The Putin Mystique: Inside Russia’s Power Cult (15 page)

But the now notorious “snowball effect” of
siloviki
rising to the top echelons of government – with Putin inviting former KGB friends into the Kremlin, and each bringing his own clique of St. Petersburg associates
⁷⁵
- hardly countered the rampant corruption left over from the Yeltsin era that Putin purportedly sought to quell. Instead it entrenched it, with the
siloviki
themselves becoming that corrupt bureaucracy.

A better illustration of this point is the remarkable transformation of legislation pertaining to private property during Perestroika. If business and speculation was a crime sometimes punishable by death in the Soviet Union, then it would have been naïve to expect that the criminal code and the legislation regulating business and trade would be miraculously reformed overnight. Instead, reforms often appeared to be layered onto existing laws. The resulting muddled legislation regulating this sphere turned into a powerful weapon of both the
siloviki
, pursuing their own commercial ends, and Putin’s administration as a whole. What Putin was referring to when he spoke of “law” was so incomprehensible that the implementation of that “law” was theoretically enough for him to imprison every individual in the country.

It was this weapon, after all, that was used to imprison Yukos founder Mikhail Khodorkovsky when he began posing a political threat, and to confiscate his oil empire, and to convict opposition activist Alexei Navalny of embezzlement in 2013.

The very idea of government, the sought-after ideology, the “idea of Russia,” should have been a set of coherent, viable laws that could serve as an objective for these men – a group of values that they could share with their leader.

But those values did not exist.

Instead, the loyalty of many of the security officers to Putin was cemented by economics – a set of values that was, in many respects, feudal.

“These were people who’d already been disillusioned and betrayed once,” Kirill Kabanov spoke of his colleagues. “And they formed something of an ideology – one that was understood by the people. And that ideology was – if you control the chief economic assets, then you are essentially holding everyone by the balls. You have unlimited power. Was it the initiative of Vladimir Vladimirovich? Not exactly. It was their initiative. They came to him and said, ‘you’re our boss’.”

The balance was such that those who were inside the system benefitted and had little incentive to criticize – while those on the outside were vulnerable to the chaos of “the law,” applied by many officers eager to take advantage of this system to their own enrichment.

But precisely because it was a system that pre-dated Putin – a system of organizing relations that officers had to “remember” from the past – it came with its own set of limitations and regulations. Once those unspoken regulations, remembered from centuries past, were internalized, the result was a system that benefitted far too many people – both the rulers and the ruled – to be easily discarded.

Mark Galeotti, a British scholar who has extensively studied Russia’s security and organized crime groups, is one of the few who has identified the positive factors of corruption which explain its resilience. This may be explained by comparing it to the ancient feudal practice of
kormleniye
, or tax farming.

Literally, “feeding,”
kormleniye
was a system of supporting a prince’s administration at the expense of the local population. A cheaper form of administration, it allowed the prince to dispatch a viceregent to a remote area, where he would be “fed” exclusively by the locals. Widely used in the 14th and 15th centuries, it was believed to be formally abolished under reforms of Tsar Ivan the Terrible in favour of direct taxes to the treasury.
⁷⁶
But despite its formal abolition, the term has frequently appeared to describe various forms of corruption in Russia and across the Soviet Union that continue to this day. British anthropologists Caroline Humphrey
and David Sneath noted that many of their respondents in former Soviet republics and Russia would equate various forms of bribery “not with ‘market relations’ but with the very different patrimonial institutions of earlier times, such as ‘feeding’ (
kormleniye
), ‘feudalism’ and ‘serfdom’.”
⁷⁷

Despite its moral shortcomings, tax farming was efficient enough for Russia’s emperors to keep coming back to it again and again simply because it worked to ensure management and the loyalty of state officials operating from remote places.

