A quick glance at his 2010 official income statement shows an official living in as much luxury as a prince. His family in the two preceding years earned in excess of $48 million.23 They own two plots of land of 40 acres, an apartment of 175 square metres, a rented apartment of 643 square metres, a residential property of 1,479 square metres in Austria and an apartment of 424 square metres in London.24 They also possess a fine selection of cars, amongst them a Jaguar, three Mercedes, a ZIL limousine and other luxury vehicles.25 Funnily enough, the earner in the family is not the politician but his wife, who earns thanks to ‘securities’.26 And despite embassy gossip that he is a reformer, documents have revealed that he has amassed a fortune by co-investing over $200 million with the oligarchs Suleiman Kerimov and Roman Abramovich.27 The opposition suggest this is either cronyism or bribery.28 With fortunes like these it comes as no surprise that men like Shuvalov have not struggled harder for reform. In an ideological feud, beliefs tend to override faction’s material interests. This is not the case in Shuvalov’s Kremlin. The two most prominent ‘liberals’, the 2000 to 2011 finance minister Alexey Kudrin, and Dmitry Medvedev, who have both called for reform, are said to detest each other. Kudrin eventually resigned, partly because he refused to serve under Medvedev as prime minister after the 2012 elections.
Putin’s court is a provincial place. The most powerful ministers and magnates are old colleagues and friends of Putin from St Petersburg. Many of those characterized as liberals are rather St Petersburg ‘civilians’, whilst those seen as ‘hardliners’ are mostly St Petersburg ‘siloviks’. They are two sides of a local political mafia that grew up around Anatoly Sobchak whilst he was mayor. The two ‘civilians’ who had the biggest mark on economic policy as veritable ‘chancellors’ to Putin were German Gref, the moustachioed ethnic German, and Alexey Kudrin, the fiscally conservative economist who used to share an office with Putin when they worked for Sobchak. Always slightly outspoken, Gref served in the government until 2007 and Kudrin until 2011. Both can claim credit for the policies that brought macro-economic stability such as balancing the budget, bringing in the flat tax and liberalizing legislation.
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: