Putin's Kleptocracy_Who Owns Russia?

by Karen Dawisha

  An example of the information the United States had about Putin’s inner circle came from Sergey Tretyakov, who was the Russian foreign intelligence (SVR) station chief, or rezident, in New York City in 1995–2000 and who defected in late 2000. At the end of his first hundred days, Putin was looking forward to his first trip as president to the United Nations, and after the Kursk disaster he certainly did not want or need negative publicity. In August, in preparation for his UN speech, his security team flew to New York City. Yevgeniy Murov (director of the Federal Protection Service, Russia’s Secret Service), Murov’s deputy Aleksandr Lunkin, and Viktor Zolotov (head of Putin’s presidential guard) personally went to approve the plans. There they met with Tretyakov, who was in charge of all SVR operations at the UN and in New York City. According to Tretyakov, Lunkin warned him to be wary of Murov and Zolotov: “They are common thugs.” To illustrate, quoting from Tretyakov’s account as told to the security affairs writer Pete Earley: “Lunkin said that he had been with both men in Moscow when Aleksandr Voloshin’s name had been mentioned. Lunkin claimed that Murov and Zolotov had talked openly about Putin’s feelings of jealousy toward Voloshin and the political power he wielded. Putin wanted to fire the ‘Gray Cardinal,’ but for political reasons couldn’t. Lunkin told Sergey [Tretyakov] that Murov and Zolotov had suddenly begun discussing ways to murder Voloshin. One idea was to kill him and blame Chechen terrorists. Another was to make his execution appear to be a ‘hit’ by the Russian Mafia, the result of some sordid business deal gone bad. ‘They were quite serious,’ Lunkin assured Sergey. [But ultimately] they agreed that killing Voloshin would not end Putin’s political problems. . . . Murov and Zolotov decided to make a list of politicians and other influential Muscovites whom they would need to assassinate to give Putin unchecked power. After the two men finished their list, Zolotov announced, ‘There are too many. It’s too many to kill—even for us.’ ”133

  Brighton Beach dinner, 2000. From the left, Viktor Zolotov, Yevgeniy Murov, Aleksandr Lunkin, Sergey Tretyakov. Earley, Pete. Comrade J: The Untold Secrets of Russia’s Master Spy in America After the End of the Cold War. New York: G. P. Putnam’s Sons, 2007, p. 299.

  On the same trip, during a visit to a restaurant in Brighton Beach, Tretyakov claimed that Zolotov had boasted of the armaments and skills that the presidential guard possessed. Everyone was trained in advanced firearms and martial arts: “Without any warning, Zolotov suddenly swung his hand in the air and struck Sergey in his temple. The blow knocked him off his chair and unconscious on the café floor. Moments later, Sergey awoke with Murov and Zolotov standing over him. Murov was furious. ‘You could have killed him!’ he yelled. Zolotov began apologizing as he helped Sergey into a chair. ‘Lunkin was correct,’ Sergey said later after meeting Murov and Zolotov. ‘They were dangerous. [At first] I didn’t see a difference between Yel’tsin’s people and these unsophisticates who were the president’s closest friends.’ ”134 Through Tretyakov, U.S. intelligence certainly had an early warning about the true nature of some of those surrounding Putin.

  Zolotov’s role would only increase under Putin. Anyone who watched the inauguration of Putin in 2012, when the Moscow streets were completely emptied of people and Zolotov’s arrow-shaped phalanx, or strelka, of black armored cars carried the president through the eerily quiet city, understands the power that Zolotov possessed, the extent of the president’s probably increased nervousness about his security after the 2011–12 demonstrations, and the obvious message from Putin to the residents of Moscow who had not voted for him as president: “This is my country and my city, and I can rule without you.”135 Zolotov was elevated to become the deputy minister of the interior in charge of the all internal troops and thus in a position to protect the regime. Tretyakov defected in October 2000, became a U.S. citizen, and died of a heart attack at the age of fifty-three at his home in Florida in 2010.136 An FBI autopsy did not uncover any mysterious circumstances in his death.137

