The Concealed Battle to Run Russia

The New York Review of Books
by Amy Knight

Despite their professed mutual respect, Russia’s president, Dmitry Medvedev, and his prime minister, Vladimir Putin, apparently cannot agree on one question—which of them will be running for the Russian presidency in March 2012. Over a year ago Putin told foreign journalists that he and Medvedev would at some point “sit down and come to an agreement” about who would be the presidential nominee of United Russia, the overwhelmingly pro-Kremlin party, in the next election. (He repeated the same promise in a recent interview with Larry King on CNN.) But that moment has yet to come, and in the meantime, both men are provoking speculation about their possible candidacies.

Putin’s publicity stunts last summer—including a 1,300-mile drive across Siberia in a Russian Lada (which reportedly broke down twice)—suggested that he was already campaigning. And at the Valdai group, an international forum, in September, he made a pointed remark about FDR’s four terms as US president having been legal under the American Constitution. For his part, Medvedev has said more than once that he did not rule out the possibility of a second term (which, beginning in 2012, will be six years instead of four). His press secretary, Natalya Timakova, was more emphatic, saying in September that Medvedev could not complete his program of “modernizing” Russia in just one term. In an October interview with the Russian newspaper Kommersant, Igor Yurgens, a top presidential adviser, went so far as to insist that Putin should take himself out of the running to make way for Medvedev to carry out his programs. Yurgens acknowledged that Putin deserved “honor and praise” for stabilizing the country when he served as president in 2000–2008, but went on to point out that “if stabilization goes on forever, it leads to stagnation.” Medvedev himself warned in a video blog on November 24 that Russia was showing signs of “deadly” political stagnation because of the overwhelming dominance of one party.

As it has in earlier contests over leadership, the country’s all-powerful Federal Security Service (FSB) is bound to have a crucial part in deciding who will be the next president. (This agency made the original arrests in the Khodorkovsky case, discussed below, which has great significance for the presidential succession.) This is why The New Nobility, which explains how the FSB has evolved over the past decade into an organization with enormous political and economic influence, is such an important and timely book. The authors, Andrei Soldatov and Irina Borogan, who wrote the book in English, are a husband-and-wife team in their mid-thirties, with a well-established reputation as Russian investigative journalists, specializing in security and intelligence, a dangerous subject in Russia. (They told me when I met them in Moscow in 2008 that they had been summoned to the FSB on more than one occasion and threatened with reprisals because of their reporting.) They also have a website, www.agentura.ru, which they founded in 2000, to report on and analyze these issues on a regular basis. Using anonymous sources from within the security services and the Kremlin, along with on-the-spot reporting, Soldatov and Borogan have uncovered new and significant information on the FSB and its relations with the Russian leadership.

The book’s title comes from an interview given at the end of 2000 by the then FSB chief, Nikolai Patrushev—a longtime ally of Putin’s from St. Petersburg—in which he called members of the FSB “our new ‘nobility.’” Patrushev’s description has proved apt. After Putin, a former FSB chief, became president in 2000, he made changes that substantially expanded the authority and the resources of this agency. Putin’s predecessor, Boris Yeltsin, in a gesture to the democrats who voted him into power, had dismantled the KGB into several different agencies and curtailed their powers. Putin, as Yeltsin’s designated heir, gained public support because of his image as a strongman who initiated the second war in Chechnya (as a result of the shocking September 1999 apartment bombings in Moscow and two other Russian cities, which the Kremlin blamed on the Chechens though many said they were the work of the FSB).

Although Putin had the backing of powerful oligarchs like Boris Berezhovsky (who later became one of his fiercest enemies), his main power base was the FSB and he set about reversing the Yeltsin-era reforms that had weakened its authority. In 2003 the FSB absorbed the border guard, which, with over 150,000 troops, had been an independent body, and the part of the federal communications agency charged with electronic intelligence gathering. Under Putin the FSB was authorized by law to conduct intelligence operations outside Russia (formerly the job of the Foreign Intelligence Agency exclusively) and in 2006 a decree was passed that gave it the right to carry out assassinations abroad.

