WASHINGTON — Has Vladimir Putin lost touch with reality? Once widely viewed as a cunning, if ruthless, but ultimately rational actor, the Russian president is now isolated and increasingly paranoid, having launched a war in Ukraine that has alarmed even some of his closest advisers, says Catherine Belton, a former Moscow-based correspondent for the Financial Times, now with Reuters and the author of the widely praised book “Putin’s People: How the KGB Took Back Russia and Then Took on the West.”
In an interview with Yahoo News’s "Skullduggery" podcast, hours before Putin placed Russian nuclear forces on high alert, Belton explains why the battle for Ukraine could be the Russian president’s waterloo.
What follows is an edited transcript of Belton’s conversation with Yahoo News chief investigative correspondent Michael Isikoff, Yahoo News editor in chief Daniel Klaidman, and Victoria Bassetti, a fellow at the Brennan Center for Justice.
Michael Isikoff: So, extraordinary time, and extraordinary events going on. You have dug into Vladimir Putin's past, and also his cronies and the oligarchs. The United States and its Western allies are trying to deter Putin with imposing ever harsher sanctions. Just on Friday, the United States announced that they were going to sanction Putin and Foreign Minister Lavrov directly. Is any of this having any impact or effect on the Kremlin?
Catherine Belton: I'm afraid it's not, clearly not, having too much impact on Putin's own calculus. And I guess the question is really: To what degree is he now just acting all by himself? Because I actually can't imagine for an instance that his decision to launch a full-scale invasion of Ukraine was supported by a majority of his own top officials. And you could see that on their faces when he held that Security Council meeting on Monday. You could see the fear in their eyes and that, really, they didn't want to be there. They all looked deeply uncomfortable.
And I think for many in Moscow, Putin's actions this week have come as a great shock. I think many were preparing for him to maybe, yes, recognize the independence of Donetsk and Luhansk because already, since 2015, de facto they've been independent anyway. They were held by separatists backed by the Kremlin, and this was just making a de facto situation de jure.
And it would have allowed Putin to kind of walk out. He’s taken yet another little slice of Ukraine. He could continue to perhaps menace from the borders and threaten [Ukrainian president Volodymyr] Zelensky in an attempt to gain concessions from Zelensky and maybe from NATO on missile shields and so on. No one expected him to go this far, and you can see that in the reaction of the Russian stock market, for instance. … It lost half its value immediately after the invasion.
Daniel Klaidman: So the fact that the people around him are so surprised suggests that Putin has changed in some fundamental way. That there's been some shift here. And people talk about him being increasingly isolated. Why do you think it happened?
Belton: I wish I knew the answer to it, and it's the answer that ... everyone's trying to scrabble around and guess at, including quite high-placed officials in Moscow who really don't understand what's changed. But we can only presume it's the last two years of the pandemic, where he has been increasingly isolated. And, as you say, he has become consumed by history and his place as the restorer of the Russian lands.
We always knew that he placed a very special emphasis on kind of restoring Russia's greatness and restoring its imperial past. We also know that, even from 1992, when he gave his first-ever interview as the deputy mayor of Saint Petersburg, that even then he was suggesting that Ukraine wasn't a real country. Even then he was blaming the Bolshevik revolutionaries, as he did in his speech on Monday, for creating an artificial republic. … He doesn't believe that Ukraine should exist. He believes it should be part of the Russian empire.
But we've seen him always before, no matter what he's done … we've always seen him act, perhaps wrongly and terribly, but always with a degree of cool rationality. … And it seems [that] has changed over the last two years. He's lost touch with reality. I mean, it really seems that he thought maybe the Ukrainians would just back down. Maybe he thought Zelensky was going to do the same. But it certainly seems he didn't expect such resistance, and he didn't expect, I think, such a strong response from the Western world, because Russia's economy is now going to be devastated and it's getting cut off from all the cultural ties. I mean, so many Russians are completely devastated by what's happened.
Victoria Bassetti: Do you think Ukraine is the end of his kind of, let's call it, descent into madness?
Belton: I guess we've got to hope so. And the signs are hopeful. I mean, the stronger resistance that Ukraine can put up, the stronger the resistance from the West, will hopefully mean that this is the end, that it is his waterloo, and it will lead to his toppling. We have to see how long can President Zelensky withstand the Russian forces. We have to see whether the U.S. and the rest of the Western allies will now escalate their response. Because at the moment, I think we're only seeing the beginning of the impact of the sanctions that were launched earlier this week. So the sanctions against [Moscow-run financial services company] Sberbank, against [Russian state bank] VTB, barring them from conducting any dollar transactions, they're pretty tough. We’re already seeing signs of a run on the banks. But Russia's Central Bank has clearly made some quite strong interventions in the market to prop up the ruble and to keep things stable for now. But for quite how long it can continue to do so is another question.
