Putin's Kleptocracy_Who Owns Russia?

by Karen Dawisha

  I worked for the President. The image that I had, I tried to advance. I was under the impression that the President is a man who cries when the people are crying, and when the people are happy, he is happy too. . . . But in those days of the Kursk, the whole country was crying, not just the wives and mothers. . . . And the President, the main person in the country, sits in Sochi, when the whole country is crying. And if I, for example, had not come to this meeting, if I had not been invited, or been on vacation, in all likelihood he would not have gone [to Vidyayevo]. . . . And the moment he went everyone wrote: “Oh, at last he went, what a great guy, how he feels the pulse of the people.” But few people knew that he doesn’t have any empathy, that circumstances forced him to go there. I felt that he didn’t give a damn, and this hit me hard. This was the “first moment” [that I saw him for what he is].68

  In the meantime the military high command refused foreign offers of help but could not rescue the ship alone. Official Moscow went into a miasma of accusations: FSB director Nikolay Patrushev announced that two of the crewmen were Dagestanis, hinting at sabotage; many of the admirals claimed that U.S. submarines were in the area and had rammed the Kursk. Television showed Deputy Prime Minister Il’ya Klebanov sitting helplessly in front of family members so distraught that one had to be forcibly tranquilized, but not before she screamed out, referring to the lost sailors, “They earn $50 a month and now they’re stuck in that tin can. . . . You better shoot yourself now.”69 Another personally attacked Putin: “Why was Putin away on holiday while our kids are dying here?”70

  Putin did not appear on national TV until five days after the initial event and returned to Moscow only on day seven. It was not until the eighth day that the Russians accepted Norwegian offers to help rescue the sailors. On day nine, when divers finally reached the sub, it took them less than thirty minutes to open the hatch, but by then all the sailors had perished. Putin took personal blame for the accident, but after an official inquiry in 2001, he demoted Klebanov to be minister of industry, science and technology (the fellow St. Petersburg city administration employee would, however, become Putin’s plenipotentiary to the Northwestern Federal District in 2003) and forcibly retired fourteen senior naval officers in one day. Russia had commissioned a world-class attack submarine but had no deep-sea rescue capability. Russia had innumerable senior military officers, but evidently none of them would tell the commander in chief that the situation was dire.

  Also in August the country was left without nationwide television for hours when the Ostankino television tower in Moscow caught fire and no one would authorize the electricity to be turned off so that the firefighters could get into the tower. The request for authorization went all the way up the by now well-functioning “vertical of power” until Putin himself gave the order to turn off the electricity. Later in his presidency, analysts became used to speaking about the phenomenon of “manual control”—meaning Putin himself had to get involved to solve any issue—but clearly this hesitation to take personal responsibility, so much a feature of Soviet society, was once again fully on display.

  Putin’s major problem in 2000 was in combating the negative public reaction to his handling of these events, especially the Kursk, which led to a 10 percent drop in support for him in the polls. Andrey Kolesnikov noted, “You needn’t be Gleb Pavlovskiy or anyone else to understand that vacationing at . . . [his residence in Sochi] during the national disaster would threaten the political health and rating of the president.”71 The contrast between state-owned and independent media coverage of Putin’s reaction to the crisis could not have been starker. And foreign media overwhelmingly rebroadcast the negative views of the independent media, leading to a dip in international regard for Putin’s leadership only months after his inauguration. The NTV journalist Vladimir Kara-Murza subsequently remarked that independent television’s handling of the Kursk ended the lull in the fight between Putin and the media barons: “Putin was annoyed when NTV journalists took such a lively interest in the Kursk tragedy. It showed him that the media would report what they wanted unless they were put under control. The episode left Putin nervous of the media.”72