Putin filled the ranks of the FSB leadership with Pitertsi—former colleagues from St. Petersburg. He also gave friends from the security services key positions in other law enforcement agencies, as well as in the Kremlin and in state corporations, thus creating a new power base of officials—commonly referred to as the siloviki (“strong men”), with loyalties to the security services and to Putin himself. By the year 2007, according to the Russian sociologist Olga Kryshtanovskaya, two thirds of the members of the president’s administration were siloviki. Technically, the term applies to any official with a career background in one of the agencies that use force or coercion, which would include the defense and interior ministries and the prosecutor’s office. But under Putin the siloviki were primarily those who worked or used to work for the security services.

Not surprisingly, the siloviki see themselves as elite. As Russian economist Andrei Illarionov put it: “Their training instills in them a feeling of being superior to the rest of [the] populace, of being the rightful ‘bosses’ of everyone else.” As such, they also feel entitled to privileges. Soldatov and Borogan show that a number of high-ranking FSB officials managed to take over the official property of the old KGB for their private use, building large mansions in one of Moscow’s most expensive and exclusive suburbs, Rublyovka. The FSB in Moscow alone owns close to a hundred black Mercedeses, BMWs, and Audis, specially equipped with the lights and sirens that allow them to cut through the traffic jams that plague the city—the highest sign of privilege. (The Ministry of Defense has only nineteen such cars in Moscow.)

The siloviki also make sure their family members are well taken care of. For example, Patrushev, who headed the FSB from 1999 to 2008, has two grown sons, both of whom graduated from the FSB Training Academy in Moscow before working in that agency and later branching out into what is referred to as the “Active Reserve” (those who work in business, the media, and government while retaining FSB ties). In 2007 both were granted special awards for service by Putin.

The older son, Dmitry, is now chairman of the powerful Russian Agricultural Bank and the younger son, Andrei, was given a full-time position as an adviser to Igor Sechin, the chairman of Rosneft, the state oil company. Sechin, a former employee of the Russian military intelligence agency, is also Putin’s deputy prime minister. He is believed to be one of the most powerful men in the government, referred to jokingly by Russian journalist Evgenia Albats as “our Suslov”—Mikhail Suslov having been the éminence grise of the Kremlin during the Khrushchev and Brezhnev eras.

As the authors point out, the FSB is in several ways more powerful and more of a threat to individual rights than the KGB was during the Soviet era. The KGB took its orders from the Communist Party, which always kept a close watch on its operations. In contrast, although both Putin and Medvedev have influence over the FSB, it is in many respects its own master. (US Secretary of Defense Robert Gates observed in a secret cable, released recently by WikiLeaks, that Russia was “an oligarchy run by the security services.”) The committee of the Russian parliament charged with oversight of the security services is in fact powerless. The FSB formally answers only to the Russian president, but since Putin has close ties with the FSB leadership, its actual loyalties are in question. As Kryshtanovskaya expressed it: “In theory, Medvedev is in control. Whether or not security ministers think so is, of course, something altogether different.”

Because its main concern is preserving the current political regime, the FSB focuses its efforts on protecting the Kremlin’s vast economic interests, suppressing legitimate political opposition, and ensuring the Kremlin’s control over the press and television through intimidation and violence. Although the FSB’s direct involvement in the dozens of murders and beatings of outspoken Russian journalists over the past decade has never been proven conclusively, the available evidence strongly suggests that the agency was behind many of these crimes. (In the case of Anna Politkovskaya, who was gunned down in October 2006, one of the suspects was a former FSB officer, although he was never convicted.1) The shocking attack on Oleg Kashin, an investigative journalist who was severely beaten in the entrance to his apartment building on November 6, is certain to raise further questions about the FSB’s role in the violence against journalists.

