Vladimir Yakunin - The Treacherous Path - An Insider's Account of Modern Russia

They had thrived in the immoral economy that had reigned since the dissolution of the Soviet Union, where power and people could be bought as if they were toys, and children aspired to be bandits and hard-currency prostitutes. [13] A hard-currency prostitute, or interdevochka in Russian (literally international girl), is a prostitute who works for convertible foreign currency, selling sex mostly to foreigners. Between 1996 and 2000, the group of oligarchs known as the Semibankirschina (the seven bankers) possessed a significant proportion of Russia’s finances. Before I became CEO of Russian Railways, I commissioned a special piece of research into the Russian economic landscape. It told me that 46 per cent of the nation’s economy was concentrated in the hands of just eight families, and that within four years, if nothing was done to stop them, this figure would reach 51 per cent. These businessmen had used their immense riches – seized in the main during the scandalous privatisations of the previous decade – to buy newspaper and television channels, as well as huge influence in the Duma, where sitting politicians were bribed and puppet candidates pushed forward. Boris Berezovsky, who in the first few months of 2000 was telling anyone willing to listen that it was he who had brought Putin into power, had once said that ‘Russian politics is a modern version of Russian roulette’. He and his associates had spun the chamber too many times to count and had always got lucky, but things were going to be different now.

It helped that Putin realised quickly something that the oligarchs only understood very dimly themselves: they were despised. The Russian people hated the oligarchs’ flaunting of their colossal riches – the private planes, the super-yachts, the sprawling villas on the French Riviera, and the way this ostentation was combined with a supreme disregard for the wellbeing of the millions of their countrymen. By contrast, Putin’s stern, ascetic demeanour, the fact that he had been seen to refuse many of the luxuries and blandishments on offer to those in power, indicated to many that he was the man to save the nation that had become a land lost to hope.

The first sign that the winds had changed direction came before the presidential election of 2000, when one of the oligarchs swaggered into Putin’s office, making the same visit he always paid to new candidates. The oligarch wanted to make it clear to the politician before him that he stood no chance of winning any election without the support he and his fellow businessmen could offer. What kind of deal, he enquired, did Putin intend to make with them? I do not think that the oligarch expected the substance of the reply he received, or the tone in which it was delivered.

This was followed by a televised meeting in July 2000, where the President summoned twenty-five of the most prominent members of Russia’s business elite to the Kremlin to tell them that their attempts to dominate the government’s agenda would no longer be tolerated. It was a profound and long-overdue realignment in the relationship between capital and state power.

I remember speaking in 2013 with a professional acquaintance, who might be classed as an oligarch, a number of years after Berezovsky and Gusinsky had been expelled, and Khodorkovsky imprisoned. I was talking to him about how some of the government’s decisions around this time might be seen to have been prejudicial to the success of private businessmen like him. ‘Yes,’ he told me, ‘I hated it.’ When I asked him why he had stayed silent while his business was effectively under attack, he replied that ‘In 2004 we were given a clear signal not to intervene in politics, and that was enough.’

Vladimir Putin had inherited a barely functioning quasi-market economy that was built in many places on a rotten foundation of criminality. But although the budget was empty, inflation rampant, and the education and health systems devastated, the new President was alive to the importance of thinking strategically about the Russian economy. He knew that there were no short-term solutions to long-term afflictions and threw his weight behind a programme of infrastructure investment and development that was essential if the country were to be able to compete on the global stage in the years to come. As deputy Minister of Transport, I was involved with the construction of the ports of Primorsk and Ust-Luga – projects that had been initiated but not completed during Yeltsin’s time in power – and I saw at first hand the impact Putin’s courage and force had on their success. He identified himself unbelievably closely with these transformative but highly controversial endeavours. Had any of them failed, it would have been a tremendous, perhaps even fatal, blow to his reputation.

It would, however, be a mistake to regard these efforts as some kind of outlier. Rather, the work conducted by the Transport Ministry between 2000 and 2002, and the challenges we faced, might be seen in some respects as a case study of what was happening elsewhere across the country.

We were dealing with a sector of the economy that was only partially reformed, with some areas completely privatised, others little changed from their Soviet incarnations. Furthermore, the transport sector had been hit hard by the dissolution of the USSR, which had deprived it of many of the ports, ships and other key elements upon which it had depended prior to 1991.The system as a whole was threatening to degenerate into an incoherent mess, something that would have profound consequences for the economy. The fate of the components of the internal waterways system, which had been almost completely privatised, showed us clearly what would happen if we did not take action fast. Because there had been no central coordination, and no private company willing to undertake the unprofitable tasks of maintenance, the rivers soon silted up and the fleet was allowed to degrade. Russia had been deprived of an important method of transport and communication, and this loss had its own unfortunate consequences. For instance, since barely any cargo was being ferried along the rivers, the demand for river-going boats fell abruptly, and so the shipyards that had previously been busy sites of construction and maintenance no longer had much reason to exist.

But even without these issues, the collapse of central authority under the previous administration meant that in many parts of Russia, even once we had created a defined transport strategy, it was a struggle to secure the support we needed from the powerful regional governors. However sincere our intentions, however well considered our plans, however high the stakes, there was no guarantee we would succeed.

My appearance in Moscow in 2000, where as deputy minister at the Transport Ministry I was charged with particular responsibility for port development, international cooperation and the coordination of different transport development and investment programmes (most notably with the railways), had been almost accidental. One of Vladimir Putin’s first actions after he came to power was to rationalise the country’s unwieldy administrative architecture, and my role at the North-West Inspectorate of the Chief Control Department of the President, as well as the jobs of my twenty-one fellow inspectors, were victims of this. Because our work and responsibilities overlapped fairly substantially with the activities of those people who reported directly to the President, it was decided to make the once independent regional inspectorates answerable directly to the office of the President’s Representatives in the Regions.

In the meantime, however, Sergei Frank, the Minister of Transport, who I had worked with closely on a number of port projects already, invited me to work with him. The first Putin knew of the move was when Mr Frank informed him of his plan for my appointment. (I later learned that the President had told his transport minister that there were two things he needed to know about me: first that I was a tough, straight-talking guy, so much so that I could talk my way into trouble, and second that I could be trusted to do whatever task was set before me.)