  By the end of 2000 the major symbols of Russian statehood were in place. The tricolor had been adopted as the Russian flag, the tsarist double-headed eagle had been adopted as the state seal, and a slightly revised Soviet anthem had been approved as the new national hymn. But the fourth symbol had also been established: Putin himself. The Ministry of Defense ordered all military bases to display portraits of the president, a feature that had not been present under Yel’tsin.138 Putinomania was stoked throughout the country, as state-owned media pictured Putin daily, meeting national and regional leaders and making an unprecedented number of foreign trips. Russia was once again a player on the international stage, to be respected and taken into account. If Putin wished it, cooperation with the United States would proceed, as occurred when the SALT II weapons treaty was finally ratified by the Duma on his recommendation. But if America pursued policies hostile to Russia, the Russian people could be assured that their president was ever-vigilant and would not allow decisions to be made on the international stage that did not take Russia’s interests into account. In his speeches on foreign policy, Putin emphasized the trend toward competition with Western countries and with Western oil and gas companies in countries of the so-called near abroad, making it clear that Russia’s influence would be exercised not only by the state but also by Russian oil and gas companies and marking the beginning of a major feature of Russian foreign policy in the Putin era.139

  Putin also emerged as the hero and defender of Russia more broadly and of the security services in particular. He increased salaries of military and security service employees by 20 percent toward the end of the year. He gave medals to the pilots who buzzed the American aircraft carrier Kitty Hawk in October 2000, in the first such incident in what some called a new Cold War.140 Counterintelligence services increased their surveillance and introduced the harassment of Americans inside Russia, resulting in the arrests in 2000 of Edmund PopeXIX on espionage charges and a Fulbright exchange student for marijuana possession. All of these activities were trumpeted in the Russian media and became part of Putin’s allure, distracting attention from his slow implementation of economic measures and the continuing struggle in Chechnya. Poll figures showed that 48 percent of the population believed he had had an unsuccessful year generally, but this figure rose to 65 percent in the economic sphere. Yet he behaved as the undisputed Leader of the People. When a major national debate broke out in December 2000 over the choice of the new Russian anthem, Putin favored using the old Soviet version, with slightly updated words. Boris Yel’tsin came out of retirement to declare, “I am categorically against reinstating the USSR anthem as the state one.”142, XX Putin was having none of it, justifying his preference by pointing to polls in which a majority of Russians supported the hymn. “Let’s not forget that in this case we are talking about the majority of the people,” he said, but slyly admitted, “I do allow that the people and I could be mistaken.”145 The Duma passed the package of symbols overwhelmingly.

  Robust Kremlin measures against the media and opposition figures helped make Putin much more popular than any other contender—a strategy that has been used successfully since the beginning of his presidency. As the year ended, the new Russian Establishment, headed by Putin, had succeeded in promoting the key members of Putin’s FSB and Petersburg circles to key positions to such an extent that astute observers were already calling it a “militocracy.” The Russian sociologist Ol’ga Kryshtanovskaya estimated that over 58.3 percent of the Security Council and 32.8 percent of the government came from the siloviki, about 25 percent higher than the proportion of military and security elites in Yel’tsin’s cohort in 1993.146 In the meantime Putin had succeeded in chasing the powerful oligarchs Gusinskiy and Berezovskiy out of the country and erasing the investigations into his activities in the Russian courts. It had been a difficult but good year.

  Putin’s first year clearly demonstrated that the Kremlin, and the Kremlin alone, would be calling the shots. His close circle dominated all decision making, using whatever mean
s necessary to constrain the oligarchs, stripping them of their assets and even imprisoning them if needed. Television was also firmly moving under Kremlin control. The regions had to submit to the seven presidential plenipotentiaries. Once these agenda items were achieved, the rest was relatively easy. And given that all of it was signaled and much of it accomplished in Putin’s first hundred days, it should be registered as a singular achievement in the annals of authoritarian rule.

