Irony and Loyalty

The New York Times has an article about William Browders' troubles in Russia. Browder was one of the most prominent foreign investors in Russia. His fund, Hermitage Capital, had $4 billion under management. He was a champion for minority shareholder rights in Russia. In that capacity he stepped on some important toes. Since 2005 he has been unable to secure a visa to return to Russia.

The irony is that Browder (the grandson of Earl Browder, former head of the US Communist Party) used to be one of Putin's biggest cheerleaders. He argued that Russia needed Putin's strong leadership, and applauded when Mikhail Khodorkovsky was sent to jail in October 2004.

Browder's fate does might seem to reflect a lack of loyalty on Putin's part. But what it really signifies is the risk inherent in challenging the system Putin created for control and distribution of resource rents in Russia (see my article with Cliff Gaddy on Resource Rents and the Russian Economy for a discussion). Browder's calls for transparency challenged the fundamentals of the Putin system. That is why he lost his visa.