Putin's Kleptocracy_Who Owns Russia?

by Karen Dawisha

  Berezovskiy would provide the funding and the access to ORT, the state-run channel that he had a minority stake in, as well as possibly helping to fund off-the-books operations, as Dunlop suggests, including Basayev’s raid into Dagestan that acted as the tripwire for this era. It was widely reported that Putin and Berezovskiy had many clandestine meetings before Putin became prime minister, both in Moscow, in the elevator shaft of the FSB building, which, according to Masha Gessen, was the only place in FSB headquarters that Putin believed was safe from bugs;201 in a holiday flat Putin rented in the south of France;202 and in the Sotogrande resort in southern Spain, in San Roque, Cádiz province, where Berezovskiy had a residence.

  It was in Sotogrande, La Razón reported, that Putin and Berezovskiy held at least five secret meetings in 1999 that appear to have been at least partially taped by Spanish intelligence. They contend that they were actually monitoring at the request of Interpol the activities of a member of the Russian mafia who happened to live next door to Berezovskiy in this quiet enclave by the sea. In early 1999 they only casually discovered Putin’s presence when, in monitoring the movements of the Russian mafia figure, who was in the garden, they realized he was talking to Putin and Berezovskiy. It was then that they decided to inform the government of Spain, at which point surveillance was increased, since Putin was at that time secretary of the Russian Security Council and head of the FSB. Moreover he had not entered Spain legally, through passport control, but had flown into the British protectorate of Gibraltar, whose airstrip is under British military control, giving rise to never confirmed speculation that British intelligence had tracked Putin,203 and transferred to a private boat, arriving at the private Sotogrande dock near Berezovskiy’s house. CESIDXVII reported that Putin was in Spain at the invitation of Berezovskiy to “plan the substitution of Yel’tsin.” They claimed that British intelligence had monitored Putin’s movements from Gibraltar and that he had made at least five trips in 1999 alone, including several when he was prime minister. While in Sotogrande, Putin restricted his activities and behaved with “great discretion”; the neighborhood’s private security force noted only that during these periods there was a flurry of black luxury cars, but they were never informed who the visitor was. Berezovskiy, on the other hand, was more public, throwing a massive party with fireworks at the beach club for the area’s growing Russian population soon after Putin was named prime minister.204 The Times of London confirmed Spanish reports that Spanish police had monitored Putin, who had “flown to Gibraltar and sailed into Spain without declaring his presence on Spanish soil, as the law requires.”205

  The story published by La Razón stated that Spanish intelligence also knew of Putin’s previous visits to Torrevieja, when he was a deputy mayor of St. Petersburg.206 This concurs with allegations being made in St. Petersburg at the time by procurators that Putin had used false papers to travel frequently to Spain to supervise the building of apartments with money diverted from the Mayor’s Contingency Fund.207 A Novaya gazeta investigation based on the articles in La Razón and the Times found further details: that the mafia person being investigated was the leader of one of the St. Petersburg crime families; that Putin may have used false papers to enter Spain via the British base in Gibraltar; that he may have traveled to Gibraltar via London; that both MI5 and MI6 knew about his travels but did not share the information with Spanish officials—remembering that Putin was at this time the head of the FSB.208

  In addition to Berezovskiy and Pavlovskiy, the Family needed not just to shape Putin’s image; they needed to ensure that the Duma elections were won by a pro-Kremlin party. However, in the summer of 1999 such a party did not exist. The Our Home Is Russia Party, which had won sixty-five seats—more than any party but the Communists—in the 1995 Duma elections, under the leadership of Prime Minister Viktor Chernomyrdin, was no longer functional. With Primakov at the head of OVR, that party could be expected to win the lion’s share of the seats and ally with the Communists to launch their own parliamentary investigations of the Family. They needed a party that could capture a sizable proportion of the seats. Berezovskiy is credited with the idea of creating such a party, but it was the job of Vladislav Surkov to realize it.