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  I. For more on this idea of the “society of the spectacle” in which authentic relationships are replaced by representation, as it applies to Putin, see Goscilo (2012).

  II. The Russian Justice Ministry had estimated that in 1997, of “44,000 regional legal acts, including laws, gubernatorial orders and similar documents, nearly half did not conform with the constitution or federal legislation.”7 This continued into the period when Putin came to power, when it was also calculated that only one republic (Udmurtia) had a constitution that was in accord with federal legislation.8 Emblematic of this problem was the Far East’s Primorskiy Krai, where the governor, Yevgeniy Nazdratenko, had so misruled affairs that the region had been thrown into darkness amid widespread power and heating outages in areas where average winter temperatures plummeted to below –30 Celsius. Local hospitals had been flooded with frostbite victims, some of whom needed amputations that had to be done without anaesthetic, which itself was in short supply.9 Demonstrations broke out in Vladivostok in February against the government, and in response Putin sacked his own energy minister and sent an envoy who demanded that the governor and all deputy governors and heads of department submit their resignations. But Nazdratenko himself resigned only after being offered a federal position as head of the State Fisheries Committee. On the day Nazdratenko accepted the position, Putin signed an ukaz banning regional governors who had resigned from participating in future gubernatorial elections. Elsewhere the problems were much the same. Journalists reported that the governor of Mariy-El, Vyacheslav Kislitsyn, not having mines or energy wealth to exploit for his own personal use, started negotiations with Middle East governments behind the backs of the Ministry of Defense to sell them S-300 missile defense systems at a reduced rate for his personal profit.10 It was clear from Putin’s evaluation of the sorry state of these affairs that once he became president there would be a big shift in power away from the regions.

  III. An analysis of word clouds in Putin’s subsequent speeches, and those of Medvedev in 2008–12, shows that Putin continued to emphasize the state’s needs, rights, and roles, while Medvedev’s speeches deemphasized the state in preference for discussion of development, the people, and the country. Word clouds were generated by inserting the annual speeches into www.tocloud.com using a 20 percent tag, display frequencies, and linear interpolation.

  IV. Gusinskiy subsequently won a case against the Russian government in the European Court for Human Rights, which agreed that his criminal prosecution and imprisonment was an abuse of state power under Article 5 of the European Convention for Human Rights, to which Russia is a signatory.28 The Parliamentary Assembly of the Council of Europe pronounced on this and similar cases in Russia, “Such predatory practices amount to an organized system of . . . takeovers . . . acting on behalf of private interests protected by the government, with the connivance or even on the instructions of the government . . . none of which would be possible without the cooperation of highly placed individuals.”29

  V. Like many Soviet-era state corporations that dealt in foreign trade, Sovcomflot was characterized by some Russian analysts as a vehicle for KGB penetration abroad. Aleksandr Volskiy of the Higher School of Economics estimated that its staff was 85 percent KGB and 15 percent professionals.42 As in other foreign trade enterprises, the professional staff was in charge of actually running the company, while the KGB watched the professional staff, used the company as a front for intelligence activities, and laundered massive amounts of KGB money abroad.

  VI. Detailed examination of the circumstances surrounding the Kursk disaster can be found in Truscott (2002) and Moore (2002). An examination of the controversy surrounding whether the Kursk could have been sunk by an accidental ramming from an American submarine shadowing the exercises is provided in the documentary Kursk: A Submarine in Troubled Water (2004).66

  VII. Arkadiy “Badri” Patarkatsishvili was involved in Georgian and Russian politics and both licit and illicit business in his own right. He took credit for arranging for Putin to be hired by Pavel Borodin in 1996. He said that in 1996 Putin had called him twice a day to beg him to help get him a job in Moscow after Sobchak’s defeat, and that he had gone to Borodin, asking for “this intelligent guy to be transferred to the financial-control administration.” This conversation was recorded at the end of December 2007 between Patarkatsishvili and the Georgian interior minister and was part of a larger scandal that rocked Georgian politics in early 2008.80 Patarkatsishvili remained on good terms with Putin until 2001, when he was accused of trying to organize the escape of Nikolay Glushkov from prison. Patarkatsishvili fled Russia at this time for Georgia, where he tried to enter politics, putting up a poor showing against Mikheil Saakashvili—not least because he campaigned entirely from abroad— in the January 2008 elections. He died of a heart attack at the age of fifty-two near London on February 12, 2008.81

