One example from 1995 illustrates how parlous the situation of this persistently profligate enterprise had become. That year, the Railway Ministry’s cash flow dried up almost completely, and civil servants from Moscow had to stuff suitcases full of cash and travel to the provinces in order to pay employees’ wages. At times, they were even reduced to bartering services for salaries.
However, what impressed me when I was appointed ten years later was how successful they had been at preserving the morale and professionalism that had always been a distinguishing feature of the railwaymen. Without any significant financial or political support, they had somehow ensured that the service still continued, just about, to function. After the dissolution of the Soviet Union, the infrastructure of many of the country’s great monopolies fell apart, but the Railway Ministry had managed to keep intact even the network of professional universities and schools across the country that trained their engineers and workers.
Perhaps this should not have come as a huge surprise. Throughout our history, the railway workers have been an embodiment of the best aspects of Russia, considered to be the civil service’s nonpareil – under the tsars, they unofficially enjoyed the same celebrated elite status as the navy did within the armed services; both institutions were a locus for national pride.
They might have been paid a little more than their counterparts in other wings of the state, they might have had a smart uniform and the right to travel for free, but the pride felt by a railway engineer, a station master or a locomotive driver was derived from their devotion to their work and their knowledge of its importance. The employees cherished the fact that they had all received a special education, that the job was day and night without any excuses, that they were subject to an almost military discipline. It would never be possible to overestimate the devotion displayed by the men and women who have been employed by the railways.
These were the people who worked, without a second thought for their own safety, on the front line in the conflicts that have defined the last century and a half of our history. During the war with Japan in 1905, an American journalist wrote that the Minister of Railways was more dangerous to the Japanese than his counterpart in the Ministry of Defence. The contribution the railwaymen made to that ultimately doomed, quixotic campaign was almost the only thing from it we can look back on with any pride. Tracks were laid across frozen rivers and lakes. Throughout the harsh winter, trains carried munitions and materiel, even submarines, to the hard-pressed soldiers fighting on what must have seemed like the other side of the world.
Just over forty years later, the great Marshal Georgy Zhukov would echo these sentiments when he suggested that Russia’s defeat of the Third Reich was due in no small part to the effort and courage displayed by the railway workers. I was struck when I became CEO of Russian Railways by how resilient this spirit was – how completely it had survived the collapse of the Soviet Union as well as the years of neglect and decay that followed.
The minister responsible, Nikolai Aksenenko, was forced to retire in 2002 amid a storm of accusations about financial irregularities, but he had been a leader able to keep his organisation from disintegrating at a time of incredible pressure. He fought for the railways, and helped keep them together, making sure that even at times of accelerated regional tension, the CIS railway union, one of the USSR’s most valuable legacies, remained solid. I would also come to understand that he was a far-sighted figure: many of the reforms we eventually implemented had been discussed by him years before.
Mr Aksenenko knew that times and technology had moved on and the old ministry was no longer constituted in such a way that would enable it to engage in building the large infrastructure projects – such as high-speed rail lines and new routes connecting natural resources to global markets – that we all understood would be a crucial part of the country’s recovery. He tried to initiate a debate about introducing a more pronounced commercial element into the ministry’s activities as early as 1992, and would continue to raise the principle throughout his tenure.
But he was acting in circumstances that were not friendly to such an ambitious undertaking. For one thing, the effort expended in ensuring that the railways continued to function and remained solvent left little energy for strategic thinking. And although his proposals were discussed in the Duma and by the country’s nascent business elite, they never went very far. The political influence of his patron, Yeltsin (Aksenenko was part of the former president’s close personal circle), was vanishing, and as a result, power in the country was fragmented. There may have been a set of compelling reasons to embark on far-reaching structural changes to the railways and the way they operated, but neither Aksenenko nor anyone else in the government had the political capital, or perhaps the energy, to push it through in the face of strong resistance from the resurgent Communist Party. Especially since everybody understood how complex and demanding a process it would be to modernise what had been known in the Soviet Union as the ‘Empire inside the Empire’. This was not just because the vast, sprawling railway system employed so many people and possessed so many assets, it was also because the rail infrastructure was intimately linked with so many other industries. It is no coincidence that in the main it was the comparatively discrete, small-scale sectors of the economy that were first privatised. Nor is it a surprise that oligarchs on the hunt for easy profits left this challenging sector of the economy alone.
Only after Aksenenko had been ousted in 2002, when the country was in a much more satisfactory economic and political position, and the resistance to modernisation had largely subsided, was the possibility of reforming the railways discussed again.
President Putin supported the argument that the railways were central to Russia’s revival; that Russia’s natural resources – buried in remote, land-locked parts of the country – could be better exploited if they could be transported to the ports and on to markets more efficiently. The wellbeing of the railway system and the Russian economy were, as they always have been, intimately linked: if the railway system was not given the tools it needed to take on the modern world’s challenges, then the country would suffer.
I had never expected to be charged with controlling Russia’s railway system. In 2002 I was still deputy Minister of Transport, where I was responsible for trying to put back together the fragmented pieces of Russia’s transport infrastructure, trying to find a way of integrating the railway system with the country’s ports. I was already familiar with its staff and also the most essential aspects of their strategic planning and operations. More pertinently, I was in regular contact with the so-called ‘Leningrad diaspora’, or the Piterskie (‘the Petersburgers’), as they are sometimes also known. They included, among others, Vladimir Putin, Herman Gref, Alexei Kudrin and Dmitry Kozak – men who had relocated to Moscow after the defeat of Anatoly Sobchak, and had moved into some of the country’s top political positions.
On a Sunday afternoon in 2002, I received a call from the President, who asked my opinion about a particular individual who worked at the Ministry of Railways. Because this conversation was taking place so soon after the departure of Aksenenko, I immediately realised that the person the President was asking questions about was being considered as a replacement for the outgoing minister.
I knew the man in question from my previous work in St Petersburg and was not convinced he would be the right choice, so my responses were generally cagey, even negative. The President’s next question took me by surprise: ‘So, who do you think is suitable for the role?’