Few know the financial system behind the Russian president as well as British journalist Catherine Belton. In a rare interview, she discusses Putin’s game with the oligarchs and his beginnings as a KGB man in Dresden.

Interview: Jochen Wegner


21 July 2022.

“Putins’s People” is the most profound report yet published on the inner workings of the Kremlin. The book profiles Vladimir Putin as a KGB-trained Mafia Don who stages terrorist attacks and provokes international conflicts obviously to get the support of the Russian people, pushes around oligarch billionaires like his capos and channels vast amounts of illicit funds to destabilize Western democracies. The author, investigative reporter Catherine Belton, currently works for the Washington Post. She got her first posting in Moscow in 1998 and later became a correspondent for the Financial Times. After publishing the book, Belton was sued last year by the Russian oil firm Rosneft and four oligarchs – among them Roman Abramovich, the former owner of the British football club Chelsea. This interview has been edited for brevity and clarity.

ZEIT ONLINE: While reading your book, you get the impression we should have seen the current war in Ukraine coming, that it was inevitable. But even you didn’t expect it. Why not?

Catherine Belton: Many people who have studied Putin closely did not expect it. Even some of those closest to him in the president’s economic elite, even the head of the Central Bank, those in the Finance Ministry, did not expect him to go to war. Even the troops who were mobilizing did not understand what the real aim of the build-up was until just three days before the invasion.

ZON: How is that possible?

Belton: He always kept to a kind of cool pragmatism. He is always pushing the envelope, but always seeking a legitimacy to his actions and some kind of international recognition, so that he can maintain influence in foreign countries and have these networks of apologists for his regime. It didn’t make any sense that he would suddenly tear the mask off – a mask that he’s been so carefully cultivating for more than 20 years, that he would go in with such a violent incursion into a country that is on the doorstep of Europe. Obviously, he’s gotten away with his atrocious bombing campaigns in Chechnya and in Syria, and the West has closed its eyes to the death and destruction he has wrought there, but no one expected him to do this in Ukraine. In 2014, for instance, there was also a threat of invasion. There were also 150,000 troops building up on the border with Ukraine – but then he had advisers who told him: ”No, the response of the West is going to be too strong, the economy won’t sustain the sanctions and you don’t have support on the ground in Ukraine and it won’t be popular.” For some reason, this time he was convinced he could ride it out.

ZON: Isn’t he riding it out to some extent? Despite the vast Western sanctions, daily life in Russia seems to go on rather undisturbed. The shelves are full, the credit card payment system is working and the ruble is even stronger than it has been in recent years.

Belton: The financial block wasn’t prepared for the scale of the sanctions that were imposed, but they were able to quite rapidly react and impose capital controls. The sanctions take time to bite. It is going to take another couple of months. It will be autumn by the time the stocks of most Western goods are going to run out. Central Bank Chairwoman Elvira Nabiulina has warned that most manufacturing plants in Russia are 90-percent dependent on the import of foreign components. She has warned the president that the worst is yet to come. The economy is going to be facing its worst recession in 30 years. But it’s not possible to collapse the Russian economy, because energy prices have risen so high during this crisis. The Russian economy is still making like a billion dollars a day from its sales of energy to Europe. So, one of the things that the West can do is get a little bit smarter about how it is imposing the sanctions, and one of the measures under discussion right now is the imposition of a price cap on Russian oil and Russian gas. That would significantly lower the price pressures, which are affecting the Western economies, and it would also really cut off a major revenue stream for the Kremlin. I really hope something can be done about this.

ZON: Within the population, there still is an impressive amount of support for Vladimir Putin’s hazardous policies. In your book, you describe this as a historic pattern that emerges in times of crises – at the beginning of his career, Putin’s KGB people even allegedly staged terrorist attacks to get the population behind him. Do some Russians still dream of the Soviet empire?

