To win the upcoming election, Yeltsin needed money. A deal was worked out and given the rather innocuous name “Loans for Shares.” The oligarchs with cash would loan the government money; shares in state-owned industries would be held as collateral. It was clear to all that the government would never be able to pay back the loans. And when the time came to auction off those shares held as collateral, the people currently holding them made sure the auctions were rigged in their favor, though a few face-saving forms were observed. Still, if an airport had to be closed to prevent unwanted prospective bidders from arriving, that airport would be closed.
Chrystia Freeland, who covered those turbulent times as Moscow bureau chief for the Financial Times, called Loans for Shares a “Faustian bargain”[160] because the young and still committed reformers like Chubais knew the sale of the immense state enterprises to a handful of rich men would put an end to the free-wheeling capitalism they dreamed of. Chubais and Yeltsin consistently said: “We do not need hundreds of millionaires, but millions of property owners.”[161] But the choice was stark: either give the tycoons control of the economy or lose the election to the Communists. Chubais found an eschatological formulation: “Isn’t it clear that there is one and only one question facing Russsia today: will there be a second coming of communism—or not?”[162] A Red scare in Russia of all places.
The Communists’ leader, a colorless apparatchik by the name of Gennady Zyuganov, had suddenly come to life and been the hit of the World Economic Forum in Davos in February 1996. He presented Western leaders and businessmen with an image of sober, serious dependability. To Chubais’s horror, those Western leaders danced attendance on Zyuganov: “The world’s most powerful businessmen, with world-famous names, who with their entire appearance demonstrated that they were seeking support of the future president of Russia, because it was clear to everyone that Zyuganov was going to be the future president of Russia.”[163] At Davos, George Soros warned Boris Berezovsky that if Zyuganov was elected, as he certainly would be, Berezovsky would “hang from a lamppost”[164] and advised him to leave Russia.
But nothing energized Berezovsky like a good crisis. He made peace with his enemy Vladimir Gusinsky, who owned the other major TV network. Now the airwaves that had throbbed with criticism of Yeltsin’s prolonged, expensive, and apparently unwinnable war in Chechnya began to sound the alarm of a Communist resurgence and to beat the drums for Yeltsin. Zyuganov, though taking advantage of the free television time due him by law and buying some in addition, preferred to communicate with his constituency in written form—poster, newspaper, leaflet. This was a throwback to Soviet times, but not entirely a foolish decision, since the Communist Party still had 500,000 members, a large percentage of whom could be mobilized for door-to-door campaigning. Better a personable youth delivering a leaflet to your door than yet another talking head on the screen.
But there were other deeply retro aspects to the Communist campaign. The evil stink of anti-Semitism was very much in the air. When Zyuganov spoke of “the cosmopolitan elite of international capital,”[165] which was using the United States to destroy Russia, everyone knew what he meant—the cabal of Jews that ran the world as described in the tsarist secret-police forgery The Protocols of the Elders of Zion. Yeltsin and company were not just political opponents but “the turncoats, destroyers and traitors of the Fatherland who currently rule in the Kremlin.”[166] But Zyuganov made practical proposals as well—rents would not exceed 15 percent of income, the army would be rebuilt, natural resources would be renationalized, but law-abiding, tax-paying privatized enterprises would, though with great distaste, be tolerated.
Like Berezovsky, Yeltsin was a man who could be energized by crisis. He came alive, regaining “his spark and charisma.”[167] He quit drinking and lost close to twenty pounds. Chubais was running his campaign Western-style, replete with “sound bites, daily photo ops and nervous advance men.”[168] He began dealing with the war in Chechnya and used some of the Loans for Shares money to begin paying long overdue salaries and pensions. What Yeltsin had that Zyuganov did not was a strong, clear, positive message. “Five years ago we chose freedom. There can be no retreat.”[169] And, as he said to voters: “I will ensure you freedom of choice, but the choice is up to you. Vote for a free Russia!”[170] He reminded voters of what the “circles of Bolshevik hell”[171] had been like: the camps, the hunger, the fear. It hadn’t been that long ago either—people did not need much reminding. “I was under a communist regime once, and I don’t want a replay of it,” said the leader of one of Russia’s most popular bands, the aptly named Time Machine. “Come cast your vote on June 16 so Time Machine can keep on playing.”[172]
Rock ’n’ roll was on Yeltsin’s side. How could he lose?
On June 16 he didn’t lose, but he didn’t win either. Yeltsin received 35 percent of the vote, Zyuganov 32 percent. The rest of the vote was split among other candidates. This was still a time when Russia was gloriously messy with its new democracy, dozens and dozens of parties competing, even the Beer Lovers won 428,727 votes. A runoff was scheduled for July 3.
In the meantime there had been another election—for mayor of St. Petersburg—which at first seemed mainly of local importance. Putin ran the election campaign for Mayor Sobchak, his boss and mentor. “Politicians like Sobchak are usually the last to learn their luster is gone,” as Masha Gessen put it.[173] And Sobchak was mostly luster to begin with. He had made some progress, with Putin’s help, in attracting foreign business to St. Petersburg but had done very little for the people, to improve their daily lives, the ultimate measure of all politics. Corruption, crime, and a crumbling infrastructure were what people saw. And there was always some ambiguity about Sobchak, how much of his attachment to reform was genuine, or did that tall, telegenic man just wear democracy as if it were a well-cut foreign suit?
Defeated in the election, Sobchak would remain in office until June 12, at which point both he and Vladimir Putin would be officially unemployed. But no moves could be made until the presidential runoffs were held.
This time the results were clear and striking—54 percent to Yeltsin, 40 percent to Zyuganov. As Yeltsin’s biographer Leon Aron said: “In the end he won because the election had, as he intended it to, become a referendum on democracy and communism, rather than on market reforms or the Russian version of capitalism.”[174]
If things had gone the other way—a Yeltsin defeat and a Sobchak victory—Putin would probably have remained in St. Petersburg, dabbling in democracy and corruption, at the margins of history.
But that’s not what happened. Instead, Chubais, the much-hated chief of privatization and the successful manager of Yeltsin’s reelection campaign, contacted Putin with a job offer—deputy chief of the Kremlin’s Property Department. It was an important post, dealing with the $600 billion in property that Russia had acquired from the USSR. Putin would be “in charge of the legal division and Russian property abroad.”[175] He accepted and moved to Moscow.