  In a subsequent meeting with journalists, Putin admitted, “I probably should have returned to Moscow, but nothing would have changed. I had the same level of communication both in Sochi and in Moscow, but from a PR point of view I could have demonstrated some special eagerness to return.”73 But in the immediate aftermath of the disaster, he was much less self-reflective about his own actions and much more vicious in blaming the press and the oligarchs, especially ORT and Berezovskiy, for the crisis. He stated publicly, “The people on television, who for ten years were destroying the army and the navy, where people are now dying, are the first among the army’s defenders. . . . They want to influence the mass audience in order to show the military and political leadership that we need them, that we are on their hook and must fear and obey them, and let them further rob the country, the army and the navy.”74

  In his sworn written witness statement in the 2011–12 Berezovskiy v. Abramovich trial, Berezovskiy recounts a remarkable meeting with Putin at this time in which the oligarch defended ORT’s coverage of the disaster as “entirely proper and that the openness of the coverage actually helped him [Putin] because it demonstrated that he was not seeking to censor the media. President Putin listened to what I had to say. After I had finished, he produced a file. He then read from it. I do not recall his exact words, but the gist of what he said was that both ORT and I were corrupt. He also accused me of hiring prostitutes to pose as the widows and sisters of sailors killed aboard the Kursk to attack him verbally. These allegations were completely untrue and I told President Putin this.” Berezovskiy claimed that Putin told him point-blank to sell his shares or face imprisonment.75 Presidential Administration Chief of Staff Voloshin confirmed in his own witness statement at the trial that the meeting between Putin and Berezovskiy had taken place and had failed to achieve a break in the impasse.76 ORT’s coverage had shown women who were truly the agonized relatives of sailors lost in the frigid northern seas, although to be sure, it also brutally counterposed those pictures with shots of Putin relaxing on the water in the subtropical south.

  Against the backdrop of the intensely negative media coverage he received in August over his handling of the Kursk tragedy, Putin announced in September that in response to the “false information on the activities of the federal authorities,” he was putting in place an Information Security Doctrine that would increase state control over the media.77 “Information pollution” was undermining national security, and henceforth the state would have the right to limit the circulation not only of military and security data but also any political, economic, or environmental information deemed crucial to national security. It goes without saying that journalists circulating such information would be liable to espionage charges.

  Putin’s own role in the fight against the media was further indicated by the early involvement of Abramovich as his envoy, authorized to make Berezovskiy an offer he ultimately could not refuse. Initially Putin had been unable to wrest control of Berezovskiy’s ORT television network even after Berezovskiy left the country, and Putin had to take the fight abroad. In an interview with French journalists in October he took advantage of his first trip to France, where Berezovskiy was living in exile, to threaten that if the oligarchs didn’t give up their control of the mass media, the Russian state would swing a cudgel (palitsa) and “clinch the argument with one fell swoop. But we have not used it yet, we are simply holding it in our hands, and that has had some resonance already. But if we are provoked, we will have to use it.”78

  As 2000 drew to a close, Putin’s first order of business was to work with and through Abramovich to get Berezovskiy to divest his shares in ORT. Abramovich’s role was critical because Putin wanted to uphold the principle of private ownership in theory while ensuring that the next private owner would be wholly loyal to the Kremlin in practice. Thus Ab
ramovich got the green light from Putin and worked with Voloshin to pressure Berezovskiy to sell his shares in ORT.