“Corruption was a useful tool in that you didn’t have to pay everyone a high salary.
Kormleniye
is absolutely nothing new. In the 19th century, a small bribe to an official wasn’t even considered a bribe,” Galeotti explained. “Putin is certainly heir to that tradition. But he’s interested in effectiveness as well as control.”

The practice whereby officers shaved money off enterprises and ran their own businesses, whether in benign or not so benign protection rackets, or
kryshas
, came with a catch.

“As long as you do your job, as long as you’re loyal, whatever else you happen to do, up to a certain level, is permissible. Individuals are going to get sacked, get demoted. But for that to happen, you have to screw up. You have to take a bribe higher than the accepted level. Or you have to pick a turf war at the wrong time with the wrong person. Or you just have to be really bad at your job,” Galeotti said. “There is still a sense that you have to be doing your core job, and you have to be good at it, or at least at a certain level. You can’t just not bother turning up to work. You still have to earn that freedom of entrepreneurialism.”

The spate of high-profile sackings in 2006 – when Putin fired a handful of FSB generals and replaced Prosecutor General Vladimir Ustinov over alleged links to what, for all purposes, was a protection racket – signalled that there were limits to how officers could use their jobs for self-enrichment.

Still, within the haphazard system of feudal bonds that tied Putin to his security apparatus and his bureaucracy, his power was deeply limited. He could sack officers who abused their
kormleniye
privileges by taking more than their rank allowed. But by having promoted these officers to the highest echelons of power in the first place, by allowing them to make money, he tied himself down and
curtailed his own manoeuvring space in the economic reforms that he clearly sought to pursue.

These extra-legal forms of management entangled a critical mass of people to the point that made fighting corruption from the top nearly impossible.

As Kirill Kabanov struggled to expose and punish graft case by case, he began to realize that Putin was just as dependent on his officers and the bureaucracy he had recreated as they were on him.

“Because so many things are done outside the law, you broke the law, they broke the law. Your reputation becomes dependent on them,” Kabanov explained.

These bonds are reflected in Putin’s personnel policy both as president and as prime minister, where he is wont to avoid high-profile sackings. When officials are rotated, they are often given lower-profile posts with a high potential for rent-seeking activity, to keep them quiet and loyal – a practice that has been compared to traditions of the Soviet nomenclature, “in which elites were circulated within, but rarely expelled from, the ruling class.”
⁷⁸

In September 2006, for instance, Putin fired nineteen senior law enforcement officials suspected of corruption. In fact, it later emerged that they were still coming to work months later. “What does this tell you?” Kabanov said.

“That they went to him and said, ‘Vladimir Vladimirovich, what is this? We did all this for you! We’re your flesh and blood!’”

By allowing them to extract rent from the fiefdoms he had given them as part of their government posts – for that, in the absence of ideology or law, was the only bond strong enough to tie them to him and ensure his power – he severely limited his own leverage over these people; now they answered only to him, and not to the law.

Putin’s return to a third term as president in 2012 certainly heartened a large part of the higher-tier corps within the FSB. Although he had never truly left and ran the country from his post as prime minister between 2008 and 2012, the FSB still nominally answered to the president even if
de facto
they took their orders from Putin.

“As long as Putin is there, we have our
krysha
(protection racket),” Galeotti said, explaining why many officers were relieved
to hear that Putin would replace Dmitry Medvedev as president in 2012. “The basic element is that Putin espouses the beliefs that they all share, gut-level nationalism, that sense of technocratic order of society, that sense that the masses just ought to let the elites run the country. He speaks their language in a way that Medvedev never did.”

But the FSB, like any structure, is not uniformly content – just as not all of its members practice tax farming. There is evidence that the factors that helped enrichment spread and cemented the FSB’s loyalty to Putin are the same ones undermining the very stability of his control. Andrei Soldatov, the Moscow-based security expert, noted growing unhappiness due to funding disparities within the FSB.
⁷⁹
And the disparity of “extracurricular” enrichment opportunities between lower-ranking officials and senior officers is a dangerous imbalance rife with conflict. Loyalty, in other words, is directly proportional to financial well-being – and for those many officers who struggle to do their job without engaging in extracurricular enrichment schemes, seeing their bosses brag about expensive watches only aggravates their discontent.