Belton: You see this with the collapse of all empires, even the British one. We have Brexit for instance, as a result of this imperial nostalgia, where the politicians who are behind Brexit appealed to restoring the Commonwealth, and some part of the population bought this. I’m afraid it’s this nostalgia for all lost empires. The Soviet Union imploded in such a spectacular way that, of course, people still yearn for that standing. And ever since Putin has come to power, he has railed against the unipolar world in which the U.S. is the sole superpower dictating terms to everyone else. Going back to your question about the terrorist attacks, I’m not sure it was Putin himself who would have directly arranged them, but perhaps those in his inner circle, hardline hawks, such as Nikolai Patrushev …

ZON: … today the powerful secretary of the Security Council …

Belton: … have certainly had a hand in some of the many darkest dealings of the Kremlin. There is a tradition in Russia in which the secret police, the Cheka, have been involved in the most awful terrorist attacks in order to consolidate and acquire power, and this has stretched over centuries. Putin’s secret police is no exception to that. For many years, no one could believe these theories that perhaps the FSB, the successor of the KGB, had a role in the apartment bombings that helped propel Putin to power. They killed hundreds in their sleep in Moscow and caused Putin to launch the war in Chechnya that raised his status from a gray bureaucrat who was only known by 5 percent of the population to this national hero. And there were real signs that left a

trail to the FSB. The FSB may have had a hand in these attacks at a time when it was led by Patrushev.

ZON: Many Russians didn’t seem to care. Why is that?

Belton: After Putin first came to power, there was a huge surge in the oil price. People’s living standards rose and they were grateful to Putin for that, even though this wasn’t really his doing, but I guess in dominating the country’s political life and taking over all these levers of power, he did bring a certain stability to the country. People heaved a huge sigh of relief after the chaos of the Yeltsin years. Finally, they could get back to rebuilding their lives. They can afford to have apartments, go on holiday to Turkey and all these places. And unlike in Soviet times, the secret service did not interfere on a micro level in people’s lives. It is hands-off as far as most people’s lives go unless it somehow touches on the Kremlin’s strategic interests. And I think people have appreciated that Russia is a rising power and reasserting its role on the world stage.

ZON: Also this time?

Belton: I do not think that this is going to be a long-lasting surge in enthusiasm for what Putin is doing. The scale of the killing on both sides is too big, and most Russians have relatives in Ukraine. I don’t think that the state propaganda is going to work forever.

ZON: Right after Putin came to power, he basically shut down most of the major independent media. Today, there’s no major free medium based in Russia. Is it still possible for people to get trustworthy information?

Belton: It’s getting increasingly hard. You have to use VPN to get access to Western news sites, but there are some independent Russian news outlets out there that are doing great work. There is Meduza.

ZON: DIE ZEIT and ZEIT ONLINE are working together with Meduza, which operates outside of Russia now.

Belton: And there’s an outlet called Proekt, which has just done a very good investigation into the state of the Russian army, the protest within it and the deaths. Of course, this is only accessible and known to a certain urban elite. If you live in a village in Siberia, you’re not reading Meduza or Proekt.

ZON: Your book could also be used as the most detailed map of the financial network Vladimir Putin and his people built over the years. Can you explain the Kremlin’s complex black cash system for non-experts?

Belton: It’s a tactic that the KGB used in Soviet times. They used front companies and intermediaries and trading schemes in which things like oil would be sold at a knock-down price to an intermediary who would then sell it on – at world prices. The intermediary would pocket the difference to fund political allies or to conduct active measures against the West, whether that be kind of covert influence operations or buying off and corrupting officials. When Putin came to power, he was able to recreate this on a grand scale because he and his KGB men began taking over the most important strategic sectors of the economy, like the oil industry, with the arrest of Mikhail Khodorkovsky …

ZON: … the owner of the oil firm Yukos and probably the wealthiest Russian at that time, in 2003.

Belton: That arrest was a real turning point in which the once independent oligarchs of the Yeltsin era, who used to dictate their will to the Kremlin, suddenly found the boot was on the other foot. They could see that if Khodorkovsky is going to go to jail for 10 years and his company is getting gobbled by the state through arbitrary tax charges, then the same thing could happen to them. So, they all had to tow the Kremlin line in order to retain control of their fortunes. They had to essentially do favors for the Kremlin or follow orders in order to keep hold onto their wealth. To a great degree, this meant sharing their wealth with the Kremlin. As one of the once independent Yeltsin-era tycoons said to me: “Look, if I get a call from the Kremlin saying, spend $1 billion or $2 billion on this or that strategic project, I can’t refuse, you have to comply.” There are networks of billionaires who essentially are arms of the Kremlin, and some of them are already deeply integrated into the West. There are companies that are listed on Western stock exchanges and, of course, you have this huge amount of cash in the offshore system, in Western banks, it’s hundreds of billions of dollars. In Russia itself, they could buy elections, fund state propaganda and make sure they had total control over political power. Then, once they reached a critical mass inside the country, they suddenly had this huge web of cash outside of Russia under their command in the offshore system, which they could then use to undermine and disrupt Western democracies.

