Tag Archives: Vladimir Putin

FIFA Corruption and Small State Soft Power

Vladimir Putin made a good point in his condemnation of the indictment of 14 FIFA officials by the US Department of Justice this week: is this any of their business? Yes, FIFA is a corrupt organization. Yes, many members of FIFA’s all-powerful Executive Committee have been implicated in a number of corruption scandals. Yes, Putin has skin in the game because Russia was awarded the 2018 World Cup as part of a rigged dual bidding process in 2010 that also gave Quatar its controversial 2022 World Cup–a process that allegedly took corruption to a much higher level and that now is under investigation. Furthermore, given his aggressive and deceptive policies against sovereign nations formerly in the Soviet orbit, Putin is not a likely candidate to occupy the moral high ground in issues other than riding topless through the Siberian tundra.

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FIFA President Sepp Blatter in 2010 disclosing Russia and Qatar as hosts of the 2018 and 2022 Word Cups (BBC News)

Yet, Putin makes a point worth exploring. Here is what Putin said about the arrested FIFA officials: “They are accused of corruption – who is? International officials. I suppose that someone broke some rules, I don’t know. But definitely, it’s got nothing to do with the USA. Those officials are not US citizens. If something happened it was not in the US and it’s nothing to do with them. It’s another clear attempt by the USA to spread its jurisdiction to other states. And I have no doubt – it’s a clear attempt not to allow Mr Blatter to be re-elected as president of Fifa, which is a great violation of the operating principles of international organisations.”

Let’s look at Putin’s argument in a reversed order. So how do international organizations work? They are incorporated in the country where they are based. FIFA is incorporated in Zurich, Switzerland, as a tax-exempt “Verein”–a club or association–with few financial reporting requirements. Except that there balance sheet has a few more digits than that of the local stamp collector club. De facto, FIFA operates like a large global, post-national corporation even though its members are continental and national federations. It has become a money-making machine even though on paper it is just a non-profit club. So the legal structure within which FIFA operates is woefully inadequate for the kind of business it does.

The next question is: if FIFA really is so corrupt, and not even Putin denies this, why would the host country, Switzerland, not investigate FIFA and bring charges?  For starters, corruption per se is not a crime under Swiss law. If corruption leads to unfair competitive practices, this can be prosecuted under the Unfair Competition Act. (Ironically, the Swiss parliament currently is considering the implementation of an anti-corruption statute which actually may make a difference in the future.) This is one reason why over two dozen major international sports organizations, including the International Olympic Committee, are based in Switzerland. (Other reasons are reliable and secretive financial services, an excellent transportation infrastructure, a pleasant environment, and good shopping for their wives.) They have created a culture of collusion with Swiss authorities who are going easy on these organizations in return for them doing business in Switzerland. Switzerland sees the presence of these organizations as a source of soft power–a small state specialty the Swiss are proud of. There are cases of Swiss authorities backing off when the organization under scrutiny threatened to leave the country. In short, the Swiss authorities never would have investigated FIFA on their own, particularly as the FIFA president, Sepp Blatter, is a Swiss national.

There is a striking over-representation of small states in the Executive Committee, FIFA’s governing body. This is part of the FIFA system. The Cayman Islands, for instance, did nothing to investigate Jeffrey Webb, one of the vice presidents who now is suspended. It is not in the interest of small states to investigate its citizens who sit on important international boards and thus give their countries outsized influence. Of the seven FIFA officials arrested in Zurich this week, six represent small states. And then there is Teflon Sepp, the FIFA president, who so far miraculously has escaped prosecution. It is instructive, in this context, that the US has taken Chuck Blazer, its own corrupt FIFA official, out of circulation. He now is an informant for the US government.

This brings us back to the original question: what business of the U.S. is it? The indictments were brought under the Racketeer Influenced and Corrupt Organisations Act (RICO) of 1970. This implies that FIFA is treated as a Mafia-like criminal organization. As long as just one aspect of the crime, like wire fraud, originates in the U.S., the entire web of crimes can be prosecuted under U.S. law. This hook allows U.S. authorities to go after crimes that were largely committed abroad. The hook here is the Confederation of North, Central America and Caribbean Association Football (CONCACAF), a regional FIFA suborganization, that is based in Miami. Not surprisingly, most of those indicted are indeed associated with CONCACAF.