  VIII. Pictures originally appeared on the Russian Wikileaks site, RuLeaks.net,95 but this site came under a denial-of-service attack. However, by that time, the pictures had spread throughout the Internet, and those presented here were posted on many sites on Google and Wikicommons.

  IX. I am in possession of the documents provided by Kolesnikov that were posted on his site Corruptionfreerussia.com before it was taken down and they can be viewed at www.miamioh.edu/havighurstcenter/putins-russia.

  X. Kolesnikov claims that within this tight circle, they all called each other by nicknames: Yuri Koval’chuk was known as Kosoy or “Cross-eyed”; Timchenko as Gangren or “Gangrene”; Miller as Soldat or “Soldier”; Kozhin as Tuzhurka or “Double-breasted Jacket”; Zolotov as Generalissimo; and Shamalov as Professor Preobrazhenskiy or “Professor of the Transfiguration,” presumably after the central character in Bulgakov’s Heart of a Dog who transforms a stray dog into a human. Of Putin’s closest circle only Gorelov did not have a nickname.99 As to the lifestyle of those within this group, Kolesnikov said in his interview with Al’bats that it was exactly as it had been described by Nataliya Vetlitskaya, a popular singer, who wrote in her LiveJournal blog of her experience singing before “the czar.” In that account, which she calls a “fairytale,” top artists were invited to perform free of charge, singing in front of only a handful of formally dressed guests who were waited on by servants in Catherine the Great–style costumes. When the performance was over, they were told to stay because the dinner group might like to sing with the performers. They were then each awarded prizes; one was given a People’s Artist of Russia award, others were given a clock or jewelry. One was given an icon, and when the artist asked the tsar to sign it, he hesitated, thinking it might not be appropriate, but then decided that nothing could be more appropriate than the tsar signing an icon, and he signed. Vetlitskaya stated, “We ‘wept’ about what had just happened to put it mildly.”100 She didn’t identify “the czar” as Putin, but when the “fairytale” exploded on the Internet, other commentators certainly did.101 There was a similar account of a private 2009 concert given by a British ABBA cover band in an official compound in Valdai. The invitation referred to the host as “the #2 person in Russia,” and the accompanying photograph showed a person who looked like Putin. With him were a “Miss X” in a long cream dress and only six other guests. While the band was obliged to perform behind a bizarre gauze curtain and were forbidden to have any conversation with the audience, they claimed that the eight exuberantly danced along with the songs. Their account was provided to the Guardian but was denied by the Kremlin.102

  XI. Shamalov w
as no longer retained by Siemens after the Siemens settlement under the U.S. Foreign Corrupt Practices Act.105

  XII. A bearer share is an equity security wholly owned by whoever holds the physical stock certificate. The issuing firm neither registers the owner of the stock, nor does it track transfers of ownership. The company disburses dividends to bearer shares when a physical coupon is presented to the firm. Bearer shares allow the greatest anonymity of ownership except for cash. Ownership can be transferred by simply handing the bearer shares to another party. In theory ownership of bearer shares is not subject to legal registration. However, OECD pressures have over time limited the free and anonymous transfer of bearer shares, so that by 2013 only Panama, Seychelles, Marshall Islands, and Antigua still offered true bearer shares. Thus, as one website specializing in tax havens suggested, “it is enough to incorporate an offshore corporation in a traditional tax haven and to register the yacht, the property, etc. in its name. If you want to sell it again, the buyer is just given the bearer shares, thereby changing the company’s ownership and with it the asset in its name. It is an immediate transfer, and best of all, there are no records, notaries nor taxes to pay.”109