ZON: We use the term “oligarch” in the Russian context without thinking much about it. Could you – as one of the leading experts – define it? What is an oligarch?

Belton: The original oligarchs who made their wealth during the rule of President Boris Yeltsin have now been completely displaced. In fact, under Putin, there is no such thing as an oligarch. In the nineties, this term was used to describe the coterie of Russian businessmen who privatized the crown jewels of Soviet industry at a knockdown price. It was used because these men were so powerful they could dictate their will to Yeltsin’s Kremlin administration and to its government. It was used in the true sense of the meaning of the word oligarch – “a person who is part of a small group holding power in a state”. Soon after Putin came to power, he sought to overturn this power paradigm. The equation changed completely and the so-called “oligarchs” became the servants of the Kremlin. Because of this change I tried not to use the word oligarch in my book but to describe these businessmen as billionaires or tycoons.

ZON: From your point of view, what is the role of Oleg Deripaska, who is a main character of our cover story, among the oligarchs?

Belton: Deripaska was the first tycoon to publicly voice how this power paradigm had changed under Putin. He did so in an interview with me in 2007 when he said he would not seek to battle the Russian state, but instead he would give it all up – meaning his business empire – if the Kremlin asked him to. It was the first time it became clear that the so-called oligarchs had realised that they were now essentially no more than hired managers. Deripaska has been anxious to prove his patriotic worth to the Kremlin in the past. The Senate Intelligence Committee has pointed out how he worked with the Kremlin to help engineer the overthrow of the pro NATO government in Montenegro, as well as working to promote Kremlin interests in Guinea and other countries where his business assets would double up as strategic arms of Putin’s Kremlin. However, since Russia’s invasion of Ukraine, there is strain in this relationship. Deripaska has been one of the most vocal critics of Putin’s war. Deripaska, it seems, is one of the first to break ranks.

ZON: After you published your book, you were sued by four oligarchs and one oil firm, Rosneft. Ironically, the very first pages of your book describe exactly that: How oligarchs in the UK managed to use the very special British legal system to stay out of the media, to park their money silently there. You must have foreseen this, right?

Belton: No, I really didn’t. That’s one of the great ironies because I watched at very close quarters how the Kremlin could use and abuse the UK court system to target its political enemies in the UK. I had no idea that this was then going to be turned against me, too. I was very shocked when nearly a year after publication, Abramovich suddenly announced he was going to sue us.

ZON: Roman Abramovich, who still owned the Chelsea football club at that time. Why only after one year?

Belton: It’s a one-year statute of limitations. His lawyers had written to my publisher HarperCollins and to me as soon as the book was published. They were very much upset in particular about one line in the book, which quoted three of his former associates saying that he had bought Chelsea Football Club on Putin’s orders in order to acquire soft power and influence in the UK. He said this was false and defamatory, but we had responded by explaining that we put this allegation to his spokesperson and included the spokesperson’s responses in the book. We never asserted whether it was true or not. We said only that it has been denied, and that whatever the truth of the matter. This purchase became a symbol of the Russian cash that was flooding into London. We had an exchange of letters and then we didn’t hear from him for more than eight months. And then, all of a sudden, when the statute of limitations is about to expire, he announces he’s going to sue. And then, literally days later, we got a nasty letter from Mikhail Fridman of Alfa Group,…

ZON: …whose investment company is a shareholder of the German energy firm Wintershall…

Belton: …and whom I barely mentioned in the book and from whom we hadn’t heard any complaints since the book was published nearly 12 months ago. We got nasty letters from Alisher Usmanov, another Kremlin-linked billionaire who has since been sanctioned…

ZON: …who is also well known in Germany for owning some houses at Lake Tegernsee in Bavaria.