  In the 2011 Berezovskiy v. Abramovich trial, the loyal Abramovich himself confirmed many details of Putin’s involvement: “If the President would say that it’s not recommended for me to buy the shares or if Mr. Voloshin would say that it’s not recommended to buy the shares, I would not buy them. It’s quite an explosive product, these ORT shares, I mean their impact, so that’s why I didn’t want to play any part in it at all. If I would have felt that someone is against it, I wouldn’t touch it with a bargepole.”79 A number of failed meetings were held in late autumn; then, on December 6, after Berezovskiy’s second-in-command in Russia, Nikolay Glushkov, was summoned to the Procurator General’s Office and faced arrest, Berezovskiy again agreed to meet. This meeting, between Berezovskiy, his partner Badri Patarkatsishvili, and Abramovich, took place in Paris and was secretly recorded by Patarkatsishvili.VII The transcript of the meeting was validated by both sides and entered into the record in the trial. In it, it is clear that Abramovich was Putin’s agent. At the trial Abramovich was asked about the transcript: “This is you telling Mr. Patarkatsishvili that he doesn’t have to be concerned about being arrested and you refer to a conversation you had with President Putin in which he said that Mr. Patarkatsishvili had nothing to fear and that he was free to visit Russia.” Abramovich answered, “Yes I can see that and remember it.”82 Abramovich agreed that he “had spoken to President Putin and he has said that if the sale of ORT could be achieved quietly and he was kept out of it, then he would not stand in the way of money being paid to Mr. Berezovskiy.” For Putin the issue was not money, but media control. As he told Abramovich, the financial arrangements were “nothing to do with me. Do it between yourselves. This is your private business.” Taking his cue, Abramovich tried to get Berezovskiy to sign the agreement of divestiture promptly: “Should we sign then so that I could take it to Vladimir Vladimirovich [Putin], show it to him and say: here you are, the deal is done . . . ?”83

  Despite this pressure, no written agreement was signed, and indeed the next day, December 7, Glushkov was arrested in Moscow. In response, a furious Berezovskiy spoke live to a Moscow radio station: “This is pure blackmail. Blackmail against me. And it is blackmail in the best KGB tradition, so to speak. In other words, the president said that he would bash my head with a cudgel. The cudgel turned out to be too short; he cannot reach me here. So he started hitting people close to me. In other words, it is in the very worst tradition: blackmailing someone by putting pressure on their relatives, their associates, their friends. . . . I believe it makes absolutely no sense to struggle on against such risks—not risks to me personally, but to my friends and family. Therefore I will decide within the next two . . . days.”84 Berezovskiy, Patarkatsishvili, and Abramovich met again, and this time they agreed on a deal that would transfer ownership to Abramovich. At the trial Abramovich made it very clear that Putin had no financial interest in the deal but only sought to get rid of Berezovskiy’s influence over the media:

  Q[uestion]: The reason you were acquiring ORT was because President Putin wanted Mr. Berezovskiy to give up the shares in ORT and you were assisting President Putin in achieving that end?

  A[bramovich]: President Putin didn’t want the shares. It was not the shares that he wanted. He wanted Mr. Berezovskiy and Mr. Patarkatsishvili to leave management of the company and relinquish control, stop influencing the content of the programmes. The papers [referring to the fact that Putin was willing to allow the newspapers owned by Berezovskiy to continue expressing an independent point of view] in themselves weren’t that necessary.85

  Later, on the same day, Abramovich clarified his role as an instrument of Putin’s struggle against Berezovskiy:

  Q: You had promised President Putin to get the deal done by the end of the year; that’s right, isn’t it?

  A: . . . I promised that once the deal is closed, I would inform him. I don’t remember if I told him that directly or via Mr. Voloshin. But I did say: when I finish the deal, I will inform.86

  After Berezovskiy signed over his shares in ORT, Abramovich immediately transferred control to state-appointed executives. This campaign against NTV and ORT had started within forty-eight hours of Putin’s inauguration; everything forecast in the secret document on the reform of the Presidential Administration had come to pass.

  The Final Agenda Item: Putin’s Escape from Prosecution

  Putin’s Kremlin in 2000 was involved in implementing plans to institute a “vertical of power” that would suppress opposition, control the mass media, diminish federalism, and remove the legislature as a source of independent activity. In addition 2000 was an extremely important year for Putin in suppressing prosecutions against him that still loomed. These have been dealt with extensively in a previous chapter, but it is worth revisiting what happened with these cases as Putin took over the presidency. Putin’s emergence as acting president was like a call to arms for those democrats, procurators, and opposition politicians who knew him from his St. Petersburg days and sought to make last-ditch efforts to stymie his rise—all for naught.

