The Penguin History of Modern Russia

by Robert Service

  Putin was proud of being the product of a Soviet upbringing. He described the dismantling of the USSR as ‘the greatest geopolitical catastrophe of the twentieth century’; he hated the blizzard-like deprecation of the USSR’s achievements. Born in Leningrad in 1952, he had a father who had fought in the Second World War and a grandfather who had cooked for Lenin. As an adolescent he became a judo champion in his native city. He also applied for recruitment to the KGB, but was told that the KGB expected to approach individuals, not to be approached by them. But his enthusiasm was noted and while he was studying at Leningrad State University he was promised a posting. His main early job was as an intelligence officer in the German Democratic Republic. Operating there during the years of Gorbachëv’s rule, he was filled with dismay. For Putin, perestroika’s principal effect was to dissolve a great state, economy and society. But he was also pragmatic and on returning to Leningrad joined the administrative team of mayor Anatoli Sobchak who was seeking to make political and economic reforms work well for the city. Putin was skilled at adapting to circumstances. His organizational talent attracted attention and in 1996 he was promoted to the Presidential Administration in the capital. Soon he was appointed head of the Federal Security Service, and in August 1999 this man whose name was barely known to most Russian citizens became their Prime Minister.1

  The ‘oligarch’ Berezovski had boasted to the press that it was he who had put Putin in power. He thought that his commercial interests would be protected in return. He could not have been more wrong. Soon after assuming the presidency, in July 2000, Putin called the business élite into the Kremlin and told them directly that their challenges to policies of state would no longer be tolerated. He also spelled this out in a face-to-face session with Berezovski.6 When Berezovski continued his public defiance, Putin decided to demonstrate that the businessman’s days of pomp were over. Police investigations were started into his alleged frauds. He fled to the United Kingdom in 2001 where he received political asylum and, wrapping himself in a coat of democratic principles and clean capitalism, publicized his accusations against Putin. Next to feel Putin’s wrath was Vladimir Gusinski. He too had multiple interests in the economy. And he had political ambitions: his NTV television channel regularly poked fun at Putin through the Kukly satirical puppet show.2 But his business career had had its murky side and a police investigation was started. Gusinski was briefly arrested. He too fled the country in summer 2001, finding refuge in Israel and Spain.

  Putin called for the achievements of Russia after the October 1917 Revolution to receive their due; and he re-introduced the melody – if not the words – of the USSR state hymn.3 Most Russians welcomed the restoration of a stirring piece of music they associated with victory in the Second World War. They wanted to be proud again about being Russian; and surveys revealed that the proportion of citizens feeling associated more with the USSR than with Russia was going down only slowly.4 The popular response was favourable. His opinion-poll rating fell drastically only once. This was when he reacted stiffly to an explosion in the nuclear submarine Kursk in August 2000. All on board perished. Putin was widely criticized for declining to interrupt his holiday and display personal sympathy. He learned from this setback and tried to avoid falling out of step with national sensibilities. He was tested again in September 2004 when Chechen terrorists occupied a school in Beslan, a town in North Osetia, and took captive a thousand tiny pupils, their minders and their teachers.5 Putin was televised supervising the handling of the siege until Russian security forces re-took the buildings. Although the operation was accompanied by many deaths it was not the Russian president who incurred the blame.

  He consolidated his position by filling many offices of state with individuals who had ties to the Federal Security Service or other coercive agencies. The appointees ruthlessly enforced governmental decrees. State power was their shibboleth. It is true that newspapers, books and posters continued to criticize or ridicule him. Yet television was the medium with the deepest popular impact, and the humbling of Berezovski and Gusinski had the effect desired by the Kremlin as TV programme editors exercised caution in what they transmitted about the central authorities.