Belton: I didn’t know whether HarperCollins would be able to fight all these lawsuits all at the same time, because it’s so expensive in the UK for any media organization to defend itself. And then we found out that Rosneft had filed a complaint without even telling us. And another Kremlin-linked billionaire had done so as well. We were facing at least five lawsuits, and we had

another threat which didn’t actually make it to the lawsuit stage. I didn’t know whether HarperCollins would be able to defend the book or whether it would have to be withdrawn. Thankfully, they stood up strongly, and we were able to fight off most of these suits.

ZON: Did you have to make changes in the book?

Belton: In some cases, we made very small changes – just to make them go away, because there were too many cases to be dealing with at once. Abramovich was going after 26 different passages in the book. In some of which he wasn’t even mentioned, including a quote from Joe Biden in 2015, saying that the Kremlin deploys oligarchs as tools for strategic corruption. It was a real struggle because the book was based on 20 years of reporting as a foreign correspondent in Moscow. The way the UK libel law works is that even if you have a very strong public interest case, you did everything that you were meant to do, you put the allegations to the spokesperson and so on, it can still take a year or more to defend such a claim on public interest grounds, and it could have cost HarperCollins 2.5 million pounds to defend in the UK and another further 2.5 million pounds to defend in Australia. Abramovich was trying to intimidate HarperCollins out of defending the book to make it too costly to continue.

ZON: Just recently, you took part in a hearing of the UK parliament to address this problem. The plan is to change the British law now.

Belton: Yes, that is the big silver lining. I think the Kremlin clearly overreached in our case. All these cases came nearly a year after publication, and we’re trying to figure out if it is a coincidence that it came two months after Alexei Navalny published a video about Putin’s palace on the Black Sea, quoted from my book and waved it in the air. Perhaps that caught too much of the Kremlin’s attention and that’s what led to the wave of lawsuits. I didn’t want to talk to any press because you feel intimidated. You are told by your lawyers you can’t speak to anyone because this will be wrongly interpreted by the courts. But still, because there were so many cases, many journalists wrote articles independently about my situation and thereby drew attention to the weaknesses of the existing libel laws and how they can be abused.

ZON: Your book also presents new details about Putin’s early days in Germany. What did he actually do there?

Belton: Well, he liked to pretend when he first came to the presidency that he hadn’t done anything at all, and the very fact of his being there was a sign that his career had reached a dead end. He talked about how there was nothing to do, and all he did was drink so much beer that he put on weight.

ZON: The legend goes that he put on 12 kilos.

Belton: When, really, there are no photographs there showing Putin having put on any weight at all. I think people were overly dismissive of Dresden and its importance. Putin was working closely with Matthias Warnig, who we know now as the chairman of Nord Stream 1 and 2. In those days, Warnig was a hotshot Stasi officer. According to a defector who had worked with Putin in the Stasi, Warnig was running a KGB cell for Putin. Putin was the chief liaison between the KGB and the Stasi, and it also turns out from another defector that Putin was then involved in active measures against the West. For instance, he had been trying to entrap a professor into handing over the secret to untraceable poison by planting compromising pornographic materials on him. We don’t know whether this operation ever came off. Putin was supposedly also a handler of a notorious neo-Nazi, who later helped stoke the rise of the far right in the east. According to a former member of a far-left terror group, Putin was also working closely with the Red Army Faction (RAF). Members of the RAF would come across to the east and would meet with Putin and another KGB officer there. They would not give the RAF members orders on targets, but they would make suggestions and make sure that they were equipped. The RAF members would hand over lists of things that you would need, whether it be cash or weapons, and these would then be left in a safe place in West Germany for them to be picked up. Putin being in Dresden did not mean his career was at a dead end. It meant that he was actually involved in much more covert operations that were far away from the eyes of the West, and the West was concentrating only on Berlin.

ZON: When your book was published in German, some news media picked up the fact that you talked to an anonymous former member of the RAF. You found hints that maybe the Stasi and also Putin were behind the attack on Alfred Herrhausen, the chairman of  Deutsche Bank at the time. The sophisticated attack has always been a bit of a mystery.

