BACK STORY With DANA LEWIS
Frozen Russian Funds For Ukraine/Iran And "The Butcher Of Tehran"
On Back Story Russia's 300 billion in frozen funds may be about to thaw and fund Ukraine's defence, whether Russia likes it or not. The EU's bold maneuver to repurpose frozen Russian assets for Ukraine with guest Bill Browder.
Then, we pivot to a nation seemingly in mourning and turmoil—Iran—where the sudden demise of President Raisi in a helicopter crash has opened a Pandora's box of political outcomes.
On Back Story Russia's 300 billion in frozen funds may be about to thaw and fund Ukraine's defence, whether Russia likes it or not. The EU's bold maneuver to repurpose frozen Russian assets for Ukraine with guest Bill Browder.
Then, we pivot to a nation seemingly in mourning and turmoil—Iran—where the sudden demise of President Raisi in a helicopter crash has opened a Pandora's box of political outcomes.
Well, first of all, I don't think there are any reputational risks and she's absolutely right that we're talking about. If Russia wins, then they're going to be fighting at the Estonian border and the Lithuanian border and the Polish border or even pushing into those countries, and then we have a NATO obligation to fight with Russia, obligation to fight with Russia and that's going to be literally. At the moment, the US spends 5% of their military budget supporting Ukraine. The United States will be having to spend 100% of their military budget fighting Russia.
Dana Lewis :What is happening? Do you think away from that funeral procession? Are people really mourning the passing of this man Actually?
Shahin Gobadi:quite to the contrary, people are celebrating because he was deeply, deeply hated by the Iranian regime. He was loathed by the Iranian regime for a very good reason. Actually, raisi was known as the butcher of Tehran.
Dana Lewis :Hi everyone and welcome to another edition of Backstory. I'm Dana Lewis On this edition funds for the front line in Ukraine from an unlikely donor Well, not exactly a willing donor either, russia. Eu countries have formally adopted a plan to use windfall profits from Russian central bank assets frozen in the EU for Ukraine's defense. A senior Russian diplomat denounced the plan, saying it would have unpredictable consequences, with the EU obliged, sooner or later, to have to return to Russia what it had stolen, he said. We talked to Bill Browder, who has pushed sanctions against Russia and Iran. A helicopter crash takes out the notorious president and others on board. Could it usher in real change in Iran? I speak to Iranian dissident Shaheen Gobati. Welcome, good to see you, good to see you again. So look, the debate on frozen Russian assets. I mean, I want to take you down that road, but just for people who don't understand what's happened the war started and $300, roughly billion, in Russian assets were frozen in US and mostly European banks. Am I correct? Exactly US and mostly European banks, am I correct?
Bill Browder:Exactly so.
Bill Browder:About a week after the war started, the main countries allied with Ukraine against Russia the United States, canada, the European Union, uk, japan, australia all of those countries in unison froze what appears to be about 300 billion dollars of russian central bank reserves.
Bill Browder:This is the money that the russian government kept in in foreign currency, um, and that money has been frozen since the beginning of the war, and and the original intention was just to unfreeze it at the end of the war, and that would be the that would be part of the negotiation when there was a peace settlement. But but of course, the war has gone on a lot longer than people had hoped. Russia has destroyed, depending on whose estimates you believe, somewhere between $500 billion and $1 trillion of property in Ukraine, property in Ukraine and the obvious thing that that brings you to is that that money shouldn't just be frozen at this point. That money should be confiscated and given to Ukraine, and that's where the debate is at the moment is should it be confiscated or should it not? And if it is confiscated, how do you do it? And then lots of people on both sides of the debate come up with their own reasonings why it should and shouldn't be done.
Dana Lewis :Let's walk through some of that. So the European Central Bank argues against seizing frozen assets, which almost seems like a contradiction in turn to me, because they are, in effect, seized. Russia certainly couldn't go and make a bank withdrawal at this point, but they are not redirected to anything, so they're frozen in these banks and Washington. Now I think that it seemed to me that initially, america was kind of behind everybody else in this debate, um, and and the last ones that wanted to deal with the whole issue of assets. Now they seem to be leading the charge. I mean, uh, treasury secretary jenny yellen is, is uh talking to the europeans and saying that you saying that we have to take some of these Russian assets and Russia has to pay at this point how we take them and what form we take them. But it looks like the US now is leading that charge. Is that right?