  Surkov was born in Chechnya of a Chechen father and a Russian mother; brought up in southern Russia, he began the post-Soviet period as a publicist for Mikhayl Khodorkovskiy.209 He became deputy head of the Presidential Administration when Sergey Zverev was fired in late July, although he had worked in the Kremlin for some months already. A brilliant tactician, he would succeed in the course of less than three months in organizing a founding congress on October 3 for the new pro-Putin party of power, Unity, and laying the groundwork for Unity to win 23.3 percent of the vote in the elections on December 19. Pavlovskiy subsequently stated, “Surkov was not just controlling the work, he was masterminding it; forming different political projects.”210 The combination of Putin’s performance at the head of the “party of war,” the growing and nontransparent power of his associates who followed him from St. Petersburg, Berezovskiy’s intrigues, Pavlovskiy’s PR skills, and Surkov’s tactical genius resulted in a truly remarkable political team. And part of their strategy was to provide Prime Minister Putin with a platform that would focus the country on a strong response to the resurgence of Chechen terrorism and bombings, in which Putin would calm the people, prevent panic after a horrible wave of bombings, and become the actual and symbolic vehicle for the nation’s demand for a strong and vengeful state response. A number of the St. Petersburg faithful were added to this team. Viktor Zolotov became head of Putin’s personal security team, and Igor Sechin moved in as head of the new prime minister’s Secretariat. Zolotov remained close to Tsepov in St. Petersburg but added his own close business connections with the Moscow-based oligarchs Roman Abramovich and Oleg Deripaska,211 helping to extend Putin’s ties beyond Petersburg.XVIII

  On August 23 Basayev announced that his Chechen forces had largely withdrawn from Dagestan, a date that coincided with Putin’s self-imposed deadline to crush the uprising.213 In late August Russia launched a major air campaign over Chechnya, designed (as evidently had been planned since March) to establish Russian preeminence over Chechen territory north of the Terek River. Then, between August 31 and September 16, five bombs exploded:

  • On August 31 in the Okhotnyy Ryad underground mall underneath Manezh Square, just steps from the Kremlin, killing one person.214

  • On September 4 in Buynaksk, Dagestan, via a car bomb in front of an apartment building housing Russian border guards, killing sixty-four.215

  • On September 9 in Moscow’s Pechatniki district on Gur’yanov Street, using a massive bomb planted in the ground floor of an apartment building, killing one hundred sleeping residents.216

  • On September 13 on Moscow’s Kashirskoye Highway, via a bomb planted in the basement of an apartment building, killing 118 sleeping residents.217

  • September 16 in the southern Russian city of Volgodonsk, in which a massive truck bomb planted outside an apartment building killed eighteen sleeping residents.218

  The bombing campaign came to a halt only when an FSB team that had evidently been involved in planting a bomb in the city of Ryazan was apprehended by local authorities.

  Altogether 301 were killed and almost two thousand injured. Up to three additional bombs were allegedly located and defused in Moscow.219 The government put out a nationwide call for vigilance, blamed the bombings on Chechen separatists, and appealed for help in finding a man who was using the stolen passport of a dead man named Mukhit Laypanov. The man was seen at the Pechatniki bombing scene, had leased space in the Moscow apartment buildings demolished by bomb attacks, and had rented a garage in which police found a cache of three tons of explosives disguised as seventy-six sacks of sugar.220

  Beginning almost immediately, Russian investigative journalists began to analyze the evidence of responsibility for these bombings. Additional subsequent investigations by Western and Russi
an scholars, journalists, and participants expressed concern about government collusion or participation. Because of their similarity and high death toll, the apartment bombings in Moscow struck the most fear, but the botched effort in Ryazan produced the greatest debate about the identity of the actual perpetrators.

