It was the Americans’ turn now to try to seduce Putin with some good mood music. He was invited to the Bush family ranch at Crawford, Texas. Putin felt rarely privileged. He explained that he had never been to the home of another world leader. The atmosphere was cosy. While a thunderstorm raged outside, a log fire burned inside. Van Cliburn – a hero in the Soviet Union, where he won the Tchaikovsky Piano Competition back in 1958 – played for the guests. Condoleezza Rice danced and Putin’s foreign minister, Igor Ivanov, chatted in Spanish with President Bush. He recalls: ‘I speak Spanish because I used to work in Spain, and when Bush found this out he always used to chat to me in Spanish. He called me “Iggy”. “Hey, Iggy,” he would say, “Como estas?”’25
But nothing could remove the log-jam over the ABM treaty – and Putin certainly did not intend to provide a fig-leaf by agreeing to abandon it jointly with the Americans. The most that could be agreed was that Bush would not embarrass Putin by announcing the withdrawal while he was still in the States.
In December Secretary of State Powell flew to Moscow to bury the treaty. In three days’ time, he told Putin, President Bush would publicly announce America’s unilateral withdrawal from the ABM. He described the curious reaction he got from Putin. ‘Putin looked at me with those steely eyes of his and started to complain: “This is terrible, you are kicking out the legs from under the strategic stability, and we will criticise you for this.” I said, “I fully understand that, Mr President.” And then he broke into a smile, and he leaned forward to me and he said: “Good! Now we won’t have to talk about this any more. Now you and Igor [Ivanov] get busy on a new strategic framework.” And I said. “Yes, sir.”’26
Within five months a new strategic arms limitation treaty had been cobbled together. It was rather less imposing than its predecessors, the SALT treaties of the Cold War era and the START treaties signed by Gorbachev and Yeltsin with George Bush Senior. Covering just a couple of sides of A4, it was pretty thin, and though it reduced each side’s nuclear arsenals, it lacked any verification provisions or even any obligation to destroy arsenals permanently. But both Bush and Putin needed it for its symbolism. These two leaders were getting on like a house on fire, and they needed a treaty to prove it.
After the signing, Putin and his wife showed George and Laura Bush around the Kremlin, and then took them home to their dacha, where they did some fishing in a pond. Putin was repaying the Crawford experience. The next day they flew to Putin’s home town, St Petersburg, where they visited the city’s massive war memorial, the Hermitage gallery and the university. Putin then snuck off to attend a judo competition. And in the evening the presidential couples, with ministers and advisers in tow, went to a performance of the Nutcracker ballet at the celebrated Mariinsky Theatre.
Here something curious happened. Condoleezza Rice and Sergei Ivanov had struck up a great friendship. And while both were lovers of ballet, neither of them wanted to sit through three hours of the Nutcracker. When the lights went down, Ivanov leaned over to Rice and said: ‘Condi, do you really want to watch the Nutcracker?’
‘What do you have in mind?’
‘I have an alternative. Have you heard of the Eifman ballet?’
Rice had heard of it. Boris Eifman was an avant-garde choreographer, much more to her taste. ‘Let’s go,’ she said.
Ivanov and Rice slipped out of the Mariinsky and headed for Eifman’s studio. They sat side by side in the rehearsal studio, transfixed, sole viewers of a thrilling performance (apart from a somewhat disgruntled looking Vladimir Rushailo, the national security adviser, who had been sent as a chaperone).
‘I could see she loved it,’ Ivanov recalled later. ‘You can’t fake that sort of thing.’27
They got back to the Mariinsky just before the lights went up, just in time to join the official delegations for a midnight canal trip around St Petersburg.
‘Personal relationships do matter,’ Rice confided in an interview. ‘I came to trust that Sergei Ivanov was someone who was going to deliver on what he said he would do, and I think he believed the same about me.’28
It truly seemed like the dawn of a new era. Who could have imagined that it would all soon begin to disintegrate?
3
THE BATTLE FOR ECONOMIC REFOR
Putting a new team together
It wasn’t just Putin’s foreign policies that impressed the West. At home, he launched a raft of economic reforms that won plaudits abroad, as they appeared to be aimed at stimulating the economy, entrenching the free market and consigning the last vestiges of communism to the dustbin.
While still prime minister – before he was even acting president – Putin recruited a new team of Western-oriented reformers to draw up a programme. Some, like German Gref and Alexei Kudrin, he knew from his St Petersburg days. Andrei Illarionov was an outspoken liberal economist and Arkady Dvorkovich, a young whizz-kid, was just back from studies at Duke University. Putin himself was still an economic novice, willing to listen and learn, and convinced that things had to change. Kudrin described him in an interview as ‘a man of the next generation, who understood modern demands’.1
Under Yeltsin major projects had been carried out that had already transformed the economy, particularly mass privatisation and the liberalisation of prices. But the country did not enjoy sustainable economic growth, inflation was high and the new private sector worked inefficiently. Above all, the country’s industrial base remained almost entirely focused on the extraction and sale of raw materials – oil, gas, aluminium, timber – while there was scarcely any modern manufacturing.
At the end of 1999 Putin put Gref, a 35-year-old lawyer-turned-businessman, in charge of a new Centre for Strategic Research, which became the engine room of the reforms. Gref, a bustling man with a pointed beard like Trotsky’s, was no economist, but few doubted he was the right man for the task. Deputy finance minister Kudrin described him as ‘bright and brave… he was a tank, an engine, and totally committed to the reforms’.
Gref’s Centre was a kind of brains trust. He recalled in an interview later: ‘You know, what we were trying to do was to have consensus in society. We wanted to shape the programme with maximum input from intellectuals, academics, researchers, managers, economists. Part of the reason why we wanted public consultation was so nobody would think that it came from nowhere, so everybody would help to implement it. So the first task was to involve as many people as possible.’2
Not all the ideas that came flooding in were exactly what he had in mind. Gref smiled wryly as he recalled one contribution. ‘We received all sorts of ideas, and some of them were pretty exotic, to be honest. One of the institutes of the Academy of Sciences offered us a set of measures which in effect would have brought back socialism. I remember their idea was to create a national fund for the payment of all salaries and then to standardise them all.’
Over the next six months the team held scores of briefings and brainstorming sessions, gradually sifting through all the proposals and pulling together a plan. Putin would occasionally attend, mainly listening and asking questions, often raising the question of how the reforms would impact upon social welfare. He also had his own economics guru, Andrei Illarionov, whom he used as a sounding board, and in some regards as a counterbalance to the Gref team.