  Marina Sal’ye joined opposition forces in 2000 to call attention to Putin’s behavior in the food scandal but was driven into hiding, where she remained for twelve years. Only after her death in 2012 were the documents about the scandal released, but by then Putin had begun a third, now six-year term. U.S. officials put Russia on an international money-laundering blacklist in 2000 allegedly as a result of Putin’s links to SPAG. But he resigned from the board, and when in 2003 the case finally went to court in Germany, his name was quietly forgotten.

  The criminal investigation of Putin’s involvement in Twentieth Trust (No. 144128), which allegedly used St. Petersburg city funds to build private residences in Spain, and Putin’s personal involvement in supervising these constructions, exploded on to the Spanish, and then Russian media, during Putin’s first trip there in 2000. By then, Novaya gazeta bemoaned, the Ministry of Finance documents verifying the activities of Twentieth Trust had been scooped up by “intelligence agencies who have tried to hide them from prying eyes,” although the newspaper claimed it had “the most comprehensive” version available publicly (the paper has a reputation for extensive files it has threatened to publish if Kremlin pressure is used).87 But the investigative team was broken up in Russia, and when the Spanish authorities declined to pursue the case, it fizzled, at least until one of the investigators involved, Andrey Zykov, resurfaced in 2012.

  The investigation of bribe-taking by the top leadership of the St. Petersburg city government, including Putin (Case No. 18/238278–95) was ended by order of the procurator general on August 30, 2000. Investigator Zykov’s subsequent civil suit against Putin was rejected by the Kremlin, which asserted that a sitting president could not be party to a trial.

  In the case of Mabetex, Putin had granted Yel’tsin and his family members immunity as his first presidential decree, but the role of others was still subject to legal scrutiny. The procurator general’s case was very quietly dropped on December 13, 2000, “for lack of evidence” despite the nineteen thousand pages of documentation, including thousands of pages submitted by the Swiss.88 Although the Swiss pursued the case and ultimately fined Borodin $177,000 for money laundering, he was allowed to return to Russia, where his lawyers announced he would not appeal his conviction since he did not “recognize the court’s jurisdiction” anyway.89 In 2000, Putin named him as the State Secretary of the Russian-Belarusian Union, giving him diplomatic immunity. The threats by Felipe Turover, the whistleblower in Switzerland who had started the whole Mabetex affair, to “turn the Yel’tsin-gate into Putin-gate”90 did not materialize when the Russians issued an international arrest warrant for Turover for various petty crimes, including failure to pay his rent in Moscow.91 Kremlin threats of an “asymmetrical response” to any attacks on the president were certainly fulfilled in these cases.

  Kremlin, In
c. and the “Never-Ending Presidency”

  After Putin’s July 2000 meeting with the assembled oligarchs, Boris Nemtsov declared, “The era of the oligarchs is over.”92 In the period after this, the oligarchs did not know how to behave. They knew there were new rules, and they knew that Putin was establishing his power and authority over them, both by destroying Gusinskiy and then Berezovskiy as demonstration effects and by expecting them to pay tribute. Åslund writes, “Two oligarchs told me that when an oligarch was called to see one of the top figures in the Kremlin, he was asked to put up $10 million or $20 million in ‘donations,’ either for Putin’s reelection campaign or for some charitable purpose. In the Yel’tsin period, Mayor Luzhkov had persuaded the Moscow oligarchs to ‘donate’ $500 million to the reconstruction of the Christ the Savior Cathedral. Now, Putin attracted $300 million in ‘donations’ for the reconstruction of the Konstantinov Palace in St. Petersburg. . . . The Kremlin treated the oligarchs as its self-service boutiques. A few major businessmen were rumored to make large-scale payments of hundreds of millions of dollars to the corporations belonging to Putin’s circle in St. Petersburg.”93 As a consequence many of the oligarchs began to spend more and more time abroad, according to Åslund, so as not to be called back to the Kremlin.