This type of aggressive extraterritorial jurisdiction is mostly seen with great suspicion and contempt in other countries as it tends to show U.S. authorities as overzealous, overbearing and overreaching–even though soccer fans would be glad to make an exception here. Over the years, such extraterritorial prosecutions often are directed against small states and its citizens. A good example is the U.S. pursuit of Nazi Gold in Switzerland in the 1990s–at a time when Swiss neutrality no longer was of use to the U.S. So the question remains if the U.S. prosecution really will be able to uproot FIFA corruption. The fact that Blatter himself was not indicted makes me think that it won’t. And the other question is how long it will take for small countries to feel trampled by this very assertive U.S. prosecution. So far, authorities in Switzerland have cooperated–hence the Zurich arrests. But it is unclear how long they will. Ironically, then, the solution may have to come from within FIFA, as Blatter himself demanded today. What Blatter can’t see is that this only has a chance of working without him as president.

Estonia’s Russian Legacy and Putin’s Greater Russia

When British defense secretary Michael Fallon publicly stated last week that the Baltic states of Estonia, Latvia and Lithuania were at high risk to be drawn into armed conflict by Vladimir Putin, much like Ukraine had been over the past year, and that NATO had to prepare for Russian aggression, the media in the West took note. But to people in the Baltic region, this was old news, as I experienced first-hand during a visit last Fall when I had a number of discussions on the topic with colleagues at the universities of Tartu and Tallinn. They confirmed that the Russian covert campaign Fallon warned against in fact had already begun.

Estonia is a classic case of a small country that has been tossed around by history. Estonia was dominated by foreign powers for most of the last millennium: Danes, Germans, Swedes, and Russians, both of the Tsarist (1710-1918) and Soviet flavors (1940-41; 1944-91). In spite of that, Estonia has been able to maintain a cultural and linguistic identity over the centuries which forms the core of its national identity today. To Estonians, the Russian legacy weighs particularly heavily as Tsarist Russia began to russianize Estonia in the late 19th century, the construction of the highly visible Russian-Orthodox Alexander Nevsky Cathedral occupying the symbolic spot across from the Toompea Castle being the pinnacle of that effort.

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Russian-Orthodox Alexander Nevsky Cathedral (1894-1900) on the symbolic Toompea Hill in Tallinn, Estonia.

Estonia was traumatized in particular by the Soviet occupation of 1940 and its subsequent integration into the Soviet Union. While foreign control over the centuries, even by Tsarist Russia, had been comparatively benign, Soviet rule was ruthless and oppressive. The Estonian response after independence in 1991 was a strong anti-Russian backlash and assertive policies to pursue integration into the Western economic and military systems by seeking membership in Nato and the European Union and by joining the Eurozone. The only Russian celebrated in Estonia today seems to be Boris Yeltsin whose supportive role in Estonia’s quest for independence in 1991 was recognized by a plaque in his memory in 2013–which has a distinct anti-Putin edge. The plaque was affixed to the bottom of the massive wall that fortifies Toompea Hill–which since the Middle Ages had been the locus of foreign power.

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Plaque in memory of Boris Yeltsin in Tallinn, placed on the historic city wall in 2013.

But the most obvious legacy of almost 50 years of Soviet rule is a large ethnic Russian population. The Soviet Union used massive forced migration to pursue its goals. According to the Estonian government, the Soviets killed or deported about 60,000 Estonians, or more than five percent of Estonia’s population, between 1940 and 1949. At the same time, a large number of Russians relocated to Estonia, both voluntarily and forcibly. While in 1934, 88.1% of residents of Estonia were ethnic Estonians, their share had dwindled to 61.5% in 1989.