  Whatever hopes there were to avoid a “storm in Moscow,” it had definitely arrived. The horrors of the actions were almost immediately matched by discussion of the unthinkable: Had a group within the walls of the Kremlin been behind these bombings, and for what purpose? Certainly Luzhkov still needed to be defeated politically, and Putin’s credibility as a security hawk and head of the “party of war” needed to be established not just in Kremlin corridors but in the public eye as well. Putin’s public ratings when he was first appointed prime minister in August were in the low single digits, much lower than Luzhkov’s, Primakov’s, and the Communist leader Gennadiy Zyuganov’s. The apartment bombings had the effect of creating panic in the country as a whole, but in Moscow in particular, Luzhkov’s ability to display his control of events was undermined. Additionally Prime Minister Putin was on television nightly. The population was baying for vengeance, and Putin became their vehicle. Regional elites started to go over to the Putin camp. As retired KGB general Leonov subsequently wrote, “Putin’s ratings were growing rapidly. Silent was the same Russian press that during the first Chechen war had waged a vicious anti-Russian campaign, defaming the army and all those who can be called ‘statist patriots.’ Now the moral and political climate in the country had changed completely. There was an awareness of the real risk of the collapse of the Russian state and the power of a united people.”221 On September 23 a group of twenty-four governors wrote President Yel’tsin, asking him to step down in favor of Putin.222 That same day, according to Gessen, Yel’tsin signed a secret decree authorizing the military to renew combat in Chechnya; the next day Putin issued the same decree, although, as Gessen notes, “Russian law in fact gives the prime minister no authority over the military.”223 But Putin was to be the public face of the regime’s fight against the Chechens, and it was on this day that he famously promised the country that he would indefatigably search for the Chechen bombers: “V sortire zamochim”—“We will wipe them out” (literally, “make wet” or “liquidate”)—“in the outhouse and that will be the end of it.”224 His ratings began to rise, and having only narrowly achieved confirmation by the Duma in late August, he declared that discussion of the declaration of a state of emergency was simply fanciful talk designed to convince people that the federal authorities couldn’t cope. His job was to reassure the Russian people that he was fully in charge and that Russian troops would prevail.225

  By the end of September, after Yel’tsin gave him complete control over the war effort, Putin launched a ground offensive into Chechnya. Two months before the Duma elections, the Second Chechen War began. Within the month almost half of the total population of Chechnya would become refugees. The destruction inflicted on the capital city of Grozny—which was, after all, a city within Russia—was greater than any seen in Europe since World War II.

  The heightened concern about a new Chechen war shaped Russian media coverage and blunted U.S. condemnation of the Yel’tsin Family at a time when the U.S. government’s year-long investigation of a massive money-laundering scheme at the Bank of New York by Russian crime figures was becoming public.226 Testimony given to a U.S. congressional committee in September 1999 claimed that there were two accounts at the bank’s Cayman Islands branch worth $2.7 million in the name of Yel’tsin’s son-in-law, Leonid D’yachenko. The committee also learned that one of the BNY employees who had allegedly facilitated the largest money-laundering operation in U.S. history (worth at least $10 billion) was the wife of Russia’s former representative to the IMF, Konstantin Kagalovskiy. That one of the oldest financial institutions in the United States had been commandeered by Russian organized crime, with possible participation by elite Russian circles, went public in August. Vice President Al Gore’s presidential campaign suffered from the revelations because he had been the point person for U.S. relations with the Kremlin under Clinton.227 And the creditworthiness of the Russian regime was called into question. The fact that Undersecretary of State Strobe Talbott had met Putin in June and praised his performance most likely created the conditions for refraining from direct criticism of or legal action against the Family as they jockeyed to turn the government over to someone whose public persona was comparatively unblemished.228