  The president was not an enemy of the big business corporations, only of businessmen who got politically too big for their boots. Roman Abramovich and most other ‘oligarchs’ appreciated the danger of annoying him. The downfall of Berezovski pressed home the lesson. Mikhail Khodorkovski, however, refused to accept that things had changed. As owner of the Yukos oil corporation, he was one of the wealthiest men on the planet and used to doing things his own way. He declared a wish to encourage a more pluralist form of politics and a less corrupt environment for commerce in Russia. His newspapers regularly criticized the presidential administration and the government; he also subsidized opposition parties in the Duma. When he refused to desist he was put under investigation for fraud. Prosecutors brought him to court for tax evasion. A huge bill was delivered to the company. Facing bankruptcy, Khodorkovski had to sell off his Yukos assets at a knockdown price to Rosneft. In May 2005 he was sentenced to eight years imprisonment in Chita province in eastern Siberia. Rosneft was a private company under governmental tutelage. Its acquisition of Yukos was a decisive signal that Russia’s political economy had changed since Yeltsin’s presidency.

  The implications for foreign businesses in the country were discouraging. The government’s declared priority in the early 2000s had been to attract the maximum of Western capital into the Russian economy. The world’s biggest energy companies queued up to buy up rights of extraction in areas of Russia where great profits seemed guaranteed in the near future. Royal Dutch Shell and BP signed early deals. Their investors rubbed their hands with satisfaction as Russia appeared committed to having an internationally open economy. Both companies soon suffered disappointment when official investigators were sent into their Sakhalin facilities. Infringements of environmental legislation were quickly diagnosed. One by one, American and European energy corporations were compelled to renegotiate their contracts and accept poorer deals or face the loss of all their holdings in the Russian Federation. They all gave way, and Gazprom, Rosneft and other native conglomerates exploited a commercial advantage. Personnel moved flexibly between them and the various ministries in Moscow. Russia was becoming a bastion of state capitalism. The State Duma in March 2008 rationalized the process by passing a bill to restrict foreign investment in forty-two ‘strategic’ sectors of the economy (which included petrochemicals, nuclear power, armaments, fisheries, airspace and the media). Russia was no longer up for sale to the highest external bidder.

  There was no thought of dismantling capitalism. Cabinets during Putin’s presidency always included not only former intelligence officers but also liberal economic reformers. Among such liberals was Mikhail Kasyanov, who was Putin’s prime minister from May 2000 to February 2004. Kasyanov tried to impose a framework of commercial law – and indeed there was a degree of enhanced protection for small businesses to register and operate even though the local elites remained as corrupt as ever. Improvement was also detectable in the workings of the courts, but only in cases lacking a political dimension.6 Yet Putin and Kasyanov did not get everything their own way. Though they worked long and hard for a new Land Code, the Duma frustrated them by rejecting the proposal for the privatization of territory outside the urban outskirts. President and Prime Minister were annoyed that farms in the countryside remained outside the jurisdiction of the reform. The Federal Assembly was equally averse to the call for Gazprom to be broken up so that the pieces would compete with each other. Nor did it sanction the demand for electricity and other utilities to be sold at higher prices to Russian domestic consumers.7

  Putin also ran into difficulties when he attempted to put pressure on the leaders of the various republics and provinces of the Russian Federation. Soon after being elected, he withdrew their right to sit automatically in the Council of the Federation where they could affect the passa
ge of legislation; he awarded himself the power to sack any one of them. He also divided the whole country into seven super-regions and appointed his own plenipotentiary to each super-region with the mission to ensure compliance with central laws and Presidential decrees. Putin’s initiatives were greeted with barely a murmur of objection from local leaders.8 Yet little changed in reality. The sheer complexity of political and economic processes in every republic and province smothered the attempts at abrupt disciplinary action – Putin was more successful in intimidating the media than in securing obedience from the lower levels of the state hierarchy. But he did at least achieve a halt to criticism of the government. Mintimer Shaimiev of Tatarstan, who had been a thorn in Yeltsin’s flesh, became a medal hanging from Putin’s neck. In 2004 Putin forced through a measure allowing the presidency not only to remove regional governors but also to appoint new ones without reference to the local electorate.

  Formal central prerogatives were one thing, provincial reality was often entirely another. The new governors, being obliged to ensure stability of administration, needed the co-operation of local politicians and businessmen. A strategy of give-and-take worked better in practice than peremptory orders.9 The old Russian obstacles to achieving an effective political hierarchy persisted, and the Kremlin found itself increasing its fiscal subsidies to the regions.

  Putin had formed a party, Unity, in September 1999 to enforce the government’s authority. Unity’s main function was not to discuss his policies but to agree to them in the Duma. But the party failed to achieve a majority in the Duma election of December 1999. The President in May 2001 engineered a coalition with three other parties called United Russia. Like Yeltsin, he refrained from becoming a party member and justified this by saying that the President ought to stand outside the fray of public dispute. In December 2003 the Duma elections left United Russia a little short of an absolute majority. But other Duma deputies quickly came over to Putin’s side and the Kremlin at last broke free of the restrictions in the parliament which had plagued Yeltsin. Presidential authority was strengthened as party discipline increased.10 Indeed Putin needed to veto only one bill produced by the legislature from 2002 onwards. He removed the Communist Party of Russia from the chairmanship of several Duma committees. After 2003, indeed, United Russia supplied the leaders of all such committees. The State Duma and the Council of the Federation had become pliant instruments of presidential rule.

  Putin’s election for a second presidential term in March 2004 hardly required him to conduct a campaign. This had not stopped him from organizing fawning support from the media. Zyuganov, veteran of presidential contests in 1996 and 2000, said he had had enough and allowed Nikolai Kharitonov, who was not even a communist party member, to take his place. Zhirinovski took a similar decision: not even the chance of months in the political limelight induced him to take part. The liberals were in disarray. Irina Khakamada put herself forward on their behalf but did not succeed in uniting them. Russian TV took little notice of anyone but Putin, who asked to be judged on his record and appealed for patriotic unity. The election was a foregone conclusion: he would have needed to fall under the wheels of a Moscow trolley bus to lose against his rivals. This time Putin took seventy-one per cent of the votes in the first round, again rendering a second one unnecessary.

  He had received the credit for bringing order and stability to the country. In truth the economic resurgence had little to do with his performance as a leader. Since mid-1999, before he was even prime minister, there had been a steady rise in oil and gas prices on global markets. By the end of 2007 the Russian economy was the world’s tenth biggest in gross domestic product, having expanded at an annual rate of seven per cent since Putin’s rise to the presidency.11 This had the effect of widening prosperity in Russia. Real incomes more than doubled in the same period. The size of the middle class purportedly grew to a fifth of the population by 2008. Other estimates put it at a tenth. What was undeniable was that people with a stake in the market economy had grown in number. From stall-holders to owners of small manufacturing or retail companies the proliferation was rapid and constant. Employment in all sectors of the economy had increased. Neglected regions were at last beginning to experience some improvement.

  Yet capitalism in Russia remained a wild phenomenon. In industries big and small the executive and judicial authorities turned a blind eye to the infringement of health and safety rules. Mining and chemical enterprises were the tip of a dangerous iceberg for the workforce. But strikes were few and demonstrations were fewer. Political repression and manipulation played a part in procuring this situation, but anyhow the wish of most Russians was to live comfortably. There had been many improvements since the mid-1980s. Citizens of the Russian Federation had freedoms not witnessed since the fall of the Imperial monarchy. They also had a degree of privacy impossible in the USSR. They could enjoy their sense of nationhood without fear of official disapproval. Yet it rankled with them that blatant social inequalities remained. The conspicuous wealth of the few contrasted with the harsh austerities afflicting the many. Unfairness abounded. Administrative processes were still prone to arbitrary rule. Police and judges were venal. Russians went on grumbling and had much to grumble about. In order to cope with existence they turned to the traditions of mutual assistance which had for centuries helped them through the worst times. But they did not take to the streets. The last thing twenty-first-century Russians wanted was a revolution.

