An Oligarch, A Think Tank And The Rise Of American Kleptocracy?

Journal of Political Risk, Vol. 7, No. 10, October 2019

By Bertie Harrison-Broninski

Industrialist Len Blavatnik, left, and former U.S. President Bill Clinton speak at the Film Society of Lincoln Center 40th Anniversary Chaplin Award Gala at Lincoln Center in New York, U.S., on Monday, April 22, 2013. Clinton presented Barbra Streisand with the award honoring her work in film. Photographer: Amanda Gordon/Bloomberg via Getty Images

Ukrainian-born billionaire Lenonard Blavatnik has ignited controversy once again with his lavish donations to British and American institutions. This time, it is by giving $12 million to the Council of Foreign Relations (CFR), an influential thinktank with close ties to senior business, government, intelligence and foreign-policy communities in the US.

The move has prompted a series of open letters signed by “U.S., European and Russian foreign policy experts and anti-corruption activists”, who fear that such donations are “a means by which Blavatnik exports Russian kleptocratic practices to the West”. Many of them are CFR members themselves, and their letters are rounded off with footnotes demonstrating Blavatnik’s links to Putin’s inner circle and questioning the sources of his wealth. Their second letter states that the impact of the donation “extends far beyond the potential value of the money…beyond even CFR. That impact will touch upon the health of American democracy.”

None of this will come as any surprise to those who have followed Blavatnik’s spending over the past 15 years. While his philanthropy has seen him knighted by the Queen in the UK and hailed by some as one of the world’s most generous benefactors, his donations within political and educational spheres have repeatedly led to scrutiny and protest.

This history of controversy makes the response from CFR President Richard Haass rather baffling. After stating that the money will enable CFR to pay their interns, he then effectively defends the decision by acknowledging that Blavatnik has supported several “international schools of business and government” and saying that CFR is “proud to find ourselves in such distinguished company”. Blavatnik holds citizenship in the US and UK.

What Haass fails to mention is that in many cases these donations have been public relations disasters for the universities and have cost them senior academics. Notable examples include Oxford, with the resignation of leading political-scientist and corruption-expert Bo Rothstein, and another open letter from concerned academics, as well as the Hudson institute, with the resignation of Charles Davidson as head of their Kleptocracy Initiative. At the time (December 2018), Davidson told the New York Post that “Blavatnik is precisely what the Kleptocracy Initiative is fighting against—the influence of Putin’s oligarchs on America’s political system and society—and the importation of corrupt Russian business practices and values.”

Hudson is unique so far in that they returned the money as a result of the backlash. Oxford and Harvard are distinguished despite such donations; not because of them. In fact, you could go as far as saying that it is this comfortable level of prestige that allows them to take such questionable donations without fear of long-term change of public opinion. CFR should not be proud of association with these institutions if it is by this means.

Even the details around Blavatnik’s businesses that we do have some transparency around still undermine his image of worldly altruistic benefactor: he has large investments in the oil industry, he’s been fined by the Federal Trade Commission for violating anti-trust laws, and he was heavily implicated in the Paradise Papers scandal. But the sources of his wealth that we know fewer details about are more concerning.

Blavatnik made much of his money during the ‘aluminium war’ in the 1990s, one of the most notoriously grisly industries following the fall of the USSR. A period with a reputation for corruption and ties to the Kremlin, it has been estimated that one person in the business was murdered every three days. He worked alongside one of his closest friends and business partners, Viktor Vekselberg, an associate of Putin’s who lost billions after the Mueller investigation led to US sanctions upon him for “malign activities”. Former Pentagon official Michael Carpenter told Bloomberg that “Vekselberg was deeply implicated in efforts to influence leaders and politicians here in the U.S.” Blavatnik too, was investigated by Mueller. While Blavatnik likes to claim that he hasn’t spoken to Putin since the millennium, one of the concerns the open letter to CFR notes is the 2013 deal orchestrated by Putin and his confidant, former deputy prime minister and now Rosneft chair Igor Sechin, in which Blavatnik reaped an estimated $7 billion from the sale of the oil company TNK-BP to the state-owned Rosneft conglomerate.  The letter states that “subsequent investigation indicates that as much as $3 billion of the total was an inexplicable overpayment by the Russian government.” The full list of worries around his wealth is too extensive to detail in this article, but the footnotes of the open letters to CFR are worth reading.

Far too many of Blavatnik’s ‘philanthropic’ donations directly relate to governmental policy, and specifically foreign policy, for them to be labelled mere altruism with nary a raised eyebrow. They should rather be investigated within the context of his sweeping political donations too (he is known for donating to influential figures on both sides of the political aisle in the US, even donating to both the Obama and Romney campaigns in 2011). Understandably, though perhaps unforgivably, institutions are just unwilling to refuse sums as large as the over $250 million he has now given to Harvard.

CFR accepting all of this money from Blavatnik is deeply worrying, and their justification via the examples of previous donations to universities shows that Rothstein, Davidson, and others were right to protest those donations too. We can see an escalating institutional moral apathy towards accepting money with foreign links, which serves Blavatnik’s agenda. The open letter to CFR described Blavatnik as exporting kleptocracy from Russia, echoing Davidson’s worries around importing ‘Russian practices and values’. Even if the Mueller report wasn’t as consequential for the presidency as Democrats had hoped, it was certainly a warning bell about the rising influence of Russia over American and UK politics.

Beyond that, however, I would argue that this normalisation of large money in political spheres in the US is a broader concern than being simply a Russian ‘export’ – some of the problems lie at home. It is all part of a larger downward spiral since the Citizens United case in 2010, an increasing cultural acceptance that politicians, universities, and perhaps now think tanks, rely on voluntary funding from the super-rich. Anyone following the Democratic primaries will be familiar with Bernie Sanders’ repeated warnings of a descent into oligarchy. While we might not all agree on his methods of dealing with that, it’s important that we recognise that he is touching upon a very real issue. Not all Blavatniks and Vekselbergs are Russian, and democracy shouldn’t be up for sale to anyone.

Bertie Harrison-Broninski is an English student at Oxford University, currently specialising in postcolonial studies. As a board member of the development nonprofit Oxford Omnia, he oversees the launch of their new media outlet, The Civil Society Review, as its editor. His prior writing on Blavatnik’s donations to Oxford University can be found here.