“They do not harbour a sense of reverence [for Putin],” Yuri Gervis told me of the attitudes of his former colleagues in the FSB, in an obvious understatement.

It was a vicious circle: many officers contented themselves with the
status quo
, provided that it allowed for enrichment, as they hung on every word of the sovereign. But those who believed in the law and lived on their salaries alone were powerless to change the behaviour of their colleagues and bosses. And they too looked to the top, blaming Putin.

Kirill Kabanov insisted that corruption could be fought only when a critical mass of officers internalized norms of behaviour that had no room for tax farming. But in frustration, he once told a small group of journalists: “Everyone in this room knows the name of the person from whom this corruption is coming.”
⁸⁰

“In Russia only he is great whom I am talking to – and only while I am talking to him.”

-
Emperor Paul I

COLONEL PAVEL ZAITSEV of the Investigative Committee, Russia’s equivalent of the FBI, had many contraband cases under his belt – one nearly got him sent to jail. But none stupefied him more than a mysterious shipment of Chinese goods he discovered during a routine check of a Chinese vendor in Moscow in spring 2005.

It wasn’t that someone was importing cheap, Chinese-manufactured shoes and underwear without paying customs duties – the out-of-control consumer market that hit Russia in the 1990s meant that tons of the stuff was unloaded at outdoor venues without the police so much as batting an eyelid as long as protection was paid. But this particular shipment indicated a magnitude and regularity that Zaitsev had not encountered before.

“It was as though someone had lifted the border like a curtain and let a hundred train wagons pass, and then let it down again,” Zaitsev told me years later, when, like many whistleblowers, he had left the Investigative Committee to become a lawyer.

At first, according to the documents he obtained from the Chinese vendor, it seemed that the importer was using as cover a
military unit designated with the number 6302. But his colleagues in the Defence Ministry weren’t able to locate a military unit with that number anywhere in Moscow.

And as he investigated further, the facts continued to defy logic. He learned that each year, 5,000 train wagons of cheap Chinese goods were delivered to the same recipient, evading customs. Each wagon, according to various estimates, including Zaitsev’s, contained goods with a retail value between £200,000 and £350,000.

“I go back to my office, trying to wrap my brain around it. Five thousand wagons a year. That’s ten to twenty wagons a day. It took them two weeks to get to Moscow. And while I was sitting there, more were on their way.”

Each day, at least a dozen train wagons carrying goods that had not passed customs were travelling across Russia from the Far Eastern port town of Nakhodka. And each day for the last year they had travelled thousands of kilometres without anyone detecting them.

He dug further in search of the mysterious military unit while his team gathered more documents about the shipment. And soon the answer hit him, obvious as daylight: there was no importer trying to hide behind a non-existent military unit. Instead, the military unit in question turned out to be none other than the central headquarters of the Federal Security Service (FSB) on Lubyanka Square, right in the heart of Moscow. It was the FSB that was importing thousands of tons of cheap Chinese shoes and underwear – and facilitating an off-the-books retail turnover that exceeded $1 billion a year.

“Just like that!” Zaitsev added for emphasis, grinning mischievously. Invoices gathered in the investigation suggested the FSB wasn’t even hiding the fact: each shipment was paid through FSB accounts, and the identification number of the FSB officer receiving the shipment was indicated in every invoice. It was the same person each time.

Indeed, having the FSB mentioned in the accompanying documents was the whole point: no one at customs would dare question a shipment of goods being imported by the FSB – with that kind of authority, the shipment didn’t even need to pass customs. Any law enforcement officer who dared to stop the trainload over its two-week course through the Siberian steppes would cease asking questions as soon as he saw those three ominous letters.