Putin's Kleptocracy_Who Owns Russia?
Page 33
Every frame of the inauguration had been carefully scripted to represent the founding event of Putin’s spectacle-driven presidency. Pavlovskiy, the leader of his PR team, subsequently wrote about the aura around Putin they sought to create using state-controlled TV news, “TV news smelled of incense, holy oil poured on the work of the government and its leader.”4 But in addition those in the know understood the message behind the inclusion in the audience of the disgraced former KGB chief Vladimir Kryuchkov, who had been briefly imprisoned for his role in the abortive August 1991 coup: as ex-KGB general Oleg Kalugin commented, “No wonder the new Russian leader stalled the reforms, reversed the process of democratization, and introduced discredited Soviet practices.”5
Following this remarkable performance, Putin was ready to take action. Within days he created seven superfederal districts to rule over, and rein in, the democratically elected governors of the eighty-nine federal units, and he launched an attack on independent TV and those oligarchs who had opposed him. His people too swiftly took up their positions at the commanding heights of the state and the economy.
Putin Institutes a “Vertical of Power”
On May 13, four days after his inauguration, Putin issued an executive order, or ukaz, creating seven new superfederal regions that would supervise the work of the eighty-nine federal units, whose chiefs would all be appointed by, and beholden to, the president. The regional governors had been a major source of opposition to Putin during the election; now they were faced with the imposition of his “vertical of power.” When Putin wrote in his February “Open Letter to Voters” that he was going to reintroduce the guiding and regulating power of the state,6 this was a strong signal that he was going to reintroduce a top-down, centralized command structure familiar from Soviet times. He was trying to deal with the problems all federal-level officials have with the regions’ resistance to subordination, but he had inherited a system in which the “parade of sovereignties” that Yel’tsin had encouraged had led to a significant weakening of central control.II Yet the way he introduced this vertical, by creating these superfederal regions, showed that he would disregard existing constitutional procedures if need be. This change was done by decree and was nowhere mentioned in the Constitution.
Thus in one bold stroke Putin ended the autonomy of the federal units. Additionally the career backgrounds of these seven plenipotentiaries showed that he trusted the power ministries to meet the challenge of creating this new “vertical of power.” Five of the seven were generals, two veterans of the war in Chechnya and three from the security services: Georgiy Poltavchenko came out of the St. Petersburg KGB and became plenipotentiary of the newly established Central Federal District. Viktor Cherkesov, another close Putin associate and also from the St. Petersburg KGB, was appointed to the Northwestern Federal District. General Viktor Kazantsev had been a counterterrorism chief in the North Caucasus and now was named plenipotentiary to the North Caucasus District. Lieutenant General Pyotr Latyshev, who had been deputy minister of internal affairs, became the head of the Urals District, and General Konstantin Pulikovskiy, who had been commander of the federal forces in the First Chechen War, became the head of the Far Eastern District. Only Sergey Kiriyenko, a reformer and former prime minister who was named plenipotentiary to the Volga Federal District, and Leonid Drachevskiy, a former minister in the Commonwealth of Independent States who was sent to the new Siberian District, had no past security services involvement.11 The ukaz gave them the power to coordinate all federal services to the regions and ensure regional compliance with federal legislation.12
In the federal legislature, the Kremlin worked with the Duma in a way the parties had not expected. Liberal parties thought the Kremlin would ally Unity with them, together ensuring a majority to promote a liberal economic and political agenda. Instead the Kremlin instructed Unity to ally with the Communists, giving them the lion’s share of committee chairmanships, while benefiting from the decision of Yuriy Luzhkov (who was evidently hounded day and night by Putin’s man Vladislav Surkov) and other leaders in Fatherland–All Russia to merge with Unity, thus forming United Russia. Surkov’s major objective in the Duma was to stamp out the influence of those oligarchs who had been paying for votes. This he did with a combination of bullying and counterpayments. Surkov was the point man who now started to pay Duma deputies $5,000 per month on top of their salaries for their loyalty.13
Simultaneously, on May 17, Putin announced that he would introduce laws to weaken the power of the regions and the Federation Council. Initially the bills were vetoed by the Federation Council, but in July the laws were passed so overwhelmingly by the Duma that they could not procedurally be overridden by the upper chamber. They gave the president the right to fire provincial governors who broke federal laws or came under criminal investigation (which could be initiated by the president’s office) and took away the governors’ automatic immunity and membership in the Federation Council. Governors and local legislatures would henceforth choose full-time representatives to sit on the Federation Council, who would have to live in Moscow, thereby loosening their dependence on their regions.14
Boris Berezovskiy tried to rally regional governors to resist Putin, publicly stating, “Only the Federation Council is a guarantee that there will be no usurpation of power in Russia. If the Federation Council is destroyed, we will have one branch of power—authoritarian, a very tough totalitarian regime.”15 As the quintessential insider, Berezovskiy must have had more information than most about Putin’s real intentions. He had supported Putin as a means of protecting the Family, including him, but now it was clear that Putin’s dismissal of Yel’tsin’s daughter and his attack on regional autonomy would also limit his own options. Some governors publicly protested as well; for example, the president of Bashkortostan Murtaza Rakhimov bluntly declared, “Russia has always had imperial ambitions and a desire for centralization. Putin is largely in line with this tradition.” Yet, as Vedomosti noted, he had to give this interview outside the country, to the British newspaper the Guardian.16 The Federation Council fought back and gained some concessions,17 but by early summer Putin had succeeded in creating a Federation Council loyal only to him, shifting revenue streams to the federal level, and ultimately ending Yel’tsin’s “parade of sovereignties” altogether. And in Chechnya, a republic where over 50 percent of the electorate had officially voted for Putin while under Russian bombardment, Putin announced direct presidential rule on June 8, installing Ahmad Kadyrov as his representative on June 12, thereby belying the notion that the republic was becoming a beacon of stability—a continuous theme of his election campaign.
