Ben Judah - Fragile Empire - How Russia Fell in and Out of Love With Vladimir Putin

No, his grandmother was being silly, but not stupid. By 2005 the country had not returned to oppression, but it had switched back on the soundtrack of slogans against the enemy within that had once droned on alongside it. Khodorkovsky had gone to the Gulag alone. Yet he was also the only power broker who knew where Putin’s invisible line was.

On a flight from the Siberian city of Barnaul to Moscow in 2005, with Khodorkovsky, Beslan and Kiev all behind him, the President invited his favourite journalist to dine with him. As the plane crossed the Russian continent the uneasy reporter, Andrei Kolesnikov, began to push Putin on the disturbing shapes he had begun to see in the system he was building:

‘I don’t like that sometime after you arrested Khodorkovsky, I lost the feeling that I lived in a free country. I have not started to feel fear…’

Putin interrupted: ‘That is, the feeling of absolute freedom has gone, but the feeling of fear has not yet appeared?’

‘Yes, the feeling that existed under your predecessor has gone,’ said Kolesnikov.

‘But the feeling of fear has not yet appeared,’ asked Putin, as if mulling it over.

‘Not yet,’ said Kolesnikov.

To which Putin replied, ‘And did you not think that this was what I was aiming for: that one feeling disappeared, but the other did not appear?’ 68

WHEN PUTIN inherited Yeltsin’s office, he found himself alone in the castle. He had no reliable cadres in Moscow. He saw a parliament dominated by communists, was much too junior in the KGB to enjoy true authority in the FSB, found the regions run by barons and unlike the old man did not feel these were ‘his oligarchs’ sitting atop such huge financial flows. He had no court.

His evolution to tsar-like authority evolved through three stages. First, Putin brought in his clan. Gorbachev and Yeltsin had spent a long time in Moscow building up a power base and had no need to draft in people from Stavropol or Sverdlovsk. Putin had not had time, so he brought in his men from St Petersburg to be his clients. These were provincial officials, unready for national government, but they were the only people he felt he could trust.

Second, Putin made sure his was the only court. The oligarchs who controlled institutions that threatened his power – independent TV, or independent big oil – were exiled and their assets nationalized. Beginning with the exile of Berezovsky and Gusinsky, ending with the imprisonment of Khodorkovsky, the Kremlin eliminated all other politically threatening patronage systems in Russian politics.

Third, once these men had been eliminated and Putin re-elected, his friends evolved into tycoons. Through a combination of renationalization and awarding state contracts, Putin ensured that the largest financial flows from natural resources were in the hands of loyalists. It is exactly the same principle that led to ‘loans for shares’ – distributing the right to collect the rents from natural resources in exchange for political support. Ministers became millionaires, as they doubled as board members of state corporations. This made the Russian elite one of the richest ruling castes in the world. It cemented the Putin consensus with cash.

Sitting in a Kremlin office, Simon Kordonsky, now a leading sociologist with the looks of a drinker, was watching the consolidation of the monarchical presidency with horror and fascination. In the Soviet Union he had been an outsider, even briefly a tramp, but now he was at the heart of things as the head of ‘expert control’ in the presidential administration, then a senior consultant and speech-writer to Putin himself. There, Mr Kordonsky started to realize he was witnessing a historic regression in action. Convinced that tsarist Russia’s reliance on exporting grain and the Soviet Union’s reliance on exporting oil and gas had not only doomed them, but shaped them, he had come to believe that building a diversified market economy could free Russia from this political curse. By 2003, everything seemed to be slipping backwards. Kordonsky explains:

‘Russia has always been a resource society. It is not a society structured like yours in the West. The state feeds itself off natural resources, which are then distributed, either as subsidies or as the rights to control rents by the Kremlin. The power of the state is the power to direct these flows, politics is competition to divert these flows – so what looks like corruption isn’t corruption, in the sense of it being a defect in the system, it is the nature of the system itself.’

In 2005, Kordonsky left the government to work at the Higher School of Economics and write academic research on what he felt Russia had become. ‘Essentially’, he explained to me over green tea in a cafe frequented by the FSB, eating raw sugar from the pot with a spoon:

‘The core of the economy is now no longer a market. The economy is based on raw materials and these are brought under the direct or indirect control of the state. So what looks like business is actually just a system of distribution… what this means is that upstairs there is a man, called the president, or the general secretary, or the monarch – the title is unimportant – who gets to decide what people or what classes of society benefit from the resource flows. All complaints are directed upwards, to him, the supreme arbiter. This all began with the Khodorkovsky affair and the transfer of control of all key resource flows under Putin’s supervision.’

Russia’s post-communist future turned out to be politically backward. ‘It’s so feudal,’ sighed one assistant to the oligarchy, ‘the way our tycoons relate to power.’ The language used to talk about its leader was also turning not so much Soviet, as medieval. Surkov once said, in a sacral tone with a smile on his face, ‘I honestly believe that Putin was the person who was sent to Russia by fate and by God in the country’s difficult hour, for our greater, wider good.’ 1

I am standing in front of a dribbling windowpane with Sergei Kolesnikov. The view over the city is grey and uninspiring. But he seems to like it. ‘That’s the Russian Orthodox Church, can you see?’ The office is bare. The only ever defector from Putin’s inner circle of St Petersburg ‘friends’ tries to make me coffee from an instant machine that glows fluorescent colours. ‘I’m sorry, I’ve never used this thing before.’ This is his exile, in Tallinn, the capital of Estonia.

Over twenty years ago, in St Petersburg, both Kolesnikov and Putin were in a similar situation. Their old Soviet careers had reached a dead end. Kolesnikov was a biophysicist with a soft voice, sitting inside a doomed corner of the military–industrial complex. He woke up one morning and understood that the state was no longer interested in funding his research into mitigating the effects of biological warfare. ‘I realized that there would be no more funding and in a few years it would all be rolled up.’

So he went into business selling medical equipment with a former KGB agent he knew well, Dmitry Gorelov, who knew another former KGB agent, Vladimir Putin, a guy from the mayor’s office, who arranged for both of them to provide the city with their wares. This was a conventional 1990s business hook-up. Two decades later it had grown into a monstrous one. Playing every friend and connection you had was exactly how business was done all over Russia at the time – any contact, any old institutional tie in the USSR, was something someone was trying to turn into cash. Soldiers became bodyguards, mathematicians became financiers, biophysicists became pharmaceutical salesmen and KGB agents became democratic politicians. This is how a chunk of the nomenklatura became the capitalist elite. Because the state was barely functioning – nothing mattered more to people than their network or their ability to maintain them, manipulate them. When you ask Kolesnikov what Putin was like the first time they met and their business began, he pulls a strained face, as if not quite sure what happened. He claims he had not one hint of what doing business with this grey man would turn into: