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

Yet their liberalism had limits. They enjoy a lavish lifestyle, with Gref marrying like a tsarist aristocrat in one of St Petersburg’s most gilded palaces. Kudrin approved of the ‘state champions’ in the energy sector, including Yukos assets, being brought under control of the state oil giant Rosneft. There are allegations that he was unable or unwilling to control corruption in the finance ministry. Groups of officials from the Federal Tax Service in hock with criminals appear to have stolen hundreds of millions of dollars in the late 2000s, usually under the guise of ‘tax refunds’. One of these raids included an attack on the Hermitage Capital fund, then the biggest foreign investor in Russia. This shocking case saw a foreign investor who had investigated corruption in state companies chased out of Russia and the $230 million in taxes it had paid given as a rebate to the raiders by the finance ministry. They were a gang of officials and criminals. The affair eventually resulted in the death of Sergei Magnitsky, who was working on the case defending Hermitage. Kudrin, when asked as to why he had done little to stamp out the practice, has claimed unconvincingly that he ‘did not have the authority’ to investigate thefts. 29

On the other side of the court stand the St Petersburg ‘siloviks’, former security men, of whom Igor Sechin, the ‘standard bearer’ of the faction, is believed to jostle for influence against the ‘liberals’. Sechin is a man from St Petersburg town hall, just like Kudrin and Medvedev. At the time, he was so close to Putin’s family that when his wife had a car crash during one of his foreign trips, she only needed to say ‘call Sechin’. He is currently head of Rosneft, having served as a minister and in the Kremlin. Sechin is not a good-looking man. His grin is almost monstrous with his pointy ears adding a comic touch to his unsettling background. Before returning to St Petersburg, he is said to have been a military intelligence, even KGB, agent serving as an ‘interpreter’ in Mozambique, amid allegations of arms trading. He was intimately involved in the carve-up of Yukos. He was, of course, Khodorkovsky’s nemesis, and the Yukos assets were swallowed by the state oil-giant Rosneft, of which he was then a board member.

Today his name is something of a myth. Since the Yukos affair Sechin has been accorded (in neo-Kremlinology) the role of leading the ‘hardliner’ faction. He is believed to have championed authoritarian modernization, state capitalism, mega-projects and an anti-Western foreign policy. Drawn from the lowly ranks of Soviet security ‘organs’, Sechin and those like him within the court regret the fall of Soviet power but not the planned economy, and share a fascination with China’s political system. They are less prone to speechifying than the liberals, but occasionally their views do trickle out. Vladimir Yakunin, the head of Russian Railways and an original member of Putin’s Ozero dacha cooperative, wrote a 2010 letter to The Economist in which he declared, ‘state capitalism simply works better’. 30

But it would it would be a mistake to think of Sechin as a ‘hardliner’, in the ideological sense as can be found in Tehran. The CVs of the St Petersburg ‘siloviks’ are unimpressive. None of them had been placed in highly important posts in the late Cold War. Igor Sechin had been stationed in hardly central theatre Mozambique; the former defence minister Sergey Ivanov’s work in East Africa is alleged to have ended badly; the former head of the FSB and current secretary of the Security Council Nikolai Patrushev was security service chief in provincial Karelia. The 2007–12 defence minister Anatoly Sverdyukov was the director of a St Petersburg furniture store as recently as 2000. He rose to ministerial rank in a government headed by Viktor Zubkov, who was then his father-in-law. Boris Gryzlov, the long-serving speaker of parliament, is a co-inventor of a quack ‘radiation filter’ deemed unsafe for human use by the Russian Academy of Sciences.

Russia is thus not run by the successors of Andropov’s KGB. This would be the equivalent of calling a British government colonized by a gang of MI5 agents and police constables from Birmingham an MI5–MI6 state. Consequently, both their state capitalist and anti-Western agenda is thin. They have never seriously proposed genuine mass-militarization and patriotic-mobilization of the population. There is no noticeable difference along the Rublevka in their lifestyle from that of the ‘liberals’. What has happened is that the old bureaucratic influence of the KGB and the ‘power ministries’ has become bound up in these men’s personal access to Putin through their appointments to head them.

Putin’s men are courtiers, not committed agents. It would be wrong to think of the ‘siloviks’ in government as sharing the same ethos as the KGB ‘corporation’. They may be comparable in their methods but not in their sense of duty. The KGB was murderous and repressive, but by and large, not obscenely corrupt. Lenin’s original Cheka disdained materialism and the West. One proudly self-confessed believer in Chekism, Viktor Cherkesov, a senior security official, wrote in 2007 a stinging denouncement of what he saw as the shallow Chekism of the Putin court:

The country survived a full scale catastrophe in the early 1990s… some Chekists quickly fell away and parted from the professional community. Some became traitors. Some became sweepingly depraved. But a core of our professional community nevertheless stayed… Falling into the abyss post-Soviet society was saved on the Chekist hook… Yet this caste will be destroyed from within when warriors start to become businessmen. 31

Cherkesov was retired in 2008. Yet whatever his internal motives for his denouncement, he is correct. The Chekists of the Putin court are more businessmen than anti-Western warriors. Whistle-blowers have come out of the establishment alleging that hostile takeovers of profitable enterprises have been undertaken under the supervision of Igor Sechin and the ‘siloviks’. Their business interests and contacts with foreign capital temper their anti-Westernism. Sechin, according to one US Embassy cable was considered by many of their sources to have come to realize the importance of working with Western funds and technology in the oil and gas industry. Nor are members of the ‘siloviks’ disdainful of Western lifestyles in the way that the original Chekists were or like the hardliners of Tehran. They are also believed to have vast assets spread across the EU – from bank accounts, properties, companies and a noted preference for educating their children in Swiss finishing schools and British universities.

Emblematic of this is the case of Yury Luzhkov, who as mayor of Moscow used to engage in nationalist tub-thumbing calling for Crimea to be returned to Russia and sponsored home building in contested South Ossetia. When forced from his job in 2010 he chose to spend most of his time in his palatial London residence on Hampstead Heath, one of the most expensive properties in Britain. This attitude does not make them less unnerving than the ideologues of varying sorts who ran Russia in the twentieth century. The twenty-first-century Kremlin seeks personal power for the sake of power, and money for the sake of money. Reflecting on Putin’s court, the influential analyst Vladislav Inozemtsev caustically wrote: ‘Russia is not under KGB rule. Russia would be so lucky!’ 32

In Tudor England, the Crown tended to adopt either a ‘distant’ or an ‘engaged’ approach to its courtiers. An engaged Crown would see a quick turnover of favourites and ministers, sharp U-turns and policy reflecting to a large extent the foibles of the monarch. Yeltsin had such a court. The strategy of Elizabeth I was a ‘distant crown’. This was marked by ministerial stability, long tenures and delicate management of factions, designed for all, feeling their turn could come and an isolated ruler without clear favourites or successors. This is Putin’s strategy. He has been forced to engage in faction management. Like Elizabeth I and unlike a twentieth-century dictator, he may have the power to destroy or humble a faction leader but can do little to remove the faction or tendency itself. Putin’s faction management is reflected in the way he tends to stay above the fray of political disputes. His point of view on policy tends to be heard only as the arbiter’s final voice. ‘The genius of Putin’, said one aide to the oligarchy, ‘is his faction management. He keeps perpetual uncertainty. No enemy is an enemy forever, no friend is a friend forever. Thus we have a sort of stability.’