Bill Browder:Well, in all of these stories, the US is usually the one leading the charge and the Europeans are the ones lagging, and this is another example of the whole story. I mean, there's very little that anyone can say in favor of Putin here. Ukraine didn't ask for this war. Putin launched the war. Ukraine suffered enormous damage. Putin caused that damage. We have custody of the money, of Russian money, and there's really nobody to make the argument that Russia doesn't owe Ukraine this money. What happens as you sort of get into the details is you have different people from sort of different parts of the apparatus of government and central banks starting to squirm and say well, actually this hasn't been done before. It kind of makes sense on the surface.
Dana Lewis :This is where you get into this idea that the seizure would threaten the future stability of the financial system because countries like China and Gulf states would then potentially the argument against this. They would then shun Western reserve currency.
Bill Browder:Which is an absurd argument, because there's no such thing as a Western reserve currency. There is something called a reserve currency. As a Western reserve currency, there is something called a reserve currency. A reserve currency is a currency that belongs to a country that's liquid, which means you can convert into it and convert out of it without any problem, where the economic background of that country is relatively stable they don't have hyperinflation or other types of things, and, as a result, there are only certain countries that have reserve currencies. The United States has a reserve currency, the EU has a reserve currency, japan has a reserve currency, switzerland has one, uk has one. These are the reserve currencies, and there are no other currencies that are reserve currencies, and if somebody else comes up with a reserve currency, probably they would be part of our alliance against Russia and for Ukraine. It's generally the sort of safe, civilized countries that are reserve currencies, and so you.
Bill Browder:And so it's an absurd and specious argument to say that the Saudis, for example, would keep their money in Argentine pesos or Brazilian real. It's a dumb argument. It just doesn't make any sense. The only thing they can do is keep their money in reserve currencies. We have the reserve currencies, and so, as much as people may not like the idea that if you launch a war of aggression, you can have your money confiscated, nobody has any other options. The world of finance my entire life. I'm 60 years old. I've been doing this for nearly 40 years. There's no other place for them to keep their money I can guarantee you that, and so that's just a stupid, dumb argument that shouldn't be made because it makes no sense.
Dana Lewis :Nobody's arguing for the pesos, but in terms of the euro and the dollar, those who don't want to go along with this and it looks like it's a lot of europe are saying maybe there's a compromise. Why don't we take the interest from the frozen russian assets and give that to ukraine? In the form of what? A loan or a bond?
Bill Browder:Well, so again, let's back up on this whole thing. So what's happening is the European Union doesn't have a single decision maker. There's not, like the president of the European Union, who's weighing up the costs and benefits of this thing, a sort of administrative construct in which there are 27 countries that have to come to a consensus decision, and so the consensus decision is based on some countries that are bullish on Ukraine and defending freedom, and then there are some countries that are friendly with Putin, like Hungary, and so what ends up happening is they come to basically sort of a fudge, a compromise, a complete it's not a decision made up of pros and cons and all that kind of stuff.
Dana Lewis :Is that why? Is it because Slovakia and Hungary and those countries, they won't give them a unanimous decision. Therefore, let's come up with this fudge. Is that really the reason why? That's how it works.
Bill Browder:I've been involved in advocacy sanctions advocacy at the European Union for the last decade. I know exactly how it works and that's how it works, and so it's not like someone saying this is the best alternative, given all the pros and cons. This is a bunch of people negotiating with themselves and coming to some lowest common denominator, and before we get to, is it the right decision or the wrong decision? Let me just address the other big concern that people have about confiscating the money, which is they're saying it's not legal. There's no law that allows you to do this, and again I want to stress that of course it's legal. If a country invades another country and causes damages, they've broken the law, they've broken international law and they've got to pay for those damages, and there has been absolute legal precedent of that happening. That happened after the first Gulf War, when Iraq invaded Kuwait and we confiscated their central bank reserves. It happened when, at the end of the Second World War, nazi Germany we confiscated a huge amount of their sovereign property.
Dana Lewis :They were cases of direct conflict, were they not? Whereas Ukraine is…. There's a direct conflict between Ukraine because it's not a war within I mean, it is part of Europe but it's not a war within Western Europe, where the banks are.
Bill Browder:Well, it's a direct conflict between Russia and Ukraine, and so Ukraine has the right to that money. And so then the question is do they have the derivative right to that money if it's being held somewhere else? And this is where there is potential legal ambiguity. There's no uncertainty about whether they should or shouldn't, it's just legal ambiguity. And so what do you do in a situation where there's legal ambiguity? You create a law to resolve that legal ambiguity. That's exactly what the United States did. They passed something called the Repo Act. This was passed alongside the $61 billion of military aid, and the Repo Act resolves any legal ambiguity.
Bill Browder:The United States now has the legal right under the Repo Act to confiscate Russian central bank reserves. The same thing could happen here in the UK. It could happen in Europe. They could legislate to say that if a country invades another country and causes damage, then that country's assets in third countries can be confiscated. They can legislate that that's what lawmakers do, and that would then resolve any legal ambiguity. Half-hearted, half-assed decision of the European Union where they're saying well, we don't believe we can confiscate the principle, but we somehow believe that it's okay to confiscate the interest which just comes out. Would that do anything?
Dana Lewis :If that is the end of the discussion and they say, instead of 300 billion, we'll give them 30 billion in interest and I know that that's a soft figure because I've read other figures on what the interest would be um, will that do it? Will that accomplish the goal of, of helping ukraine at such a desperate time?
Bill Browder:well, 30 billion is greater than zero, if that's the number. I don't think that's the number. I think that it's five percent on 200 billion, um, or something like that, but in any event maybe 4%. I don't know what they earn on these deposits, but what I can say is that if there's a concern about confiscating principal, there should be an equal concern about confiscating interest. That doesn't solve that legal ambiguity. You need to actually legislate for it and once you've legislated for it, you might as well confiscate the whole damn thing. Actually legislate for it, and once you've legislated for it, you might as well confiscate the whole damn thing.
Bill Browder:And at the end of the day, this is not going to be a question of the stability of the financial markets, because that's a complete red herring, and it's not going to be a question of legal ambiguity, because that can be resolved very easily. It's going to purely be a financial question. And the financial question is should the taxpayers of Europe, should the taxpayers of the UK, should the taxpayers of the United States, should their financial resources, their money, their taxes, be lower on the totem pole on the pecking order than Putin's rights to his money? And I would argue that Putin has less of a right to his money than the taxpayers of Europe and the UK and the US and other places to their money, and so we should be taking Putin's money before we take our own money. I think we're going to have to take both in order to carry on with this thing.
Dana Lewis :By the way, I think the 30 billion figure comes from. If you did a loan or a bond over some period of time, they would give them 30, and then that loan would be guaranteed by those Russian assets over time. That's where that number came from.
Bill Browder:But again, that's an absurdity. If we're feeling uncomfortable about confiscating those assets, why should anyone feel comfortable about buying a bond that's secured against those assets if you can't confiscate them, if the bond isn't paid? And so it all comes back to the necessity of just confiscating the money once and for all, and I think that it's certainly good to get more money to Ukraine than less, but at the end of the day, this war is going on longer than anyone wanted. There's a huge uncertainty about what's going to happen in November in the US presidential election.
Bill Browder:If Trump becomes the next president, which looks more likely than not based on the current poll numbers. He's pretty much made it clear he doesn't want to spend any more money on Ukraine, which means that the Europeans will have to double down in order to keep the same amount of aid flowing, and the Europeans probably don't want to double down and tax their taxpayers. And so how do you solve this problem? Well, there's 200 billion sitting at Euroclear in Belgium, and that could go a long way towards funding Ukraine and funding their defense and whatever else they need.
Dana Lewis :Let me read two quotes to you. I'd be interested in your comments on them. One is from Olena Halushka, head of the International Center for Ukrainian Victory. Also warns that if the assets are withheld from Ukraine and the country loses the war, the economic and security consequences for Europe would be far worse than reputational risks of using Russian assets.