Belton: It’s an open question. We don’t know whether Putin was directly involved in this, but it is certainly the case that the Stasi worked very closely in coordination with the KGB on all these issues. There were signs that that was a very professional attack in terms of the technology that was used to trigger the explosion when Herrhausen’s car was on its way to work. This former member of the RAF had pointed this out. We were also looking at the reasons for why somebody might want Herrhausen’s removal. Herrhausen was then calling for a write-off of the Third World debt, and the debt in the Third World was one of the ways that the Soviets had traditionally exerted control. And it was also a time when the vast business interests in East Germany were going to be privatized, and whoever got to control that process could also potentially get access to a lot of secrets on how the Stasi and the KGB had operated.

ZON: There’s this iconic scene in Vladimir Putin’s life, briefly after the fall of the Berlin Wall in 1989. When so many people were demonstrating in the streets of Dresden and also at the villa where he was staying with the KGB, Putin called for support from Moscow but Moscow was unresponsive. There’s this famous quote you use very often in the book: “Moscow is silent.” How important was this situation in Dresden for his change in thinking?

Belton: These kinds of words seem to continue to reverberate in his head. He was a career KGB officer and he had dreamt of serving an empire his entire life. But the Soviet empire was no more, and they had sort of given up and walked away. He said that the Soviet Union had simply given up its position in Europe, and: “I wanted something different to be offered in its place.” But there wasn’t anything offered. I think this was very difficult for him and many people in the service to swallow. And I think he has made his career out of trying to find this replacement for what was given up by the Soviets. It’s also the case that, when he was in Dresden, he was part of the foreign intelligence wing that had seen the writing on the wall about the fall of the Soviet empire. They had seen that communism couldn’t compete directly with the West economically or militarily. They had to adjust and they were leading the drive for the market economy, and there were preparations underway to move money into illicit offshore networks into Liechtenstein and Singapore to make sure that networks of Stasi and KGB agents could continue to operate even after a fall. I think they knew something was coming, but the speed of the collapse took them, including Putin, by surprise. They thought if there was going to be a move to the market, that they would be able to control the process instead of just this wholesale collapse. We see the consequences of that today in Putin’s actions in Ukraine. It has become his leitmotif. He is trying to recreate that something that he felt was abandoned in that moment.

ZON: Putin is still trying to rebuild the Soviet empire he lost that day in Dresden?

Belton: It’s not even really a Soviet one. In the first interview that he gave in St. Petersburg as deputy mayor, even then he was talking about the Soviet republics, including Ukraine, as something that had been artificially created. That they didn’t really have a right to existence, and that the Bolsheviks were the ones to blame for the collapse of the empire, because they created these republics artificially. Even then, he was looking back to a day of a Russian empire, an imperial empire.

ZON: After his time in Dresden, Putin went back to his birth town St. Petersburg and established another career there. In another impressive part in your book, you describe in detail the mafia-like relationship between the KGB and organized crime he established in St. Petersburg. How would you characterize the Putin of these years?

Belton: Putin was the deputy to mayor Anatoly Sobchak, who was a rising democrat, and Putin again was the chief liaison with the KGB. In those days, St. Petersburg was absolutely overrun by organized crime, and it was very difficult for the KGB to compete with it. They didn’t have a monopoly on violence anymore and Putin understood from a very early moment that you had to have control over strategic cash flows. He and his allies in the KGB very much wanted that so that they could continue to fund their networks. In order to get hold of the most strategic money pot, which was the oil terminal, Putin discussed the idea of creating their own oil terminal with Gennady Timchenko, one of his KGB-connected allies. But this just landed them in very hot water with organized crime, and they got into a battle that was so serious that Putin had to send his daughters to Germany under the care of his good friend Matthias Warnig to make sure that they were safe. It seems that, at some point, he decided that it’s not worth fighting these organized crime groups. Instead, he decided to join forces with the most powerful one, the Tambov Gang. From that moment on, they worked together to control the oil terminal, the seaport and the city’s oil distribution networks in an arrangement that was probably like equal power at the beginning. And then as Putin was able to accumulate more and more weight, the organized crime became the infantry, the foot soldiers of the KGB in St. Petersburg. They would impose their will through the use of violence. And this was actually in an alliance that was very shocking to a senior KGB officer from Moscow, who was in talks with Putin then about creating the independent oil terminal. And as soon as Putin joined forces with organized crime, the senior Moscow guy walked away. He was like, “I’m not having anything to do with this.” He told me afterwards, and that’s very important for how Putin has since run the country: “The KGB guys from St. Petersburg, from Leningrad, they’re much more ruthless than the Moscow ones.” They feel they’re not as well educated as the Moscow KGB guys, and so they’re more ruthless because of this inferiority complex and they will stop at nothing in order to acquire and consolidate power. I think we’ve very much seen this as a pattern in Putin’s presidency. If Yevgeny Primakov, for instance, the Soviet-era spymaster, had come to power, he would not have torn up the global rule book in such a ruthless manner as Putin and these St. Petersburg KGB men around him have done. They would’ve acted in a much more established diplomatic and gentlemanly manner.