In early July Putin delivered his first annual address to the Federal Assembly (the combined membership of the Duma and the Federation Council). The speech focused on achieving progress by strengthening the state, rearranging center-regional relations to emphasize the “vertical of power,” and removing restrictions on free economic activity. He spent by far the most time developing his justification for strengthening the state—a term mentioned ninety-one times, as compared with sixty-three for Russia or Russians, forty-nine for economic or the economy, forty-eight for federal or federation, thirty-four for power, thirty for country, and only twelve for democracy or democratic, twelve for parties or party systems, six for civil society or liberties, and four for elections—this last clearly a subject that occupied a very small corner of his political consciousness and that he had no desire to talk about for another four years.III
At the same time that Putin was diminishing the functions of the Federation Council and weakening the local and regional sources of governors’ powers, he was preparing to announce a State Council, which would be an advisory body to the president whose members would be chosen entirely by him. This move was one of the measures proposed in the leaked Presidential Administration document published by Kommersant in early May,18 and its announcement had obviously been delayed by the fierce resistance from the Federation Council. Nevertheless Puti
n signed a decree on September 1, 2000, establishing it in order to “provide for the coordinated functioning and interactions of organs of state power.”19 Governors and presidents of the eighty-nine federal districts would sit on the Council, but the president could appoint others at his discretion. In response to these measures, Berezovskiy resigned his seat in the Duma, announcing that he did not want to be part of an emerging authoritarian regime.20 From this point on the relationship between Putin and Berezovskiy was irreparable.
Putin began to implement the “vertical of power” during his first week in office. By May 20 Kommersant had already concluded, “There is yet another revolution in Russia. And once again from above.”21 Obshchaya gazeta on May 25 observed, “Appointments to the highest posts are being made on the basis of one principle: are any of them compromised, so as to make them instruments in the hands of the President. . . . The impression is being created that the consolidation of even more power in the hands of the president is not a means for implementing some policy (the president has not announced any clear political priorities unrelated to this consolidation of power) but an end in itself.”22
Putin Takes On the Media and the Oligarchs
The week before Putin’s inauguration, Kommersant had published the leaked document Reform of the Administration of the President of the Russian Federation, purporting to be the master plan that advocated the use of the FSB to “control the political process” and specifically to silence the opposition media by “driving them to financial crisis.” The multipage section titled “The Information War with the Opposition” contained detailed examples of how to preempt, suppress, and discredit opposition exposés on issues such as “the purchase of property by representatives of the presidential structures” or any other issue to do with corruption, with the infamous statement “The Administration must make it clear to every opposition leader that as soon as he slings mud at the Presidential side, he will inevitably receive the same treatment”23
From his first days in office Putin made it clear that he would not sanction media hostile to the Kremlin. The idea that a free media was intrinsic to a democracy meant nothing to a leader who had seen television used by oligarchs in their own battles with each other and with the Kremlin. For Putin that era was over, but his approach continued to be indirect.