Still, the FSB is not a monolith, with an agreed-upon agenda. As Soldatov and Borogan observe, lower-level FSB functionaries resent the fact that their higher-ranking bosses earn so much more than they do and get so many perquisites. Last year some FSB employees even went so far as to sue the FSB leadership in the European Court of Human Rights in Strasbourg, claiming that they were being discriminated against because their wages were so low.

Far more serious for the FSB and the Kremlin are the rivalries at higher levels, which have increasingly become open conflicts over money and influence in a society where corruption is rampant. (According to a report issued in late October by Transparency International, Russia is ranked as the most corrupt economy in the Group of 20 nations and is more corrupt than any country in Europe. And a February 2010 US State Department cable from Madrid, made public on WikiLeaks, cited a top Spanish prosecutor as saying that Russia was a “virtual Mafia state.”) With its vast police and surveillance powers, the FSB has kompromat—incriminating evidence—on just about every official in the Russian government and uses it as a political and financial weapon.

During the past decade, two main clans emerged from the FSB and allied themselves with leaders of other law enforcement agencies as well as with high Kremlin officials. One clan arose around Patrushev, who has been secretary of the Security Council since 2008. His successor as head of the FSB, Aleksandr Bortnikov, is reportedly allied with this group (like Patrushev, he has been very close to Putin for years), as are Bortnikov’s immediate deputies. The Patrushev clan also includes Aleksandr Bastrykin, an old classmate of Putin’s who heads the powerful Investigative Committee of the Russian Prosecutor’s Office, established by Putin in early 2008. Significantly, the alleged leader of this clan is none other than Igor Sechin, Putin’s deputy.

The second clan arose around Viktor Cherkesov, another close associate of Putin’s from the St. Petersburg FSB, who from 2003 to 2008 was chief of the Federal Drug Control Service, a special agency set up by Putin with broad investigative powers. As president, Putin managed to balance the interests of the two clans and prevent them from airing their conflicts openly until the autumn of 2007, shortly before the parliamentary elections. Cherkesov’s agency was then investigating a Russian furniture supply business called the Three Whales that was accused of smuggling vast amounts of goods through FSB storage facilities and evading millions of dollars of import duties. The investigation led to the dismissal of several high-ranking FSB officials, creating a huge scandal and casting a shadow on the FSB’s reputation. In retaliation, the FSB, with the cooperation of Bastrykin’s Investigative Committee, arrested (in a dramatic scene at Moscow’s Sheremetyevo Airport) Cherkesov’s deputy, Aleksandr Bulbov, and three other of his colleagues who had been in charge of the Three Whales investigation.

The arrests were a devastating blow to Cherkesov, who responded by writing an impassioned article in the newspaper Kommersant, in which he claimed that the arrest of his men was completely unwarranted and warned that an internecine war within the security services could undermine the stability of Russia: “There can be no winners in this war. There is too much at stake.”

Putin, clearly feeling he had been pushed too far, criticized Cherkesov publicly in the pages of the same newspaper: “It is wrong to take these kinds of problems to the media. When someone behaves that way and…claims that there is a war among the security agencies, he should, first of all, be spotless.” In May 2008 Cherkesov was removed from his post as drug tsar and made head of the Federal Arms Procurement Agency, a job he lost in June.

Cherkesov’s fall from grace did not put an end to the feuding between the siloviki. Cherkesov had allies, among them Prosecutor General Yury Chaika, who from the beginning was opposed to the establishment of Bastrykin’s Investigative Committee at the Russian Prosecutor’s Office. Chaika had appealed, unsuccessfully, a court decision to imprison Cherkesov’s deputy, Bulbov, who was not released until November 2009 and is still awaiting trial. Meanwhile Bastrykin’s committee had also struck a blow against Finance Minister Andrei Kudrin—another alleged member of the Cherkesov-Chaika camp—whose insistence on fiscal controls irritated people like Igor Sechin.