  Central to all of this was Boris Berezovskiy. He had the most to lose if OVR or the Communists came to power, and now even his backup plan to live abroad was in jeopardy, as these revelations suggested that he himself was a participant in several of these corrupt schemes. The financier George Soros, who knew Berezovskiy and followed his political career, provided the following trenchant analysis of the dilemma facing Berezovskiy as the Mabetex and BNY scandals broke abroad and the personal attacks on him in the electoral campaign increased: “Berezovskiy and Yel’tsin’s Family were looking for a way to perpetuate the immunity they enjoyed under the Yel’tsin administration. . . . Berezovskiy’s situation turned desperate when the scandal broke over the laundering of Russian illegal money in U.S. banks in 1999, for he realized that he could no longer find refuge in the West. One way or the other he had to find a successor to Yel’tsin who would protect him. That is when the plan to promote Putin’s candidacy was hatched.”229 Berezovskiy evidently thought it was in his interest to promote a general increase in tension in the country so that people’s attention would be drawn to security threats and unifying the country against them, thus limiting the space for opposition politicians to attack the Kremlin. But presumably the Family continued to calculate that should the need arise, the elections could still be postponed under the guise of an antiterrorist campaign. Berezovskiy traveled to Washington in November, meeting with Talbott, who generally distrusted the Russian oligarch but was curious to see which new “product . . . he was selling.” It was Putin, who Berezovsky wanted to assure Washington was a realist who would not oppose NATO expansion, unlike Primakov, and that Putin was concerned, as Washington should be, with fighting radical Islam in the northern Caucasus.230

  In an interview with Masha Gessen ten years later, Berezovskiy put forward a slightly different view. Obviously he wasn’t going to admit that he had been involved in such a monstrous act as blowing up apartment buildings. However, he did offer the following noteworthy appraisal of these events. At the time he discounted charges that the government was behind the bombings as mere political rhetoric during a campaign season: “It never occurred to me that there was a parallel game to ours—that someone else was doing what they thought was right to get Putin elected. Now I am convinced that was exactly what was going on.” Gessen continues in her own words: “The ‘someone else’ would have been the FSB, and the ‘parallel game’ would have been the explosions, intended to unite Russians in fear and in a desperate desire for a new, decisive, even aggressive leader who would spare no enemy.”231

  FSB Team Arrested in Botched Ryazan Bombing

  The idea that an elite team in the FSB was behind the bombings gained credence when, on September 22, 1999, two Ryazan residents noticed three people carrying sacks from a white car into the basement of an apartment building. The car’s license plate was VAZ-2107; the code for Ryazan oblast’, 62, was written on a piece of paper and taped over the real code in the front, but the Moscow code was uncovered in the back, causing further suspicion. The residents were able to get a close enough look at the three, two men and one woman, to describe them to police, who created composite sketches showing three clearly Slavic, not Caucasian, individuals. The local militia and the bomb squad were called, and the bomb, whose contents were immediately identified by local authorities as hexogen (RDX) disguised in sugar bags (as at least one of the Moscow apartment bombs had been), was defused. Local residents were evacuated and thousands more throughout Ryazan took to the str
eets in panic.232 Roadblocks were established to apprehend the terrorists, and Interior Minister Rushaylo praised his subordinates in Ryazan for finding a bomb.233 Putin as well, going on television the next day to announce the beginning of the bombing of Grozny, stated, “If the sacks which proved to contain explosives were noticed, then there is a positive side to it.” On September 24 he told his government, “We must not and we will not turn this government into a government of the state of emergency.”234

  But then the Ryazan story began to unravel:

  • That evening a worker at the local telephone exchange listened in on a call from one of the three alleged bombers in which they were advised by a voice at the other end to “break up” and make their way back separately. The call was traced to FSB headquarters in Moscow.235

  • But they did not break up, and they were captured by local police. When about to be formally detained, the three produced FSB identification cards, were subsequently released, and have never been charged. This became known to Russian journalists and analysts. Boris Kagarlitskiy, who made a close study of the event, concluded, “FSB officers were caught red-handed while planting the bomb. They were arrested by the police and they tried to save themselves by showing FSB identity cards.”236