Kasyanov had neither expected to rise so high – nor to be cast out so suddenly. Ten years before his appointment to high office he had been a Soviet central planner. Like so many others, he was convinced until the last moment that the USSR was as solid as the United States. Looking back, he says:
‘I, like most citizens, believed the Soviet Union to be inviolable, that no one would ever be able to destroy it. As an exemplary bureaucrat already in a high position, I thought that the State Planning Commission and the body of Lenin would live forever and for all time. And then everything that was made collapsed in three days!’4
Kasyanov then did two things common for his generation of top bureaucrats. First he swapped one orthodoxy for another – axiomatic thinking about central planning was replaced with a textbook neoliberal outlook. He then tried to turn his position in the Soviet nomenklatura into the most politically (they said financially) profitable position in Yeltsin’s new Russia. Unlike the vast majority – he succeeded. He was suave, with that certain charm needed in a courtier. The ailing leader took a shine to him. Yeltsin liked ‘bright young things’, people like Kasyanov in whom he saw the minimum of a ‘Soviet mentality’.
This helped Kasyanov rise quickly to be deputy finance minister by 1995, and made him responsible for Russia’s foreign debt and IMF loans. In the Yeltsin government – with debt to GDP ratio reaching 140 per cent in 1998 – there were few jobs that were more important. Kasyanov was the man holding the strings to Russia’s IMF life support, which was keeping the state alive. ‘The default was just killing news for me,’ he says, ‘I was shocked. I had been fighting it so hard. I was opposed to this decision to default.’ Like all other junior members of the government, he claims he was not informed until the decision had been taken – ‘by a tiny group of people, without any consultation’. But it was not bad news for his career. The same month that Yeltsin made Putin his prime minister, Kasyanov was promoted to be his last finance minister.
When Putin called Kasyanov a year later, asking if he would become his prime minister, he was the clear continuity candidate. In choosing Kasyanov, Putin’s government signalled that a Yeltsin ‘young reformer’ would run it on a day-to-day basis. With almost fluent English and close to a decade of experience closely cooperating with the IMF, Kasyanov was a soothing choice for foreign creditors. He was, however, seen rather differently inside Russia. Kasyanov had two reputations in the Kremlin – one for competence, another for corruption.
Kasyanov had a nickname that stuck like glue – ‘Misha 2 per cent’. He has never been able to shake off a reputation in Russia for kickbacks and taking a cut. The name goes back to the period when he was charged with negotiating Russia’s IMF loans. There were repeated allegations that these loans were being transferred into politically favoured banks, slush funds or simply disappearing.5 The money was urgently needed to pay wages – some months in arrears, leaving whole single-industry towns unpaid and in crisis – and to prevent vital public services from ceasing completely. He was the official who might have known how so much money could have disappeared. Though it has never been proved, corruption accusations touching Kasyanov surfaced daily in the press and were mentioned in a report for the US congress.6 He fiercely denies them as ‘black PR’, but when Putin placed him in charge of an anticorruption body, Grigory Yavlinsky, the liberal leader of the anti-Chechen-war Yabloko Party, growled that it was like ‘putting a vampire in charge of a blood bank’.7
This was the CV of Putin’s choice. The two made a deal immediately on how to share power. As Kasyanov recalls the decisive phone calclass="underline"
‘He asked me if I wanted to be his prime minister. I said “yes” – and laid out the following conditions. I enumerated a list of economic reforms that I felt were absolutely necessary for the development of the country. Putin answered: “I accept. Just stay out of my side.” So, we orally divided power like this. I would manage the implementation of economic reforms and state finances and he would concentrate on Chechnya, security, foreign policy and managing certain domestic groups.’
Kasyanov also asked for Putin not to repeat Yeltsin’s habit of dismissing the government without any explanation to the public. He agreed.
Putin needed a competent hand to manage the bulk of the government’s economic affairs. Not only was he untrained in them but, for his first few months in office, the new president had no choice but to prioritize Chechnya. Defeat in war would have turned him immediately into a lame duck. Military planning and then invasion of the rebel region itself was the immediate business of his office. The first six months of Putin’s presidency was one of all-out war in the North Caucasus. He viewed its success as his making or breaking. ‘At first Putin was concentrating overwhelmingly on Chechnya,’ says Kasyanov, who claims this left him and the ministers room to draw up a reform agenda.
The early Putin was a war president. His main focus was the tank columns and ground forces he dispatched to Grozny. This has had a huge effect on his world-view. Putin was as shaped by the apartment bombings and the Chechen war as George W. Bush was by 9/11 and his wars in Iraq and Afghanistan. Nothing mattered more to Putin in his first year in power. ‘My mission,’ he declared, ‘my historic mission – it may sound lofty, but it’s true – is to resolve the situation in the Northern Caucasus.’8
Putin fought this war in an apocalyptic state. His conviction that without him Russia stands on the verge of Yugoslav-style wars has not dissipated. During his first months in office, the Russian Army laid siege to Grozny. The result was described by the United Nations as ‘the most destroyed city on earth’.9 At every stage Putin was constantly receiving updates from the front. The war hung over his mind and government. His economic advisor Andrei Illiaronov remembers that when Putin received the news that one of the last Chechen strongholds had fallen during a routine meeting, he burst out, ‘Well, we have rolled over Shatoy.’10
Kasyanov looks back: ‘You must understand that I really believed, we really hoped that Putin could stop people dying from terrorist attacks on the streets when he assumed power after the apartment bombings. This is why we tolerated measures that in retrospect were too much and too harsh.’ As a result, their initial politics were sold to the country as something akin to a ‘state of emergency’. Yet tolerance for ‘temporary measures’ to stabilize the state, which then became permanent features, is a common way in which authoritarian regimes come about.
War put the first clamps on the media. These new rules were applied first to Russian war correspondents. Their graphic, brave but sensationalist reporting had swung the public against the first Chechen war. Putin would not let it happen again. Reporters and editors were first told, then pressured, to be ‘patriotic’. Then they were warned. In the liberal newspaper Kommersant a Kremlin spokesman made it clear, ‘When the nation mobilizes its forces to achieve some task, that imposes obligations on everyone, including the media.’11
It wasn’t long before an example was made of someone: the passionate and pro-Chechen reporter Andrei Babitsky. He had enraged the authorities with comments excusing rebel atrocities. Born in Moscow and a Russian citizen, Babitsky was apprehended by Russian forces while trying to report from the siege of Grozny. He was detained, then swapped with Chechen rebels for captured troops as if an enemy combatant. The new president shrugged, ‘So you say that he is a Russian citizen. Then he should have acted in accordance with the laws of your country, if you want to be protected by those laws.’12