Bill Browder:Well, first of all, I don't think there are any reputational risks, and she's absolutely right that we're talking about. If Russia wins, then they're going to be fighting at the Estonian border and the Lithuanian border and the Polish border, or even pushing into those countries obligation to fight with Russia, and that's going to be literally at the moment, the US spends 5% of their military budget supporting Ukraine. The United States will be having to spend the 100% of their military budget fighting Russia, and so she's absolutely right in that respect, which is, we should just be doing whatever we can right now to get Ukraine back on track, because otherwise we're going to be the ones engaged in this war.
Dana Lewis :One more. The Institute for Strategic Studies argues, we quote we have this very strange ordering of risks. Somehow we persuaded ourselves that it's more risky to take Russian state money than it is to send weapons to Ukraine that kill Russian soldiers. That ordering makes no sense.
Bill Browder:I agree with that as well. There is no risk to taking this money. And, by the way, there's one other unexpected consequence, which I actually define as an expected consequence, which is that who's the other country that has a whole lot of central bank reserves scattered about the world that's looking at eyeing up invading one of their neighbors, and that's China. And perhaps that will change the economic equation for China to do the same thing. If they see that the world is serious, that if you invade neighbors you lose your central bank reserves, that would be a good consequence.
Dana Lewis :Bill, you're always generous with your time and I think your last question, I promise, and that would be look, I have, you know, friends that go in and out of Russia still, and they tell me you know everything's there. Whatever you want on the shelves is still there, despite all these talk of sanctions. And yes, there's. You know there's been some impact on you know gas problems, profits and and et cetera, but generally goods are flowing, however they get in there through Tajikistan or Kazakhstan or wherever they're coming from. And Janet Yellen, again, the US treasury secretary, is saying that these, these sanctions have to be tightened, they have to work. But despite that, the goods seem to flow and Putin just seems to thumb his nose at the world. Why? Why is it still happening like that?
Bill Browder:Well, first of all, what they have on their shelves is not going to determine whether the war stops or starts, or ends or begins. What will determine whether this war can carry on is whether Russia can afford. The war stops or starts, or ends or begins. What will determine whether this war can carry on is whether Russia can afford the war. And at the moment we've sanctioned Russia pretty brutally. If you look at this, we're talking about the central bank reserves which we've frozen. Oligarch reserves have been frozen. We've cut off all Russian companies and government agencies and the government itself from the international capital markets. Companies have fled. A million young, able-bodied men have fled.
Bill Browder:It's a mess over there and anyone who says it's not is just repeating Putin's spin, which is that sanctions don't work.
Bill Browder:But there is one huge loophole in this whole thing, which is that Russia produces a lot of oil.
Bill Browder:They supply 10% of the world's oil and because they supply 10% of the world's oil and we're afraid of oil prices going up, we're not embargoing Russian oil and, as a result, they make a couple hundred billion dollars a year off the sale of oil and they use that money to buy weapons to kill Ukrainians. And until, unless and until we somehow figure out how to increase oil production elsewhere so that we can embargo Russian oil, they're going to always have enough money to do this. Or if, for some reason, the oil price were to collapse, maybe that would stop them as well. And so that's the problem. And that's the $ 200 billion dollar question, which is, how do you stop them from, from getting that 200 billion dollars to buy weapons to kill ukrainians, because they're they're they're basically getting the money indirectly from us, and then we're having to pay the ukrainians money to fight them back. It'll be better if they just didn't have the money to fight in the first place bill browder, always great to see you.
Dana Lewis :Thank you so much, bill.
Bill Browder:Thank you.
Dana Lewis :Shaheen Gubadi is a Paris-based National Council of Resistance of Iran member, which is the political arm of the MEK. Is that right, Shaheen?
Shahin Gobadi:Well, the National Council of Resistance of Iran is basically a political coalition which is against the Shah and against a political regime in Iran, trying to establish a democratic, secular republic in Iran. And the People's Mujahideen Organization of Iran, also known as MBK, as we said, is the main member organization of the NCRI which, as I said, is a political coalition.
Dana Lewis :The funerals have started in Iran, as you know now for President Raisi and the foreign minister and others that were killed in the helicopter crash. You see an orderly funeral procession taking place today. What is happening? Do you think away from that funeral procession? Are people really mourning the passing of this man?