  In the early years of his presidency Putin had confined his assertiveness to domestic politics. Recognizing that Russian power would remain restricted until the economy could be regenerated, he stressed his commitment to a ‘multipolar’ world. This was a tactful way of expressing dislike of the USA’s dominance as the single superpower. In practice, there was not much he could do to turn Russia into one of the globe’s great poles. Like Yeltsin, Putin tried to make up for this by holding frequent meetings with his leaders of other countries. Each get-together was managed superbly by his media experts and Putin, fit and increasingly confident, contrasted sharply with his decrepit predecessor. But substantial results were few.

  Putin rushed to offer condolence and support to the USA after 11 September 2001 when Islamist terrorists flew aeroplanes into New York’s World Trade Center. The destruction of the twin towers and the massive loss of human lives provoked the Americans into a furious reaction involving a military campaign in Afghanistan to eliminate the Al-Qaida organization. American President George W. Bush proclaimed a ‘war on terror’. Waiving Russia’s conventional claim to exclusive influence in the former Soviet republics of central Asia, Putin made no protest about the Americans using air bases in Kyrgyzstan to attack Al-Qaida in Afghanistan. He also made little fuss when, in December 2001, Bush unilaterally announced his intention to withdraw from the anti-ballistic missiles treaty signed by Washington and Moscow in 1972. Russian diplomatic stock was rising in Washington, and Putin for a while was treated as a worthy partner in international relations. Bush had claimed in midsummer 2001: ‘I looked the man in the eye. I was able to get a sense of his soul.’ Putin acquired Western indulgence for the continuing military campaign in Chechnya. The fact that international Islamist groups had sent men, arms and money to the Chechen rebels allowed him to represent Russia as having been fighting at the front line against terrorism worldwide.

  Washington ceased rewarding Putin for his assistance once the war in Afghanistan had ended in spring 2002. Although he was left alone to do what he wanted in Chechnya he was not encouraged to reassert Russian power outside the borders of the Federation. He continued to devote diplomatic efforts to the forging of closer links with the European Union and indeed with NATO. But the reality of Russia’s global weakness was there for all to see.

  This situation turned in his favour as the revenues from oil and gas exports started to fill Russian state coffers; and Putin, thinking he had nothing to lose, adopted an assertive manner in reaction to American initiatives in international rel
ations. The USA led an invasion of Iraq, a strong trading partner of the Russian Federation, between March and May 2003 in complete disregard of the Kremlin’s objections and concerns. The Americans also announced a willingness to prepare the way for Georgia and Ukraine to join NATO. They interfered in the politics of Uzbekistan. They cheered the ‘Orange Revolution’ in Kiev when, in December 2004, the anti-Moscow candidate Viktor Yushchenko won the presidential election despite serial attempts to defraud him of his victory. In 2006 they requested Poland and the Czech Republic, freshly incorporated in NATO, to allow them to install an anti-ballistic missile ‘shield’ on their territory. President George W. Bush insisted that the enemy he had in mind was Iran; but Russian politicians regarded it as one militant initiative too many against the interests of Russia’s security. In each instance Putin made public his criticisms, abandoning any worry of a worsening of the relationship with the USA – and his truculence found favour with Russians, who applauded him for restoring their country to a seat at the table of the world’s great powers.

  Western politicians continually called on the Kremlin to show greater co-operativeness and pleaded for NATO’s good intentions to be accepted. Putin barked it out at a dinner for Prime Minister Blair: ‘This is ridiculous. I am a Russian. I cannot agree with the Americans on everything. My public won’t let me for a start. I would not survive for two years if I did that. We often have different interests.’12 As proof of his determination, in July 2007, Putin suspended Russia’s adherence to the Conventional Forces in Europe treaty signed by the Soviet leadership in 1990. His attitude went down well with Russians regardless of political orientation. Disputes among parties were shunted to marginal matters of foreign policy as opinion rallied to Putin.