On 17 August 1998 the Russian government, unable to repay or roll over its debt with a yield of 150 per cent, declared itself bankrupt. It simultaneously defaulted on its rouble-denominated debt and devalued its currency. Countries sometimes default on their local debts in order not to devalue the currency, and sometimes they devalue their currency in order to repay their debt. Russia did both. To protect the oligarchs, the government also declared an official moratorium on their payments to foreign investors, allowing Russian banks not to repay $16 billion worth of debt owned to foreigners.
Less than a week after the default, Kiriyenko and Nemtsov were gone. The day Yeltsin counter-signed their resignation, they walked out of the White House with a bottle of vodka and went over to the striking miners to drink it with them. Three months after the crisis, in November 1998, Gusinsky watched his American satellite blast off from Cape Canaveral. It was the first-ever American satellite ordered by a private Russian client. Gusinsky swelled with pride. There was one problem: his potential viewers – the nascent middle class – were no longer ready to subscribe to it. People cut back on anything that was not essential, including Gusinsky’s satellite channel. Television advertising plummeted.
Gusinsky’s plans to float the company on the New York Stock Exchange were scrapped. Foreign investors also had little appetite for Russian assets. Yet Gusinsky was still full of enthusiasm. He turned to his friend Rem Vyakhirev, the head of Gazprom, and they agreed on a loan of $260 million. A year later, Gusinsky took another loan of a similar size – also guaranteed by Gazprom. At the time Gusinsky could barely imagine that he was putting a noose around his neck. Whatever the events that were taking place in the country, he believed that his future was protected by his media machine.
The long-lasting impact of the crisis, however, went beyond economics. The economy – as it happened – started to grow only a year later, buoyed by the weak currency that made Russian exports more competitive, and the middle class got back on its feet. The main impact was political. It was not just the government of liberal reformers that was blown up by the crisis, but their entire model of turning Russia into a ‘normal’ country. Their hope that Russia’s transformation into a functioning market democracy could be achieved by monetarism and privatization turned out as ephemeral as the Perestroika generation’s idea that democracy and freedom of speech would automatically bring prosperity.
There was a bitter irony in this turn of fortunes. Seven years earlier, in 1991, the ideologues of the Russian liberal reforms, the generation of Kommersant and NTV, had declared their parents – those who had initiated Perestroika and believed in socialism with a human face – bankrupt both morally and financially. Now they were in the same position.
Having failed to build their own political foundation, the reformers and the oligarchs alike relied on Yeltsin for political cover. Now he was in a precarious position both physically and politically. Yeltsin never understood the workings of the market economy, but he had put his trust in the knowledge and ability of the Soviet-era meritocracy that controlled the economy and the media to deliver Russia into a better state. That trust was now gone. The question of succession and ‘continuity of power’, however, remained.
SIX
Lights, Camera, Putin
In Search of a Spy
In September 1998 NTV aired its first big project of the new television season. It was produced and presented by Leonid Parfenov and was dedicated to the twenty-fifth anniversary of the iconic Soviet television spy film – Semnadstat’ mgnovenii vesny (Seventeen Moments of Spring). The series’ main character is the Soviet spy Maxim Isaev who infiltrates the Nazi high command at the very end of the Second World War under the name of Max Otto von Stierlitz – a well-regarded SS Standartenführer. His task is to find out who in the German Reich is leading backdoor peace negotiations with America and to foil their attempt to undercut Stalin’s Soviet Union. Stierlitz learns about Himmler’s secret communications with Allen Dulles, the director of the CIA, and leaks the details to Hitler and reports it to Stalin, thus torpedoing America’s ‘treacherous’ plans.
The twelve-part television series was released in 1973 and became an instant hit gathering between 50 and 80 million viewers every night. No Russian film before or after has attracted such an audience. At 7.30 p.m. when the film was shown on Channel One, the streets of Soviet cities emptied out, the crime rate fell and electricity consumption surged. It was shown every year before and after the Soviet collapse.
Stierlitz was a cult figure who spawned an entire Soviet folklore – he was the subject of popular jokes and kids’ war games. Favourite lines from the film and its soulful theme tune were as popular as those from any James Bond film.
The Nazi officers were played by the most popular and best-loved Soviet actors. They were human and likeable and nobody more so than Stierlitz himself, who was played by the heart-throb Vyacheslav Tikhonov. Tall and handsome, with perfect cheekbones, a chiselled nose and piercing blue eyes, he was calm and unflappable. The sleek and shiny Nazi uniform, tailored in the Soviet defence ministry workshops, seemed to have been shaped on him. He was a perfect Russian ‘German’, more Aryan in his appearance and style than any of the ‘real’ Nazis in the film.[1]
The film was part of a propaganda campaign launched by Yuri Andropov, who became the head of the KGB in the late 1960s. Its aim was to improve the image of the KGB from a dark, secret police – a synonym of political repression – and to attract young, bright recruits into a ‘glamorous’ secret service. The novel by Yulian Semyonov, on which the film was based, was commissioned personally by Andropov to glorify Soviet secret agents serving abroad.
In his two-part stylized documentary about Seventeen Moments of Spring, Parfenov presented and partly enacted the story of the film’s creation. In a sober 1970s dark suit and tie, he walked into one of the KGB’s offices, ‘which was designed in such a way that it made a visitor look smaller and the owner of the office larger’, and sat behind the desk, with a portrait of Andropov on the wall and a row of telephones by his side. Parfenov picked up one phone which had a hammer and sickle in place of a dial, and ‘summoned’ Andropov’s deputy who handled the writer of the novel and consulted the makers of the film.
As TV critic Irina Petrovskaya wrote at the time:
Almost every line of the film corresponds to the contemporary Russian situation – especially the theme song about ‘moments which swish by like bullets’. All political actors, all experts on all television channels say that Russia is on the verge of an [economic] disaster and the time is counted in hours, minutes, moments. And those who sit on this side of the television screen are trying to catch a glimpse of light at the end of the tunnel. But there is no glimpse, just as there is no Stierlitz who can find a way out of the most difficult position.1
Less than two months before Parfenov’s documentary came out, a new chief of the FSB – the post-Soviet successor to the KGB – had taken over Andropov’s old office. His name was Vladimir Putin, a former colonel who had served in Dresden in Eastern Germany in the 1980s. Putin was one of the ‘young and educated’ recruits who had been targeted by Andropov’s propaganda campaign. He was twenty-one years old, a law student in Leningrad, when Seventeen Moments of Spring was first released. Two years later, in 1975, he joined the service.
1
One of the film’s unintended consequences was that it inspired Russian neo-Nazi youths, who even adopted the names of the film’s characters.