I think if the U.S., as is being suggested, goes ahead and sanctions Russia's Central Bank, that's going to wipe out a huge chunk of Russia's hard currency reserves, and is potentially devastating. And you would have to hope that that would be a very, very strong deterrent against Putin ever considering going any further than what he has. But I've just been speaking to one Moscow businessman who's pretty well connected, and he says that's not possible. [Putin] can't back out now. He's crossed the Rubicon. He would completely lose face.
Bassetti: Putin still has cards in his hand, especially regarding some of the economic sanctions. He has the ability to counter-retaliate against the Western world. What are the odds that he's going to kind of engage in those strongly disruptive retaliatory actions regarding energy and the other mineral reserves that Russia and Ukraine have the power over?
Belton: I think, at the moment, Putin is scrambling a little bit. He hasn't decided himself how he's going to react because, again, I think he's facing much stiffer resistance from Ukraine than he expected and much stronger resistance from the West as well. So I think he wasn't expecting to face so much trouble. I think he didn't think that this was going to provoke such a strong response. I think that he had a kind of plan, perhaps that they might sort of be able to muddle through the Western sanctions. They've been creating their own alternative to SWIFT [Society for Worldwide Interbank Financial Telecommunication]. For instance, Russia had created its own system, and I was told that in response to the sanctioning, the barring of the biggest state banks, [they] weren't conducting any dollar transactions. The Russian Central Bank had been working on developing a program for correspondent accounts with the Chinese. But that appears not to be working because already there was news yesterday that some very big Chinese banks were refusing to carry out Russian dollar transactions, Russian dollar contracts, and they don't have the support from the Chinese that they expected.
So I think Putin is, you know, he's finding his way. We don't know what he's going to do. Unfortunately I'm not sure any of his closest officials are able to put up any resistance because we all, again, we all saw how fearful they were of him during that Security Council meeting, and I think they just have to blindly follow orders. … But yes, as you say, he does have some tricks up his sleeve. He could, for instance, sort of stop exports of titanium to the West, and Boeing is a big importer of Russian titanium. It needs it to build its aircraft. That could be one thing that he could do. I really doubt that he would cut off oil and gas supplies into Europe and the rest of the West because that would be kind of like cutting off his nose to spite his face.
Isikoff: I have to say your description of that National Security Council meeting with Putin addressing it and his advisers being startled and unnerved by what he was saying is pretty scary, because it raises the prospect that we are dealing with an isolated megalomaniac in charge of a nuclear power running amok. And nobody able to stop him. I'm just wondering, you have reported for years on the people around Putin, the silovaki [Putin’s inner circle of powerful national security advisers]. Do you see any indication that any of those close Putin advisers are actually breaking from him or not on board with what he's trying to do here?
Belton: You know, I would doubt that Nikolai Patrushev, the head of the Security Council itself or [Alexander] Bortnikov, the head of the FSB, weren't on board with this plan. I think of any of his advisers they would be the ones. I guess it's Patrushev who's always been the leading ideologue of using capitalism as a tool to undermine the West to buy off and corrupt officials and so on. And he's certainly very much painted the West as a hostile enemy of Russia and something which is kind of debauched and decrepit, and it’s time to attack. But I think the rest would not. And I think you could see that also in the eyes of Sergey Naryshkin, his foreign intelligence chief, who Putin was very sharply reprimanding for not speaking clearly or kind of fluffing his lines about recognizing the independence of Donetsk and Luhansk.
So I think there's a very close core of security officials who might support this, but right now the impact on the economy is so deep that I think even officials like Igor Sechin [the chief of the Russian energy giant Rosneft], who has made quite considerable personal fortune, is probably going to be wondering whether this is the right call.
Isikoff: I have to say, one quick question. We were talking about Bortnikov before. I noticed the other day that the [U.S.] Treasury Department, among its sanctions were actually targeting one of his children...
Isikoff: ...in the West. And I saw that as the first step for a roll out of additional sanctions going after Putin's kids — his daughters, in particular, who are supposed to have bank accounts in Latvia and other financial institutions outside of Russia. The U.S. sanctioned Putin, but Putin doesn't have any known assets in the West that could be seized. Why aren't they going after his kids?
Belton: I think that would be obviously a very good next step, possibly. I think that's something that would really hurt Putin. I think he is always resisted any kind of public mentioning of his children, his family. He's always tried to shield them from public view, and it's something that he's very, very sensitive about.
Klaidman: But that could that be a bridge too far? I mean, could that provoke him in ways that maybe would not be in our interests, kind of poking the bear?
Belton: It is like poking the bear, yeah.
Klaidman: I wanted to ask you about Putin's rhetoric, which has seemed fairly over the top recently. And one line in particular jumped out at me — when he referred to the Zelensky government as a band of drug addicts and neo-Nazis. Are these the ravings of a mad man? Or is there method to this kind of rhetoric? What's he up to here with that kind of language?
