Beware the Union of Soviet Capitalist Republics

Having lost the struggle to impose global communism, Russia is finding new ways to dominate. What does it have to offer? Economic investment to sway the minds of the gullible.

A case in point is France’s Front National. Getting elected – and Marine Le Pen is contemplating a crack at the Presidency – takes money and French banks have been unwilling to lend to the National Front. Instead, according to an investigation by current affairs website Mediapart, the party has reportedly secured €9m (£7m; $11m) in loans from a Russian bank.

At a time when French President François Hollande has suspended delivery of a high-tech warship to the Russian navy because of Russia’s involvement in the conflict in Ukraine, the National Front’s pro-Putin stance – and the presence of the deputy-head of the Russian parliament at its Congress at the end of November 2014 – have underlined how different its policies are to France’s main political parties.

Marine Le Pen, the National Front’s leader and Presidential candidate for the 2017 election, admitted to Le Monde newspaper that the party took out the loan from the Russian-owned First Czech-Russian Bank (FCRB), established in 1996 by the Czech government but now owned by Roman Popov, a crony of Russian President Vladimir Putin.

Elsewhere, Germany’s Alternative for Germany (AfD) party, the most anti-European Union party in the region’s economic powerhouse, is being eyed by the Kremlin with the prospect of closer financial ties. A report by the Moscow-based Centre for Strategic Communications, called “Putin: The New Leader of International Conservatism”, suggests Russia could help AfD via gold sales, one of the party’s main sources of funding. The quid pro quo is undoubtedly turning a blind eye to Russia’s excesses in the east.

Nigel Farage, leader of the anti-EU UK Independence Party (UKIP), has named Putin as the world leader he most admires and has called on the West to stop provoking him – as if the Russian President needs any provocation. Farage has made regular appearances on the state-sympathetic (if not state-run) multilingual news channel Russia Today directed at audiences outside the Russian Federation. Of course, as one might expect, a UKIP spokesman denied any collusion: “The party will not be accepting any money from Russian banks.”

Hungary’s Jobbik party – which has taken to emulating Putin’s power games – is said to be supported by the Kremlin. According to party members, the offensive in Crimea is “exemplary” and they are encouraging Hungarian minorities in Slovakia and Romania to act to alter the Hungarian border. In 2014 Moscow was ready to lend Budapest €10bn ($13.7bn) to finance two Russian-built reactors at Hungary’s only nuclear power plant. This was only the latest in a series of moves by Russia  to use its energy and financial clout to regain influence in eastern Europe.

One of Russia’s weapons is OAO Sberbank, its largest state-controlled lender. In the past few years, with almost 12 billion Euros ($16 billion) in assets, Sberbank Europe has built a presence in central Europe and throughout the Balkans. Besides expanding its branch network, it is offering hefty loans to companies in former communist Europe.

According to Timothy Ash, chief economist at Standard Bank Plc (STAN) in London (Bloomberg, 2 July 2014), Russia’s policy of loans is “a concerted effort to gain economic and geopolitical influence and clout, and arguably that policy has been pretty successful… Money talks.”

There are exceptions. Accepting Russian money does not sit well with Poland and the Baltic countries of Estonia, Latvia, and Lithuania – the only former communist EU countries to share a border with Russia. But these countries have been trampled on before and Putin’s boots show no signs of wearing out. Communism may be dead. Socialist capitalism is not!

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