Richard Lourie - Putin

Her attempt to feed her starving city would prove the misfortune of her life. She could not help but notice that an agreement to ship Russian raw materials—gas, oil, timber, metals—in exchange for food to a foreign concern had gone totally awry. The nearly $100 million of raw materials had indeed been shipped, but not a ruble’s worth of food had arrived. Looking into the matter further, Salye discovered documents indicating that Vladimir Putin, as head of the Foreign Relations Committee, had entered into contracts with legally dubious companies. Working with a colleague, Yuri Gladkov, she collected more evidence and presented it to the city council, which concluded that the money had been stolen and recommended to Mayor Sobchak that Putin be dismissed.

Sobchak’s response was to dissolve the city council. He wasn’t about to impede Putin, whose achievements were obvious. “Judge his success—he was in charge of foreign investment, and by 1993 we had 6,000 joint ventures, half the total in Russia.” [152] John Lloyd, “The Logic of Vladimir Putin,” New York Times , March 19, 2000. Putin helped attract American firms like Coca-Cola, Wrigley, and Gillette. And foreigners enjoyed working with Putin. Graham Humes, an American who set up a charity in St. Petersburg, said of him: “I found him great to deal with compared with these other Russian bureaucrats who all wanted to fleece you. He was very intense; he controls everything in the room. You felt he wanted to be feared but didn’t want to give you cause to fear him.” [153] Ibid.

Putin succeeded in completing a project to lay fiber-optic cable to give St. Petersburg world-class international phone service. So what if $100 million disappeared? A thousand tons of gold also disappeared as the USSR was collapsing. Later on, Russia’s chief comptroller at the time called the case “not radically more serious than what was going on in the rest of Russia…. It was just a typical case at the time.” [154] Gessen, The Man Without a Face , p. 124. You hardly threw away one of your most gifted and dogged assistants over such a measly sum, such a typical case.

Like all important moments in Putin’s life, his role in the missing hundred million is blurred with multiple ambiguities. Only three things are certain—the money disappeared, the food never arrived, and Putin had a hand in the paperwork. He does not seem to have benefited personally from the deal. His wife says that they returned from the GDR with a twenty-year-old washing machine that an East German friend had given them and which lasted them another five years. If Putin had been siphoning off some of the money from the food deal, he presumably would have found enough to buy his wife a new washer. The American Humes said he didn’t want to “fleece you.” Boris Berezovsky, the oligarch and kingmaker who would figure greatly in Putin’s destiny (as would Putin in his), describes meeting Putin in the early nineties: “And what was absolutely surprising for me was that he was the first one who didn’t ask for a bribe.” [155] Baker and Glasser, Kremlin Rising , p. 52.

If he didn’t get any money out of it, why would he have risked his high position in the new government?

It’s possible that Putin was simply chumped—in Russia, swindling is an art form. Inexperienced in the ways of commerce, Putin may have unwittingly helped abet a scam. In the chaos of those years anything was possible. More likely, however, is that Putin knew some people would line their pockets with the money and he wanted those people in his own pocket for later use. It was a time when sudden and immense fortunes could be made, but it was also a time when sudden and immense power could accrue to those alert to the utility of secrets and favors. Putin preferred power.

Marina Salye tried to raise the issue again when Putin was running for president in 2000. In her version of events, she was made to understand that any such effort would simply cost her her life. She disappeared into a tiny village in northwest Russia far from Moscow.

There were no good years for Russia in the nineties, but 1994 seems particularly bad.

Something had changed in Russia after fall 1993 when Yeltsin ordered the tanks to fire on parliament. The society became more violent, precipitate, unhinged. In June of 1994, the oligarch Boris Berezovsky climbed into the backseat of his Mercedes. His driver and bodyguard were in front. As they left the courtyard a remote-controlled bomb in a nearby parked Opel exploded with tremendous force, decapitating the driver, taking an eye from the bodyguard, injuring seven pedestrians, and shattering windows a block away. Boris Berezovsky stumbled from the wreckage, badly burned but able to walk away.

There had already been fifty-two bomb blasts in Moscow alone by that June. The use of lethal force had become a part of business as well as of politics.

In July the giant pyramid scheme known as MMM collapsed, leaving millions penniless. The 27 percent plunge in the ruble’s value on Black Tuesday, October 11, inflicted suffering on those who still had rubles left to lose. Two months later, on December 11, Russian troops were sent into Chechnya. To chaos, poverty, and desperation now war had been added.

After simmering for three years since Chechnya had declared its independence in 1991, hostilities broke out in late December between Russia and Chechnya, a war that would quickly prove “barbaric on both sides.” [156] novaonline.nvcc.edu/eli/evans/his241/notes/geography/caucasus.html . In the Kremlin’s eye oil-rich Chechnya was a lawless land with impudent aspirations to independence. But business mattered more than war.

To succeed in business in Russia during the 1990s three things were needed: capital, connections, and chutzpah. When Gorbachev tried to revive the economy, new, looser laws allowed for various cooperative-type enterprises, including financial ones that were essentially banks. Some people acquired capital by reselling goods bought abroad for fantastic profit. As one Russian exclaimed on selling a computer for 70,000 rubles: “It was my salary for forty-eight years!” [157] Hoffman, The Oligarchs , p. 117. Others dealt in cars, designer clothes, it almost didn’t matter, since everybody needed everything. It wasn’t that long ago that enterprises like these could have cost you prison time or, in some cases, death. Russians were well aware that the last time anything like this was attempted was Lenin’s New Economic Policy (NEP), which flourished for a few years before ending very badly. That this could happen again no one doubted. The Communists could come back into power—with a vengeance. The Red attempt to seize power in 1993 had been quashed by tanks firing at the White House, but there was an election coming in 1996 that at the least would be bitterly contested, a Communist defeat by no means a certainty.

It was an odd atmosphere that prevailed in those days. A mix of Klondike Gold Rush and Feast in Time of Plague, a sense that anything was possible, calamity included. Though Russian gangsters were making small fortunes via extortion, protection, drugs, and casinos, the great fortunes would end up in the hands of educated men like Boris Berezovsky, who held a Ph.D. in mathematics, and Mikhail Khodorkovsky, who, before he became Russia’s richest man and then its most famous prisoner, earned a degree in engineering. Though a few of the future oligarchs had street smarts, what they all had, and what made them all superrich, was knowing how to work the system. It really didn’t matter which system it was—the crumbling Soviet system, the system for transitioning to capitalism, or the new rudimentary capitalist system itself—as long as there was some sort of system they would find some way of gaming it.