Estonian independence turned the privileged Russian population into losers. Restrictive citizenship laws which are based on the ius sanguinis, disenfranchised many Russians living in Estonia: ethnic Russians, even those born in Estonia, were not automatically given Estonian citizenship but rather had to undergo a naturalization process that required knowledge of the Estonian Language. This turned out to be an insurmountable burden for many Russians. As a result, there were many stateless people in Estonia whom Estonia euphemistically calls “people with undetermined citizenship.” Ironically, it is the European Union which, through its European Commission Against Racism and Intolerance, pressured Estonia to improve the plight of the Russian population in Estonia. According to the Estonian government, the situation has vastly improved: while in 1992, 32% of residents of Estonia were stateless, in 2014 only 6.5% were, with another 9.2% holding foreign passports, mostly from other former Soviet republics.

While the issue of “people with undetermined citizenship” appears close to resolution, the integration of ethnic Russians remains a critical issue. An estimated 24% of the resident population are ethnic Russians, and they mostly represent the underprivileged classes in Estonian society. The concentration of Russians is particularly high in urban areas: in Tallinn, the capital, perhaps half the population is Russian, and in the Narva region along the Russian border almost the entire population is Russian–which creates an opportunity for Putin to unfold a similar scenario as in Eastern Ukraine.

This constellation will give Putin ample talking points to repeat what he is currently doing in Ukraine (and what he had done in Georgia before), particularly as Estonia has not dealt with the Russian minority in an exemplary fashion. The pattern is as simple as it is predictable: creating border incidents, developing a rhetoric of assisting beleaguered ethnic Russians in a former Soviet republic, infiltrating the border area with Russian special units in disguise to stir unrest, creating a phony and fabricated resistance and separatist movement, gradually occupying territories and integrating them into his Greater Russia.

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Tallinn presents itself as a Northern European city: there are few traces of the Russian past.

One of the legacies left to us by Soviet Communism is the fiction of international brotherhood which supersedes nationalistic divisions characteristic of capitalist societies. The implosion of Yugoslavia with all the resulting ethnic conflicts speaks to that. The Soviet policy of settling ethnic Russians in far-flung parts of the Soviet empire is another such legacy. It creates ethnic conflict in so many of the former Soviet republics, and even in areas that lie within the Russian Federation. The Baltic states today very much are afflicted by these Soviet settlement policies–and they create an opportunity for Putin to justify his Greater Russia rhetoric.

Conditions in Estonia are ripe for Putin’s strategy to unfold. In fact, stage one has already begun. Russia has been creating small border incidents with all Baltic states as well as with Finland, most commonly air space violations. The most egregious so far has been the capture and abduction of Eston Kohver, an officer of the Estonian Internal Security Service, from Estonian territory on September 5, 2014. Kohver still is in Russian custody at this writing.

Which gets us back to Mr. Fallon’s point. It appears likely that Putin will employ the same strategy in the Baltic states that worked so well in Georgia and Ukraine. In Georgia and Ukraine, Western powers could claim that their interests were not directly at stake. The difference is that the Baltic states are members of Nato, as is Poland, for that matter. We now know that managing Putin’s aggressions after the fact is futile. Yes, Nato promised not to station its troops on the former Soviet sphere of influence. But Russia also guaranteed Ukraine’s territorial integrity in 1994 in exchange for Ukraine giving up the nuclear weapons it had inherited from Soviet times. It is now time for Nato to increase its commitment to the sovereignty and territorial integrity of the Baltic states, before Putin has a chance to unfold his time-tested strategy on them.

Postscript added on March 2, 2015: The looming conflict with Russia also overshadowed yesterday’s parliamentary elections in Estonia. In the media, the outcome was represented as a victory for the governing Reform Party. But their coalition with the Social Democrats actually lost the majority in parliament as support for both parties declined slightly. One of the factors is that two new parties will be represented in parliament. Most importantly, the pro-Russia Center Party gained some votes and now enjoys support from 24.8% of the electorate (24% of residents of Estonia are ethnic Russians) and will continue be the second-largest party. It is likely that the Center Party will remain the main opposition party. The concern is that Putin will be able to use both the large number of ethnic Russians and the political support they have within Estonia as a wedge issue.