In December 2007, while Kudrin was on a business trip to Africa, the Investigative Committee ordered the arrest of his right-hand man, Deputy Finance Minister Sergei Storchak, on what many say were bogus charges of embezzlement. Kudrin protested the arrest publicly, but to no avail. Storchak was not released for eleven months, and his case is still pending, despite appeals from his lawyer to have it dropped because of lack of evidence.

With both Bulbov and Storchak awaiting their fate, the outcome of the feud between the two rival Kremlin clans is uncertain. It is also not clear where Medvedev stands in relation to the infighting. It was widely assumed by Kremlin watchers that Medvedev was a behind-the-scenes supporter of efforts to expose corruption in the FSB, efforts that were openly thwarted by Bastrykin’s Investigative Committee, and also that he was close to men like Chaika and Kudrin, who opposed the Sechin-Bastrykin group.

But some of Medvedev’s more recent actions raise questions about his allegiances. In late September, he announced that the Investigative Committee would be separated from the Prosecutor’s Office to become a completely independent agency that reports directly to him; to many, this suggests that rather than curbing the committee’s powers, he simply wants more direct control of it. The fact that Medvedev has kept Bastrykin on as chief of the Investigative Committee reinforces the impression that he is not concerned about making the legal and judicial system fairer and more effective.

Bastrykin promised publicly at the end of September that his new agency—which is soon to be approved by the Duma, despite fears by some members that it will become “an uncontrollable monster”—would reopen investigations into the deaths of at least five Russian journalists, including Anna Politkovskaya. But his past record gives little cause for optimism that any of these cases will be solved. It was Bastrykin who insisted, after the poisoning in London of Alexander Litvinenko in November 2006, that his committee had found no evidence whatever to support British claims that former FSB officer Andrei Lugovoi (now a member of the Russian parliament) was the murderer. Despite overwhelming evidence that linked Lugovoi (and the FSB) to the crime, the committee refused to cooperate with the British.

Bastrykin’s handling of the case of Sergei Magnitsky, the young Russian lawyer who died in prison in November 2009 because he was denied medical treatment for gallstones and pancreatitis, was equally disturbing.2 Magnitsky, who had exposed police corruption in a $230 million tax fraud case, had filed several protests about his unlawful arrest (by the very MVD officers who had carried out the fraud) and the appalling conditions of his confinement in prison. He died before his case went to trial.

Apparently responding to Western pressures, Medvedev recently asked Bastrykin to review the status of the investigation. Bastrykin concluded that “there is no reason to believe that his death is related to the activity of officials who conducted the investigation against him.” Bill Browder, the CEO of Hermitage Capital Management, which employed Magnitsky, responded that Bastrykin was “unfit to continue in his job. The officials conducting the investigation into Sergei’s death are ignoring so much evidence about police involvement that they must be either blind or deaf.”

Another disappointment to those who hoped that Medvedev’s much-talked-about program of modernization will include democratic reform was a bill he signed in August granting the FSB officers additional powers, including, most ominously, the right to issue formal warnings to people who they believe are threats to the country’s security. This bill was apparently intended to enable the FSB to enforce more harshly a 2007 law against “extremism”—which makes criticism of the authorities a punishable crime—and to give the FSB an additional weapon in its fight against terrorism. The new law has been strongly criticized by democratic activists because it recalls the old KGB practice of hauling in dissidents for “chats” and warning them that they could be arrested. According to Nikita Petrov, a historian who works for the Moscow-based human rights organization Memorial, issuing “warnings” is “an obsolete practice, and to return to it looks shameful. If a person commits a crime or plans to commit one, he should be punished, of course. But if he has not, what are you [the FSB] warning him for?”

Some observers have speculated that the FSB and Putin initiated the bill and that Medvedev was not powerful enough to stand up to them, despite the fact that Medvedev said publicly, during a meeting with German Chancellor Angela Merkel in July, that he had sponsored the bill. The speculation arose because Medvedev, after talking with editors of leading Russian newspapers who expressed their concern about the bill, ordered FSB chief Bortnikov to revise it so that the FSB would have to clearly define the actions that could be grounds for a warning. This suggested that Medvedev was trying to strike a balance between, on the one hand, his security service, still heavily influenced by Putin, and journalists and human rights activists on the other.

