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

‘My corruption fighting projects began as a complete accident.’ He was tipped off about what looked like a flagrantly corrupt contract at the ministry of health. The ministry wanted to design a new $2 million website to connect doctors and patients but any developers only had sixteen days to submit a design – surely, they already knew who had won. Navalny mobilized his readers. ‘I appealed to them to write letters to the ministry saying this was corruption. And we won. It was a successful campaign and they cancelled the contract and the corrupt official resigned.’ From that point his inbox went into overload. ‘I started getting two, three times more emails than usual, saying “I have a case of corruption”, or asking “Can you denounce this corruption?” So I decided I had to organize myself and my anticorruption activities.’

Navalny also decided he would get his hands on what all Russians wanted – shares in big state-controlled companies – and show that he and by consequence all Russians, were being taken for a ride and robbed by corruption inside the national champions. The guise of the ‘minority shareholder’ hit a chord with Russians in a big way. The philosopher Boris Mezhuev believes that it resonated as all Russians felt like frustrated minority shareholders in Putin’s oligarchic–bureaucratic fusion.

‘Navalny was perfect. He, as a minority shareholder, was the perfect hero for the country. A guy who could be the director of the company but who is being denied his chance as the system is unfair. He cast himself as a victim of social stagnation, which most people also felt they were too.’

Navalny began filing lawsuits on companies arguing that because they were corrupt the value of his shares was being undermined. This was perfectly legal and had been pioneered as a technique by foreign hedge funds. Those close to him say that it was none other than Bill Browder’s raided Hermitage Capital that was one inspiration. Navalny’s first big call was accusing the state bank VTB of massive embezzlement. Soon his blog was regularly posting documents and flagging up tell-tale signs of corruption across the country. As the financial crisis hit and the middle classes began to have second thoughts about Putinism, his blogging activity started to pay off – Navalny won his first election. Admittedly, only the October 2010 online poll for an ‘Alternative Mayor of Moscow’, a gimmick run by Kremlin critical news sources, but by trouncing Boris Nemtsov he had won a symbolic victory. Together with Evgenia Chirikova, Navalny was now the face of the new opposition. Nemtsov and Milov were being overtaken – left behind in their exquisite clothes and cafes.

Like any clever investor gunning for a piece of the oil boom, Navalny bought some shares in the national pipeline monopoly Transneft. Little did the government know that the company was so endemically and flagrantly corrupt that some poking around by a blogger could expose it to the millions. The month after becoming ‘online Mayor’, Navalny became a household name when his minority shareholder strategy hit a bull’s eye. It would be hard to think of a project more symbolic of the bloated ambitions and dysfunctions of Putinism than the Eastern-Siberia Pacific Ocean (ESPO) pipeline. Its goal (originally planned by Khodorkovsky) was to build the first pipeline to the Pacific and turn Russia into a global energy exporter, not one only supplying the EU. Officials dreamed that with a pipeline to China they could get the Europeans begging for energy-mercy by threatening to turn off the taps to the West. Russian diplomats liked to tease EU leaders with such a possibility. Yet despite its realization being a first rank geopolitical goal for the Kremlin, it had been chronically delayed, disrupted and gone disastrously over budget. It was none other than the ESPO about which Navalny had managed to get hold of documents that showed a spectacular $4 billion fraud conducted by the company. 43As the country emerged from the deepest recession in the G-20 in 2009, these accusations riled the reading public. In the late years of the Medvedev presidency it was becoming received wisdom that something, and something big, was being stolen – and Navalny was the man trying to stop the thieves.

Navalny was not quite the solo warrior. He was becoming an influential politician in a country where everything is about connections. Any Russian politician, even in the opposition, has to be playing games and building bridges to the establishment. Nemtsov is a good friend of many oligarchs. Milov, as a former deputy oil minister, is a man about town. And Navalny was no exception. Throughout his career he had built up friends in the establishment – from Nikita Belykh, the liberal governor of Kirov, for whom he worked as an advisor, to Stanislav Belkovsky, the ‘political technologist’ who had accused Yukos of planning a coup but ‘worked’ with Navalny on NAROD. Nor had he miraculously become a successful minority shareholder activist overnight without some advice from its most skilled practitioners. The expelled head of Hermitage Capital, Bill Browder, knows Navalny well. His company had pioneered a strategy of becoming a minority shareholder in state companies, revealing corrupt goings on that triggered investigations, leading to a stock-price rally as investors assumed the problem would be fixed. The strategy ended with him being expelled as a ‘national security threat’. Browder is not coy about ties to the opposition:

‘Yeah, Navalny, I’ve known him for years. I taught him the ropes and introduced him to some people back in 2006–7. He’s a man after my own heart. He’s genuine in his absolute disgust for the criminals doing all this stealing. When he started out we spoke to him a few times. He said that he was directly inspired by our work, but whatever he’s developed, he mostly achieved it himself… modelled on things we’ve done. But I make a point of not speaking to him anymore, so not to disrupt his meteoric rise.’

Navalny began to accrue a lot more contacts as his fame rose. In 2009, one of the board members of Alfa Bank, one of the country’s largest financial holdings, decided to email Navalny. He had been watching him for a while and was very impressed. He could mobilize people. He was charismatic. He seemed the man for his times. ‘I wrote to Navalny to say, “I’m working at one of the country’s biggest financial holdings, focusing on corporate governance and anticorruption, I’m impressed by what you are doing and have a few suggestions to make,”’ explains the same man who is now his closest advisor, the sharp and intense Vladimir Ashurkov. ‘All my life I’ve been interested in politics, but not until I met Alexey did I see someone whom I thought could make a breakthrough. I had a very well paying, comfortable job, but I felt that the things that were happening to my country were getting out of control.’

Ashurkov was told by the country’s then fourth richest man and his boss – Mikhail Friedman – to keep his activities secret. Together Navalny and Ashurkov began to design a new generation of online campaigning tools to mobilize Russia against corruption. His presence calmed people. Flanked by highly intelligent liberals, he looked less like a demagogue. ‘Look, nobody was more surprised than I was that this rich guy is coming to my office, sitting in my office and working with me,’ says Navalny. ‘Nobody believes me but I have never met any oligarchs or any Kremlin people. Ever.’ But nobody of course, did believe him.

As 2009 gave way to 2010, a team was beginning to form around Navalny. The country’s most famous editor, Evgenia Albats, saw leadership potential in him. The country’s most famous economist, Sergei Guriev, formerly close to Medvedev, started to advise him and arranged for him to do a World Fellowship at Yale University. One economist closely affiliated to the government even began boldly announcing to visiting foreign investors and analysts that he could be the post-Putin president. Their drift to such a troubling figure – ‘a democrat who is not delighted by the liberals’ – was an expression of the liberal establishment’s desperation as it became clear that Medvedev was unable, or unwilling to fight for Medvedevism. Navalny was their danger and their rabble-rouser, who gave them tingles as he ranted so charismatically. And they loved him for it.