ZON: And these ruthless Leningrad Cowboys are still in charge now, right?

Belton: Yes, when Putin came to power, he brought all of them with him to Moscow. Some were there already. In fact, Nikolai Patrushev had moved to Moscow in 1994 and he was a year older than Putin. He’d had very senior positions in the FSB while Putin was working in the Kremlin. Putin made him his first FSB chief, and now he is the ultra hardline head of the Security Council, who I think is a driving ideologist behind Putin’s war in Ukraine.

ZON: With all that in mind, let us now jump back to the Germany of today. There’s Matthias Warnig, a former Stasi captain, and as you say close friend to Vladimir Putin, who until recently, had been running the Nord Stream pipeline project. And behind the scenes, there are also more former Stasi people involved in energy projects. Although it is public information, it is still shocking given the background of your book to see that, until recently, former Stasi officers had still been in charge of some important projects. The debate in Germany has mainly been limited to Gerhard Schröder. But many other details that seem to be more relevant, haven’t been discussed very widely. Why do you think Germans have been so blind to this in the past?

Belton: I think it’s a facet of the time after reunification. No one wanted to delve too deeply into the activities of the Stasi. Of course, there were several high-profile investigations in the late 1990s, but somehow they were conducted – and then forgotten. There was an attempt to bring members of the Stasi to trial over their involvement, for instance, in some of the bombing campaigns in the west, but then they just decided that the statute of limitations had expired, and that was it. People’s Stasi pasts were to some degree brushed over. I was very shocked, too, when I first heard that there were senior ex-Stasi officials running all these intermediaries of Gazprom in Germany. And perhaps the West just thought this doesn’t matter because the overriding sense was that these networks actually don’t matter anymore, that the KGB had collapsed at the Soviet Union’s fall and that was it. In researching the book, you could see that behind the scenes, the KGB had remained a force to be reckoned with in the 1990s. The name was changed, but the foreign intelligence service was kept intact, and behind the scenes in Yeltsin’s Russia, they were occupying quite high positions in the presidential administration and waiting for their moment when they could come back. It’s perhaps an arrogance or a complacency of the West that after the Soviet Union’s fall, Russia has only existed to cooperate with the West and integrate with us on our terms. Because it collapsed, it’s an economic basket case and therefore, if this guy is ex-KGB or ex-Stasi, it doesn’t really matter because that’s not a security threat to us.

ZON: Although he is not the most important person in the networks you’re describing, how do you see Gerhard Schröder’s role in this game? We had months of debate about him and he never actually commented on this, apart from one interview with the New York Times and some quotes in Frankfurter Allgemeine Zeitung just recently.

Belton: I’d love to know more about this, but it’s certainly the case that Putin has cultivated a very close relationship with Schröder, who has benefited handsomely from pocketing these large salaries from the boards of state companies. Schröder has acted as an apologist for some of the darkest doings of the Putin regime and is explaining them to the Western audience. “Oh, you must understand Russia’s grievances” and so on. And, to some degree, I think we do have to have a dialogue with senior people in Russia. We do have to understand their grievances, but not to justify them when they commit murders and atrocities and try to undermine democracies in the West. I think Schröder’s role is that he is in the Kremlin’s pocket.