Belton: You know, I'm at the stage where I don't know whether he really, truly believes his own Kool-Aid about this. We know that they used this rhetoric before in 2014, and when they launched the proxy war for Donetsk and Luhansk through sending the Kremlin-backed separatists in, to covertly help destroy and take over those republics. So back then there was a lot of rhetoric coming out of the Russian Foreign Ministry about the need to defeat these “neo-Nazis” who were committing atrocities. There was a huge fire in Odessa which was blamed on these “neo-Nazi” groups. So we've seen this before.
But again, it really stretches belief that Putin can somehow be convinced of this, because we all know Zelensky is Jewish. So how can the country be being run by a bunch of neo-Nazis? And how can he even begin to believe that is beyond me.
Bassetti: I want to circle back to something that you said in answer to one of our earlier questions about the sanctions. And that is the way the Chinese are treating Russian bank efforts to conduct transactions in U.S. dollars. In [Friday night’s] U.N. Security Council vote, three countries abstained. China, India and UAE. Are they possible intermediaries? Is there any chance that we get out of this through the work of countries like China, India and the UAE?
Belton: I'm not sure Putin would respect anyone from India or the UAE, unfortunately. I think he has paid quite close adherence to President Xi. It was very clear to see that he did not take any military action in Ukraine while China was hosting the Winter Olympics. And there have been reports previously that he'd been specifically requested by President Xi to do that. But whether the West can rely on President Xi to broker any type of deal with Putin is another question. … From what I can see from the Chinese response, I don't think they're embracing this or wholeheartedly supporting it in any way. The Chinese are very subtle, and they don't like these huge destabilizations, these kinds of massive rocking of the global security architecture that we're seeing now.
Isikoff: As you look at the historical arc of this crisis, from 2014, the annexation of Crimea, “little green men,” the U.S. and West impose sanctions. Business goes on. In 2016, Putin launches this blatant intervention in the American presidential election; the U.S. imposes sanctions, kicks out diplomats. Business goes on. To today, with this invasion. Were there things the United States, the U.K., the West could have, should have, done that would have stopped us from getting to this point, or was it inevitable?
Belton: (laughs) That's the gazillion-dollar question. I think everyone always wanted to hope for the best. And yes, there were many apologists for Putin's behavior over Crimea, and the hybrid war in Donetsk and Luhansk. There were many apologists over the interference in the U.S. election. Not in the least Donald Trump himself. I think probably Putin was banking on a very weak and divided West that he'd been seeing. He thought he'd made great inroads into Western society. We all know that Gerhard Schröder, the former German chancellor, has salaries now from his positions on three state Russian [firms].
Isikoff: Pretty lucrative salaries if I recall correctly.
Belton: Yeah. And there's been sort of widespread, within German society, acceptance and a real willingness to try and understand [Putin’s] actions. You can, of course, paint a convincing argument for why Putin should feel a grievance over NATO's continued eastward expansion. I think, in particular, we should perhaps view with understanding his grievance over the anti-missile defense shields that are being placed very, very close to his borders. There's a new one that's just opened up in Poland, for instance, which is only a hundred miles from the Russian border. … The U.S. has always claimed that these defense shields are aimed at missiles from Iran and elsewhere, but they're certainly very, very close to Russia, and they could knock out any strike capacity of Russia.
So I think there has been a really mixed bag from the Western reaction. There's been a lot of acquiescence and apologists for previous actions, but there's also been a certain arrogance and disdain for Putin and for Russia — that it's seen as a weak economic basket case. I think there was this blindness that Russia could ever pose a security threat to the West. And there was just this arrogance. No one ever listened to his particular grievance over the missile defense shields.
Klaidman: You talk about Putin's grievances. We interviewed you before on this podcast about a formative time very early in his career as a KGB agent, when he was in Dresden when the Berlin Wall fell, and there was a mob outside. He asks some Soviet unit for help and the word comes back, “Moscow is silent.” And that was devastating to him. Kind of a "Rosebud" moment.
Belton: Yeah. I think it's clear this had a tremendous impact on him that has stayed with him forever afterwards. I mean, his description of it in his first interview about this in 2000 — months before he was elected president — it was so graphic. It was so vivid. … He described how he's calling the nearby Soviet military base asking for backup against the protesters surrounding his villa. They said we can't do anything without Moscow's say-so. And Moscow is silent. And he basically said, it was as if we'd given up our position in Europe.
Isikoff: Well, Catherine, I want to thank you, once again, for your keen insights into the enigma of Vladimir Putin. And I should tell all our listeners once again if they want to try to understand Vladimir Putin and his mentality, they can't do better than reading Catherine's book, "Putin's People." Thanks for joining us.
Belton: Thank you so much for having me on.