His new relationship with the media and its owners was signaled immediately with the May 11 raid on Vladimir Gusinskiy’s Media-Most company. Segodnya’s editor Mikhayl Berger had previously written to Putin appealing to him to guarantee freedom of the press after his inauguration. Referring to the masked special forces who swarmed the building and claimed to be from the tax police but whose credentials could not be verified, Berger now wrote, “Instead of an answer [from Putin] to this appeal, . . . we got gunmen.”24
Gusinskiy was called to the Procurator’s Office in mid-June as a witness in the investigation of the materials taken the previous month from the Media-Most headquarters. There he was unexpectedly taken into custody, without even the benefit of access to his attorney, under a provision that allows the procurator to imprison a person without formal charges. In a subsequent case at the European Court, Gusinskiy asserted that he took the manner of his detention to indicate that a “political contract” had been taken out against him.25 He testified that Presidential Chief of Staff Aleksandr Voloshin had promised him millions to stop attacks on Putin, and when he turned down the offer, the Kremlin increased pressure both on Gusinskiy personally and on banks to dry up his line of credit.26
From prison Gusinskiy launched an international campaign lambasting the Kremlin, declaring, “This is a regime which has begun the move toward the creation of a totalitarian regime, whether it realizes it or not.”27 But three days later he agreed to leave the country and sell his shares in NTV to Gazprom at a price to be determined by Gazprom, in return for criminal charges being dropped. He signed an agreement that contained nondisclosure clauses presented to him directly by Media Minister Mikhayl Lesin that obligated him to agree to the “renunciation of all steps, including public statements or dissemination of information by the organizations, their shareholders and executives, which would damage the foundations of the constitutional regime and violate the integrity of the Russian Federation, undermine the security of the State, incite social, racial, national or religious discord or lead to the discrediting of the State institutions of the Russian Federation.”IV He was released from prison once he agreed to divest himself of his shares in Media-Most and accept the terms dictated not by the Procuracy but by Lesin, although the embezzlement charges against him were not dropped.30
Having forced Gusinskiy out of the country, Putin still had to deal with his and Berezovskiy’s continued role, even from abroad, in their media companies. While admitting publicly that in theory a free press was necessary for the construction of a civil society, Putin warned in his first address to the Federal Assembly on July 8 that “the economic ineffectiveness of a significant part of the media makes it dependent on the commercial and political interests of its owners and sponsors.” As such, many TV stations and newspapers were not independent but promoted the interests of their owners and engaged in “mass disinformation” and were “a means of struggle with the state.”31 According to Putin, not only should the state be strengthened as a practical matter, to prevent its disintegration, but “the authorities have the moral right to demand that norms established by the state are observed.” Once again he returned to the idea that people can be free only if there is a strong state: “The debate about the ratio between force and freedom . . . continues to cause speculation on the themes of dictatorship and authoritarianism. But our position is very clear: only a strong, or effective if someone dislikes the word ‘strong,’ an effective state and a democratic state is capable of protecting civil, political and economic freedoms.” Strong states encourage the development of strong civil societies and strong political parties. “A weak government benefits from having weak parties. It is easier and more comfortable for it to live by the rules of political bargaining. But a strong government is interested in strong rivals.” Naturally, therefore, until the Russian state became strong, it would not have an interest in allowing strong counterbalancing influences, including from the media, which he slammed precisely for being a too strong counterbalance to the state. He wanted the media to be free of economic influence, not to represent rival points of view, and he insisted that it could function only with something called “true independence.” Without that independence, the media could turn into “a means of mass disinformation, a means of fighting the state.”32 Clearly for Putin, taking a stand against a state policy was equivalent to spewing disinformation.
The director general of NTV, Yevgeniy Kiselyev, issued a blistering rebuke to the president:
Putin was throwing down the gauntlet to us: when he mentioned media which carry out anti-state activity, or more precisely fight against the state, he meant us, the NTV channel, first and foremost. We understand that perfectly well, and I am going to respond to this. The president has different ideas to ours about what the state is and what its interests are. I think Putin is trying to imitate Louis XIV, who said “the state is me.” Putin’s address yesterday made it clear that what he means by strengthening the state is strengthening his personal power. He didn’t say a word in his address about developing parliamentarianism, nor developing local self-government, nor developing an independent judiciary, nor reforming the procurator’s office, which has of late become the absolute shame of the Russian state—we’ll have some more to say about that separately—nor about anything else. What we understand by the state is not a bureaucratic machine headed by a former member of the power structures and security services, but a democratic Russia with its people.33
The leaked internal document calling for the reform of the Presidential Administration, the raid on Media-Most, and Putin’s statement justifying it, all clearly indicated that he understood, but had no intention of fostering, the press�
�s role as a counter to the growth of state power. While 59 percent of the population polled supported NTV, there was no discernible mass public reaction to the crackdown on the station. The country was silent when Oleg Panfilov, director of the Center for Journalism in Extreme Situations, warned that “once all the media in the provinces and the capital are subdued, Putin will have total control of the entire information space.”34 In fact polls showed increased support for Putin. In early July 2000, 54 percent of citizens polled assessed his work positively.35
In the period immediately after his inauguration and throughout 2000, Putin was still constrained by projections that by 2003 half of the Russian budget would go for debt repayment to the Paris Club—a group of financial officials from the world’s leading economies who assist in debt restructuring. Russian leaders needed “private” money, including that money oligarchs had received through the “loans for shares” deal under Yel’tsin—and they intended to get it, through more effective taxation but also through new arrangements with oligarchs that would provide more revenue for the state. The Russian state would no longer beg the oligarchs for loans from the profits they made in the companies the Kremlin had sold them on the cheap (the Yel’tsin model). Now the owners of those extractive industries sitting at the commanding heights of the economy were to exercise property rights only with state approval. In some cases the state’s shares of these companies might increase, with oligarchs sharing their profits with the state and with Kremlin officeholders, including Putin, in return for a license to do business. Putin wanted the oligarchs to understand that they would have rents from these companies only as a reward for loyal state service. But for an oligarch loyal to Putin there would be no restrictions on the profits that could be realized.