ZON: Do you think that the German government had most of the information you present in your book?

Belton: I’m sure they did because there was a very good journalist called Jürgen Roth. He has written many books about the organized crime networks in Germany and had very good contacts in the German foreign intelligence agency BND who were supplying him with reports about Putin’s dealings with organized crime in St. Petersburg. Of course, they must have had some understanding, but I think it is part of an overall kind of Western blindness. You know about organized crime, you know about the KGB past, but you don’t necessarily add those two factors up to see it as a security threat because you’re busy dealing with other matters. For Putin’s two decades in power, global terrorism was the overriding priority. Everyone was busy looking for terror groups, trying to counter bomb threats, and this is where most of the efforts of Western security services have been focused. Until the annexation of Crimea and even after that, no one wanted to believe that Putin and his regime could pose any kind of existential threat to the Western order. If there’s corruption, if there’s organized crime, then it doesn’t really matter, because it doesn’t affect us. The Western economic system is actually benefiting from these illicit cash flows because our lawyers and bankers and our economies are actually making money from them. A lot of Western analysts believed that Putin’s chest-beating about restoring Russia’s role on the world stage was meant for his domestic audiences, that it wasn’t actually a real policy. That he was just using this to kind of drum up support domestically. I know this from a senior guy from the FBI, that Western intelligence services could see what Putin was up to in his near abroad. That there were these sorts of campaigns, the active measures, the influence campaigns and so on, but no one wanted to believe that he was going to extend it into the West. That understanding was only reached when there was a very clear conclusion of the U.S. intelligence community that Russia had interfered in the U.S. election in 2016, and people only began examining these tactics and actually this scale of infiltration that the Kremlin might be pursuing a nefarious agenda in the West and was trying to actually undermine our own democracies. This was only recognized after Trump’s election, and until then, I feel, it was complacency. To go back to your question, yes, I think the Germans did know this, but they just didn’t add the pieces together.

ZON: If you look at the system Russia was establishing over the years, you have this special connection to politicians like Gerhard Schröder or Donald Trump. There are connections to UK politicians, to the National Rally in France, Jobbik in Hungary, Lega Nord and the Five Star Movement in Italy, Syriza among others in Greece and maybe the Left Party and the AfD in Germany, and so on. This seems to be a very special selection. What’s the strategy behind this?

Belton: They are taking a leaf out of the KGB playbook from Soviet times. We can see this in Putin’s own activities in Dresden, when we’ve heard from a defector and a former member of the RAF that Putin was involved with far-right groups and far-left groups. It seems that the tactic has been repeated on a much grander scale, that the Kremlin has been involved in financing or supporting extremist groups across Europe and in the U.S. in order to sow chaos in our systems and try to undermine the fundamentals of the post-Cold war order, which is based on this trans-Atlantic alliance and liberal democratic values. Putin, to some degree, was very successful in doing this because, obviously since the 2008 financial crisis, there is growing inequality. There are these growing parts of the population, including in Eastern Europe, who were once happy to be joining the Western order, who now kind of feel left by the wayside in globalization. Russia could leverage that whether it be through far-left or far-right groups, be it through appealing to traditional values, through nostalgia for more stable times, that they could then kind of grow a political foothold in these countries. They’ve been very clever about doing so, and I think for a time Putin certainly thought he was on the winning side. In 2019, he gave an interview to my old editor at the Financial Times, Lionel Barber, in which he said the liberal democracy is now obsolete. You could see Trump was on the rise. You have Orbán on the rise in Hungary and all these strong men leaders and indeed they were seeking to create an alliance for instance, through Lega Nord, in which Europe would have much closer ties with Russia, and we see this in the rise of Marine Le Pen in France. Certainly, it’s not over yet, though the equation has now been significantly changed by his invasion of Ukraine.

ZON: If you think about France, we had an election there and Marine Le Pen is still on the rise. Do you think that the system of financing parties, like Le Pen’s, is still intact today or has it broken down?