Shahin Gobadi:Actually, quite to the contrary, people are celebrating because he was deeply, deeply hated by the Iranian regime. He was loathed by the Iranian regime for a very good reason. Actually, raisi was known as the butcher of Tehran, and the reason was that throughout the past 45 years, since basically the inception of this despotic rule in Iran, raisi played a key role in suppressing, killing Iranians, dissidents and people from all over the country. He joined the regime when he was only 19, and the only thing that there was in his resume was killing, killing, killing and repression, repression, repression. That was his only achievement. He was a total obedient of the supreme leader first Ruhollah Khomeini, then Ali Khamenei.
Dana Lewis :What happened in the 1980s under Raisi. How many people were killed?
Shahin Gobadi:Well, actually, in 1988, to be exact when Raisi was then the deputy prosecutor of Tehran Khomeini issued an order basically saying any political prisoner primarily the members and activists of the People's Mujahideen Organization of Iran who remain steadfast and firm in their beliefs for democracy and human rights, should be immediately killed with no mercy. And to that effect, he set up death commissions throughout the country and in Tehran there were four people who were assigned to do this, and Ibrahim Raisi was one of them. In a matter of a few months, 30,000 political prisoners, men and women, were massacred after going through sham trials that last one, two or three minutes, massacred after going through sham trials that last one, two or three minutes. In Tehran alone, thousands of political prisoners were massacred, and Ebrahim Raisi played a very, very direct role to that effect and that was one of his basically records Some of the human rights groups who have written about that have said things.
Dana Lewis :Like you know, when you say sham trials, people were asked one question or two questions and put to death by the state after that, and then, most recently, he was really the captain of the ship when it came to the clampdown on the hijab and the deaths of some of these women in custody. Is that right, yeah?
Shahin Gobadi:Well, I was about to get to that, actually first about in 1988, as you said, there was first one. Only one question was asked why are you in prison? And if you say because I was affiliated to the MEK or the People's Mujahideen Organization in Iran, that was enough. No second question was asked and you were immediately sent to the gallows. There are a few survivors, very few survivors, who have survived that process and they have basically explained to the world, have exposed how atrocious it was. It was by all definition, by many, many, many prominent international human rights jurists, a crime against humanity, probably one of the worst cases of the second part of the world, second part of the 20th century, which, unfortunately, has gone very much unexposed, and the regime leaders, who are all involved, including El Raisi, have not been held accountable for their crimes against humanity.
Shahin Gobadi:Now, more recent, for instance, in 2019, there was, as some might remember, a massive uprising by Iranians. People came to streets all over the country, in 200 plus cities, asking for the overthrow of the regime. They were protesting against the regime barehanded and 1,500 of them were massacred in a matter of two days and they were shot at directly by, you know, live ammunition, and at that time, ebrahim Raisi was head of the judiciary and he directly played a big role in massacring these protesters, many of them teenagers, obviously, many, many of them women, of them women. So, as I said, his only achievement was killing, killing, killing, and that's why he was loathed by Iranian people from all age groups and all strata throughout the country and, as Madame Mariam Rajavi, the present elect of the National Council of Resistance of Iran, said yesterday, rais's legacy was basically the wrath of all these people who had lost their loved ones, their sons and daughters, in hands of this regime, particularly by Raisi.
Dana Lewis :So why was he put in charge as president? I mean, they talk about elections, but they were very controlled votes. The voter turnout was dismal. I mean, a lot of Iranians have even turned away from the so-called democratic process. Khamenei put him in charge as president. Why? Because it was a transition and he was seen as the guy who could do what.
Shahin Gobadi:I think this is the key issue for understanding what's going to happen next and why. As Madame Rajavi said yesterday, we believe this was a monumental, irreparable strategic blow to the regime. You see, there have been four major nationwide uprisings since 2018 in Iran, one bigger than the other, 2018, 2019. And you saw the latest one in 2022, which went well into 2023, all getting bigger, more inclusive, more pervasive and all demanding the regime's overthrow and establishment of a democratic, secular republic, rejecting any form of dictatorship, being the current one or the former one by the Shah. So Ali Khamenei, the supreme leader, who saw this momentum and realized how things are going, realized that the only way that he can, in his own calculation, forestall the overthrow of the regime is to circle the values you know, get rid of any kind of rift within the regime, make it totally unipolar and bring the henchmen or the killer at the helm of things. And the most suitable person for that mission was Ibrahim Raisi, given his record. So that's why he was propped up and handpicked and basically selected by Khamenei for this position.
