A further aspect of this episode is revealing in retrospect: several of the people in the St Petersburg city administration who rallied to Putin’s defence in 1992 went on to play key roles in his regime after 2000. They included future president and prime minister Dmitri Medvedev; Pyotr Aven, who would become a prominent banker; the future justice and interior minister Sergei Stepashin; and the future head of the Russian Security Service (FSB) Nikolai Patrushev. Other figures with whom Putin forged important ties in the early 1990s include Igor Sechin, his aide in the city administration and later head of the state oil company, Rosneft; Matthias Warnig, a former Stasi officer who ran Dresdner Bank’s new St Petersburg branch – the first foreign bank to operate in the city; and the businessmen Yuri Kovalchuk, Gennady Timchenko and Vladimir Yakunin, who all signed lucrative contracts with the city on Putin’s watch.{8}
Personal connections like these are crucial to understanding how Russia works.{9} In the Soviet period, informal influence, or blat – translated as ‘pull’ – often dictated access to scarce goods, housing or coveted jobs. Its use was widespread because it was so essential to getting by. What was distinctive about the way blat came to function in the 1990s, however, was that personal connections were increasingly used as a means of making money. Previously a way for ordinary people to get around the inadequacies of the planned economy, they now served the powerful, blurring the lines between state office and private enrichment, and entangling the formal rules of government in a web of informal connections. In Russia, in any contest between legality and personal loyalties, the latter have generally won out. As we will see, Putin’s entire career, from the 1992 food scandal to the present, is in some ways an illustration of this basic rule of post-Soviet politics.
In the summer of 1996, Putin briefly found himself at a loose end after Sobchak failed in his mayoral re-election bid. But Aleksei Kudrin, a former St Petersburg colleague working in Moscow – he would go on to be Putin’s finance minister from 2000 to 2011 – soon recommended him for a post in Yeltsin’s presidential administration, as deputy head of the Presidential Property Management Department. This was a highly sensitive role, placing him not only in charge of a sizeable portfolio of assets but also in the midst of a knot of crooked dealings. For example, one scandal over contracts with the Swiss construction firm Mabetex ultimately led to the arrest of his direct superior, Pavel Borodin, for money laundering in New York in 2001.
A virtual unknown in Moscow before his arrival, Putin proved adept at navigating the byzantine paths of Kremlin politics and, perhaps more important, showed a marked personal loyalty to his bosses and patrons. This quality no doubt smoothed his progress through the ranks of the Yeltsin administration, earning him promotion by March 1997 to head of the presidency’s Main Control Directorate (GKU), which monitored the implementation of executive decisions. In May 1998, he was given another sensitive job in the presidential administration, in charge of the Kremlin’s relations with Russia’s regions. He had barely started when he was switched in July to a much more prominent role: director of the FSB, successor agency to the KGB.
What part had the KGB itself played in Putin’s phenomenal ascent? Putin himself has said that, though he left the agency in 1990 when he returned to Leningrad, he remained in its ‘active reserve’ until August 1991, when a group of hardliners led by the KGB’s chief made a coup attempt against Gorbachev. At this point, Putin claims, he formally resigned. This interval is, of course, when he began working for Sobchak. There is some debate about whether the job itself was arranged for him by the agency, as a kind of mission to supervise one of the country’s rising politicians. Sobchak supposedly knew of Putin’s KGB connections, but thought they might prove useful.
Does this mean that the agency’s shadowy hand was also behind the rest of his career? Putin himself has done little to discourage the idea: in December 1999, not long after he became prime minister, he made a tongue-in-cheek announcement at a dinner commemorating the founding of the Soviet secret police: ‘I would like to report that the group of FSB officers dispatched to work secretly in the federal government has been successful in the first set of assignments.’ Six years later, in December 2005, he told another audience of FSB officers that ‘there is no such thing as a former KGB man’.
Yet these statements are part of an image Putin has deliberately cultivated, and taking them at face value means buying into the mystique he was trying to create. He himself never went especially far within the KGB’s ranks, and was never given the kind of sensitive, high-risk assignments that he had aspired to as a boy; he remained something of an outsider in the Soviet spy world. The main achievement of his time as head of the FSB was a drastic downsizing that cut staff at the organization’s headquarters, the Lubyanka, by a third – scarcely the behaviour of a man bent on restoring the might of his alma mater.{10} Putin’s KGB training and years of work within the institution would undoubtedly have given him certain skills and encouraged particular habits of mind. But perhaps equally important, in the context of his political career, are the similarities between secret-police methods and the routine practices of post-Soviet business: the use of blackmail and compromising information – kompromat – to apply pressure; manipulation of the legal system; consistent use of threatened or actual violence. In short, many of the features of Putin’s Russia that have been traced to some shadowy KGB conspiracy were widespread under Yeltsin; indeed, they created the environment in which Putin came to power.
If Putin’s ascent up to mid-1998 was remarkably rapid, the elevation that followed was almost shocking in its suddenness. In August 1999, a man of whom few Russians had even heard was appointed prime minister. At the time, the Yeltsin government was lurching from one crisis to the next, and Putin was its fifth premier in the space of a year. The fallout from the rouble collapse of 1998, when financial contagion from the Asian Crisis spread to Russia and eventually prompted a panicked currency devaluation, was one cause of the continued political instability. But just as important was Yeltsin’s search for a reliable successor who would guarantee him immunity from prosecution after leaving office. It had become clear that Evgeny Primakov, who served as prime minister from September 1998 to May 1999, was not going to oblige. Worse still, Primakov showed signs of wanting to investigate irregularities in the privatization process Yeltsin had forced through a few years earlier. Primakov’s successor, Sergei Stepashin – one of Putin’s colleagues from St Petersburg – lasted barely three months before being discarded because he lacked the charisma to be a plausible presidential figure.
When Yeltsin designated the apparently quiet, colourless Putin, many Russians initially thought he, too, would be a mere placeholder. But behind closed Kremlin doors, the coterie around Yeltsin, known as The Family, had already decided Putin would play a much more significant role. Here Putin’s loyalty to his patrons was decisive: he could be relied upon to shield Yeltsin and his clique from prosecution. Sure enough, one of the first measures he took as acting president, in the first hours of the year 2000 after Yeltsin unexpectedly stepped down, was to sign a decree guaranteeing the ex-president immunity. The founding act of Putin’s presidency was an elite pact designed to shield his predecessor from prosecution.