Belton: I think it’s half and half. With the sanctions, it has become much more difficult for the Kremlin to finance these types of activities. Some of the oligarchs who have been maybe ordered by the Kremlin to finance parts of the political establishment in the West – when we name names, it’s much more difficult for them to kind of be able to do so. But we should not forget that there are huge networks of offshore cash, which we haven’t managed to trace or figure out whose money it is yet. One of the examples in my book is about the most well-known money laundering schemes that we’ve heard about in recent years, whether the Russian laundromat or the Deutsche Bank mirror trade schemes. Very often, there are the same sort of FSB-connected bankers behind it. It’s the same individuals. There is Department K of the FSB, which was in charge of overseeing many of these schemes, and they’re using shell companies in the UK which don’t even have to file any proper accounts. They don’t pay taxes in the UK, they don’t have to have any real business activities in the UK. They can falsify anything. And this is tens of billions of dollars that have come through the Western system, which are essentially untraceable. And once they can get to hedge funds or private equity funds that can then be made to make political donations, we don’t know who is behind it. For instance, hedge funds were major donors to the Brexit campaign in the UK. It’s still a big loophole that they don’t have to face the same type of disclosure requirements as banks do. We also have the issue again with Brexit in the UK. Law enforcement is not empowered to look beyond certain jurisdictions. There’s a well-known case with Brexit of Arron Banks, in which he gave the largest-ever political donation in the UK to the Brexit campaign that was 8 million pounds. And yet when the National Crime Agency was investigating the source of financing, they could go no further than an Isle of Man company, part-owned by Arron Banks that he said gave him a loan, and yet the NCA can’t look beyond the Isle of Man company. We don’t know where that Isle of Man company got the money from. There are huge webs of cash that we still are not able to trace properly. Of course, the sanctions are to some degree limiting the capacity to do this, but we still see quite dangerous tendencies. In France, Le Pen has been able to win quite a number of seats and of course, the political climate, with the rising living costs and the energy crises, is conducive to the rise of people like Le Pen. We still have to see what’s going to happen in the U.S. elections in just two years’ time. Will Donald Trump be coming back then?

ZON: What’s your personal scenario? How will the war in Ukraine end?

Belton: I wish we knew that. A big inflection point is coming in the autumn. This is when the sanctions will begin to bite hardest on the Russian economy, but it will also be when the energy prices hit the West the worst. And who blinks first? Do you have people like Macron and Scholz trying to pressure Zelensky somehow into agreeing to give up territory in return for a peace? I don’t know. But it seems to me that this is also a risky strategy, because whenever you give into Vladimir Putin, he tries to take more eventually. I can’t imagine a scenario in which he has taken control of part of east Ukraine and is satisfied with that. Of course, he will try to seek to topple Zelensky or take more territory, or we don’t know which other areas he might target next, whether that be the Baltics or elsewhere, so we’re heading for very turbulent and dangerous times.

ZON: It’s also a major question if there’s a way out for Putin himself. It’s really hard to imagine that he will leave of his own accord or you can move him out and bring someone else into power. What’s your scenario for the point in time when Vladimir Putin isn’t the CEO of Russia anymore?

Belton: Despite the fact that Putin at the moment looks to have quite a strong tactical hand, I think we are going to see this. There is a backlash against him within some sections of the Russian elite. It’s clear already that they are upset. It’s almost a repeat perhaps of the final years of the Soviet Union when there was a progressive element of the KGB that saw that Russia under its planned and isolated economy could not compete directly economically or militarily with the West. And Russia is heading on that same path. I do believe that there will be progressive factions even within the security services who will see it as their patriotic duty to change Russia’s course, and perhaps then also the leadership of Russia. But I don’t know when, or how soon that happens. Is it two years? Is it four years? We see some signs of this already. There are some in Putin’s inner circle who have taken on a much more vocal public persona since Putin launched his war. It’s as if they sense a weakness. There are those like Nikolai Patrushev, Sergey Kiriyenko, the deputy head of the administration. Dmitry Medvedev, too, and Vyacheslav Volodin, the speaker of the parliament who are all speaking on much more global issues than perhaps they would have been allowed to in the past. They were inhabiting parts of the political arena that were previously solely the preserve of Putin, and it’s as if they sense this moment when the beauty contest to take over can begin.

ZON: There’s no imaginable scenario that Russia one day becomes just a classic democracy?

Belton: Not in the foreseeable future.

ZON: Thank you very much.