At a hearing of the Helsinki Commission on Thursday, Sen. Sheldon Whitehouse (D-RI) spoke to RAND Corporation Defense Researcher Michael Cecire about Russian trafficking operations.
00:00I want to go back to the point I made in my opening statement related to the effects in areas under Russian influence of our rule of law country's willingness to provide rule of law shelter to corruptly obtained assets and further provide anonymity to the thieves and the criminals and the traffickers and the kleptocrats and oligarchs who stole them.
00:30And I see that happening and I see that it is wrong. Where you have more expertise than I do is what effect that operation, that ability to hide anonymously their stolen assets behind rule of law protections has for their power, their strength, their dominion over countries that are in Russia's shadow.
01:00In a nutshell, how much does that hurt?
01:07Thank you, Senator Whitehouse. I think it absolutely hurts quite a bit.
01:11And in the case of a number of countries, but I'll speak briefly about Moldova.
01:16Moldova has been in the past a regular vector of Russian illicit finance, corruption and kleptocracy.
01:27And it has been a success story that our partnership with the Moldovans and Moldova's integration into Europe has been a real impediment to that flow of illicit finance, irregular migration,
01:40even the flow of fissile materials and there's a number of cases, but one of the largest is the Russian laundromat case between a period of 2010 to 2014 where there was something like tens of billions.
01:56Some estimates go upwards of $80 billion that was facilitated from Russia through Moldova into hundreds, if not thousands of companies in the West,
02:07including about 2,000 companies registered in the United Kingdom, several hundred companies here in the United States.
02:14And that was orchestrated by a Moldovan oligarch of Vladislav Platon.
02:21And it was that Russian laundromat that sort of put on display the powers by which Russia could employ illicit finance to do two things.
02:31One, to cleanse dirty money and to spread its influence, its financial influence, but also its political and strategic influence into Europe and into the West.
02:42And also to undermine and cripple its states in the region, including in Moldova.
02:50Wherever this money goes, it taints the companies, the governments that flow with it.
02:58And so being able to have reliable partners in the region who can be responsive,
03:06who have the same goals that the United States has to undermine these financial flows is incredibly important.
03:12Yes, I agree, and I will note that there are two tiers to this.
03:19Russia actually funds a lot of their hybrid operations in Europe and outside of Russia through this type of funding.
03:24So this isn't simply a financial monetary issue.
03:27It's a concrete national security issue for a lot of our partners.
03:30So in that context, laundering money for political, diplomatic, and even then operational objectives is a playbook that Russia has developed.
03:40We've seen, for example, at a lower level, Azerbaijan uses this as well with caveat diplomacy in Europe.
03:44So this is becoming a playbook for authoritarian regimes.
03:47And of course, Russia wrote the book on this.
03:49And just as similarly, we've noted the extensive subversions in Moldova.
03:55Right now, Russia is precisely using oligarchic money to disrupt the democratic transition process in Armenia.
04:02They're using oligarchic money to basically fracture the democratic process and, in essence, subvert developments.
04:09So they view this entire process as an important instrument of the state to achieve its set objectives.
04:17But they do this through illicit means, which creates a notion known as traceless manipulation,
04:22where they could achieve their objectives, but it becomes really difficult to accuse them.
04:27So they claim plausible deniability.
04:29And it's a very, very important tool they've been using both in Europe, and now we're seeing a lot of that used in Moldova and Armenia as well.
04:38I'll add on Belarus and militarization of economy, something that they also mentioned in the beginning.
04:43So there are currently more than 280 companies and enterprises that support Russia's invasion.
04:49They deliver all goods from microchips to even uniforms.
04:55There are testimonies from political prisoners who were released saying that they were involved in suing of uniforms that went to Russia afterwards.
05:04There is even an enterprise that was producing skis, and now this enterprise supports the invasion of Ukraine by delivering products to Russia.
05:14So you see this collaboration.
05:16Belarus is using around 20 ports in Russia because of the Lithuanian decision to close its territory for transition of Potash.
05:24So Belarus is now using Russian ports.
05:28In 2022, when most important painful sanctions were imposed, Belarus lost 4% of GDP as the result of these sanctions.
05:37But now it recovered because of this collaboration with Russia and because of this kind of economy helping Russia's war machine.
05:44But sanctions is something that can make a difference here, especially sanctions on the militarized economy.