Shahin Gobadi:When it comes to Iran, I think it's a mockery and a joke to talk about elections. It has always been a farce. Anybody who wants to be even a candidate, has to prove his or her loyalty to the Supreme Leader in actions and in belief. And they have to go through so many filters and watchdogs. And unless they have total, total, absolute loyalty, they are not going to be even put in the ballots. And for years the regime played with this game and in the last few years it has become quite evident that this is only, as I said, a farce. And now it's become evident that overwhelming majority of the Iranians shun this gambit and even the regime cannot pretend that the majority of Iranians take part in this.
Dana Lewis :What can happen now? I mean, they're trying to have a smooth transition. They're going to have another election. What can potentially happen between, say, in the next 50 days? Do you think?
Shahin Gobadi:Well, first of all, one has to realize what happened. As I said, loss of Ebrahim Raisi was a big, big blow to Khamenei and the strategy that he was pursuing, because Khamenei needed to, as I said, intensify clamping down, but it does not limit it to inside Iran. He also needed to intensify the regime's foreign intervention and warmongering, and that's exactly what we saw in the last few years, particularly the last few months. As you know, the Iranian regime has been acting as the head of the snake so far as it pertains to terrorism and belligerence in the region.
Shahin Gobadi:And who was the man, who was the main implementer of Khamenei's objective?
Shahin Gobadi:Ebrahim Raisi, who put all the resources and help and everything at the service of the regime's proxies, in line and in tandem with the Revolutionary Guards, and also so far as it pertains to the regime's involvement in the war between Russia and Ukraine by providing drones to Russia. So basically, as I said, khamenei knew that in order to keep the regime in power, he has to rely on someone like Ibrahim Raisi as the implementer. Now Ibrahim Raisi is gone, so it will be very difficult for Ali Khamenei to find someone like him. So, basically, his strategy is not, as we see, the major, major blow. Basically, everything to that effect has gone to a score of one. He has to start from scratch and that takes a lot of time and effort. And also one has to remember in order to bring about what happened, khamenei had to get a lot of even the regime's insiders and loyalists in favor of Raisi the people who believed in him. But they were not as loyal as Raisi Because there are different factions in there, correct?
Shahin Gobadi:Exactly Factions and even the people who were not as absolute loyal that was needed for this position. Let's move like this. So how many has received a major blow. The faction, the feuding at the height of the regime will exacerbate because, as I said, people are vying and they realize that Supreme Leader has become weaker, and so on and so forth. But also, so far as the society is concerned, that will create some kind of situation that in the process and I emphasize, in the process makes it easier for people to show their dissent.
Shahin Gobadi:It's not by what Khamenei desires, but that's what the reality will happen. Now, so far as Khamenei is concerned, he has two choices either to open up or to even further intensify execution, killing, middling in the affairs of the region and drive for nuclear weapons. It's absolutely impossible for him to take the first because the moment he opens up, it will only expedite and accelerate the regime's overthrow and he will see a massive, massive uprising, given the deep, profound grievances that exist in the society. So he has to intensify more on killings, belligerence and drive for nuclear weapons, and that's what he will intend on. What will happen is in this situation, but the regime in totality will be much weaker and, as I said, the peoples will become much more active as we go along.
Dana Lewis :You predicted they're going to try to tighten the stranglehold that they already have on people in Iran, but it seems to me you're saying all it needs is a spark. Whatever that could be, there could be an incident near the funeral weeks after the funeral in the elections, and that may be enough to ignite the street and create real possible change in Iran.
Shahin Gobadi:Definitely, and you don't have to rely on my words on this. The Iranian state press, even before Raisi's death, is riddled about this talk and basically, so far as the regime and how many are concerned, it's anxiety, and that's our backstory this week.
Dana Lewis :The war in Ukraine isn't going well. Russia keeps throwing more troops into the grinder, more missiles, more bombs, you'd think. After well, it's almost three years, it's into its third year that President Putin would tire of all this. He won't, because the war keeps him in power and that's really all he cares about. Thanks for listening to Backstory. I'm Dana Lewis and I's really all he cares about. Thanks for listening to Backstory. No-transcript.