that Google, Facebook and some independent media in Russia might face problems.         

Second, if the Kremlin sees that the situation is starting to spin out of control, especially before the 2016 parliamentary elections, it might proclaim any accusations of corruption toward the Russian leadership as an act of treason.   

And, finally, the authorities will keep taking pre-emptive measures and looking for new ways of distracting people from their current problems. One should expect the Kremlin to orchestrate a number of moves hinting at its commitment to rooting out corruption, all of it aimed at presenting Russia as a great power that can provide an instructive example to Western democracies.

The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.