Corruption
It is rare in the West for newspapers to be invited to the inner sanctum of money and power, and even rarer in Russia. But it is not unknown. A little after Shvartsman went public, Putin shared his concerns about the domestic power structure in Russia with – of all journals – Time magazine. The presidential administration soon afterwards put the full text on the internet. Putin was asked how he controlled corruption, and his answer was, by any standards, a blunt one: ‘Unsuccessfully. We are addressing the issue without success…. In a transitional economy and during the restructuring of an entire political system dealing with such issues is more difficult because unfortunately there is no response from civil society to us…. We must speak frankly and openly admit that we have not worked out a system that encourages social control of the activities of public institutions.’
Civil society in Russia? The master of the Kremlin seemed to be well aware of the disease but unable to administer any medicine, let alone a lasting antidote. Yes, the country had abundant resources and vast amounts of money were in the hands of some individuals and some companies. But the President could not offer much reassurance except by sending highly placed officials on secondment to the top echelons of big companies. There they would represent government control and also be able to put something aside for a rainy day: ‘Incomes in the public sector for government officials still do not correspond to the nature of the decisions they have to make. That is: the payment for their work on the one hand and the importance of the decisions they have to take on the other hand are incompatible…. The activities of officials on whose decisions billions (of USD) depend should be awarded appropriately so that there is no temptation. All of this, including increasing opportunities for the media to expose corruption, all of this taken together is certainly one of the tasks that we have to deal with.’ He suggested what his American interviewers wanted to hear: ‘strengthening the political system, civil society, improving market mechanisms’. But he also seemed to warn that the Kremlin would continue ‘making governmental and administrative decisions about economic management’, and have the Kremlin representatives compensated by more than the official salary which, in the eyes of well-off businessmen looks like a pittance. Keeping Kremlin staff loyal is not only a matter of power and promotion to be granted, but also of money to be dispensed. This is also a method designed to make everybody dependent and vulnerable the very moment when disloyalty is suspected.
All the President’s men
Who are the people with real political power in Moscow and St Petersburg? It has been said about Putin that he trusts nobody. This is unlikely as the running of a large country requires reliable lines of command, division of labour, and the creation of both official and unofficial networks. Moreover, he would hardly have insisted on leaving the Kremlin after eight years in office if catastrophe or revenge beckoned – or indeed a settling of accounts. Over the last eight years Putin has surrounded himself with people he could control and trust. Much of this was planned and executed with a long-term perspective in mind. It is interesting to remember that, four weeks after Putin’s re-election in 2004, it was Dmitri Medvedev, in 2007 the tsar designate, who stood side by side with Putin and the newly appointed prime minister Fradkov, formerly of the KGB, on the Easter night at the entrance of the Christ Redeemer Cathedral in Moscow, after the Kremlin Russia’s most hallowed place.
On close inspection, there are two groups sharing power uneasily, the old and new St Petersburg clans, most of whose members had served with Putin either in the KGB or in the St Petersburg city administration, or both. At one time, the old St Petersburg clan was represented by people like Anatoli Chubais, head of the Russian Joint Energy Systems; by Alexei Kudrin, deputy prime minister; and by Sergei Ignatiev, chief of the Central Bank. Until the end of 2007 German Gref, with his belief in liberal economics, played an important role as minister for economic development; other pals from old St Petersburg days were Alexander Pochinok and Deputy Finance Minister Alexei Ulyukaev. Some of Putin’s more recent protégés were also close to the clan, among them two deputy directors of the presidential administration, Dmitri Kozak and Dmitri Medvedev; the latter shadowed Putin almost from day one in St Petersburg and was proclaimed heir apparent towards the end of Putin’s second term. He is unlikely to show anything but gratitude towards his mentor over so many years. When proclaimed crown prince, Medvedev even went so far as to say that, if elected, he would need continuous tutoring by Putin. But, as they say, l’appétit vient en mangeant.
And then there is the new St Petersburg group, called ‘special agents’ in a reference to the KGB background that has launched most of them on their post-Soviet career. It includes many former colleagues of Putin’s in the St Petersburg KGB establishment, including Sergei Ivanov, a former lieutenant-general in the KGB, with experience abroad, soft-spoken and tough-minded, until mid-2007 minister of defence and, since then, deputy prime minister for high-tech development. He was a runner-up in the race for the presidency, but Putin probably saw him as too much of a rival. On the day after Medvedev was nominated Ivanov could hardly conceal his disappointment. There is also the human resources manager of the presidential administration, Victor Ivanov (no relation, just a common name) and FSB director Nikolai Patrushev, a KGB agent who rose through the ranks, helped by his closeness to Putin. The same is true for his deputy Yury Zaostrovtsev and foreign intelligence chief Sergei Lebedev. The group also includes some former colleagues of Putin’s from the Sobtschak administration in St Petersburg, notable among them presidential affairs director Vladimir Kozhin and the head of the presidential administration Igor Sechin – one time éminence grise in the corridors of power who became the chief target of the Shvartsman revelations in Kommersant. Important also are Alexei Miller, powerful CEO of Gazprom, and other business leaders like Sergei Pugatshev (Mezhprombank) and Vagit Aleperov (Lukoil).
In retrospect, the Soviet days in Leningrad and the post-Soviet days in St Petersburg look like a long march to the top. Just before he became President, according to the London Economist,[2] Putin told his colleagues that a group of FSB operatives were ‘dispatched under cover to work in the government of the Russian Federation’. Maybe it was just a joke, or maybe it was the truth. At any rate, the mentality, the culture and the world view now prevalent in the Kremlin bear the hallmarks of the old KGB. Much of the security forces, the government and the economy is now, directly or indirectly, under the control of the intelligence services. Three out of four senior Russian officials today were once affiliated with the KGB or related organizations. The fact that Dmitri Medvedev, when named heir apparent, did not seem to have a KGB background could mean that either Putin wants to reduce the influence of the old KGB on Russian politics and society or, on the contrary, that a president not affiliated to the KGB but renowned in the West for his unorthodox views and his belief in democracy and the market would provide a cover for the real power play going on inside the Kremlin walls. The outside world will have to wait and see.