Medvedev cannot afford to look weak when it comes to fighting terrorism—a job that is primarily entrusted to the FSB. The bill was apparently the direct result of the twin suicide bombings that occurred in the Moscow subway in March, killing at least forty people and adding to the impression that the FSB’s antiterrorism efforts have not worked. As Soldatov and Borogan point out, the bombings raised a question that came up after numerous other terrorist attacks in Russia (the theater siege in Moscow in 2002, the hostage crisis at the school in Beslan in 2004, and the explosion on the Nevsky Express last year, to name a few): “If the secret services had been given so much support by the Kremlin in the name of providing security, why had they failed again to prevent such a deadly onslaught?”

Whatever Medvedev’s lofty words about reforming the legal system, his actions are what matter. Following the revelations of Magnitsky’s mistreatment, he had some prison officials fired and introduced reforms in the Interior Ministry, including a reduction in the number of agents. But the FSB continues to wield the real power among the law enforcement organs. And when it comes to making this agency accountable, Medvedev has yet to deliver.

Most significant politically for the future of the Russian government is the case against the oil giant Yukos, which began in 2003 when FSB agents raided its offices, seized its assets, and arrested several of its executives, including Mikhail Khodorkovsky, a personal enemy of Putin’s and a possible political threat, and his business partner Platon Lebedev. (Yukos’s assets were later sold in a “fire sale” to Rosneft, the state-owned company chaired by Putin’s deputy Igor Sechin.) Khodorkovsky and Lebedev have spent the past seven years in a Siberian Gulag after being convicted of tax violations. In 2007, when they would have been eligible for parole, the two former Yukos executives were charged with embezzling 350 million tons of oil and stealing shares from a Russian oil company. Prosecutors at their second trial, which ended in November, asked for a fourteen-year jail sentence.3

When he made his final statement to the court, Khodorkovsky told the judge: “Everybody understands that your verdict in this case—whatever it will be—is going to become part of the history of Russia.” (See the accompanying box.) But the verdict, widely anticipated in Russia and the West, will most likely be decided by the siloviki in the Kremlin, along with the FSB, not the court. And the postponement, without explanation, of the judge’s pronouncement from December 15 to December 27, suggests strongly that it will not be favorable to the defendants. The Kremlin may have calculated that public reaction to a harsh verdict would be minimized if it is announced in the midst of the busy holiday season. (Recall that the Soviets invaded Afghanistan on this very date in 1979.) Still, Medvedev himself could argue for an acquittal, or even pardon the defendants, which he has the legal power to do. A harsh sentence for Khodorkovsky could damage efforts to “reset” relations with the West. Also, as Khodorkovsky’s lead lawyer, Vadim Klyuvgant, said recently, If you look at the reforms declared by President Medvedev, the attempt to modernize the country, Khodorkovsky would be essential to that reform…. It’s a crime to keep a person with such potential to build and do something in isolation and unable to contribute.

Questions hover over the case. Could Medvedev afford at this point to take on the FSB if he wants a second presidential term? How realistic are his chances in this regard, given that Putin enjoys so much support from the siloviki? The siloviki are interested in their own survival, but that does not necessarily mean that they don’t recognize the need for some of the changes Medvedev has been suggesting, such as rebuilding Russia’s economic infrastructure and making the economy less dependent on oil. Indeed some members of this group might favor a continued Medvedev presidency. In the words of Richard Sakwa, a professor at the University of Kent: A second term for Medvedev is the natural thing to do, whereas a return to power of Putin would represent a humiliation for Medvedev and a snub to that part of the elite in favor of genuine modernization of the economy and society.

Medvedev, who has made significant foreign policy concessions to the US concerning Iran and Afghanistan, has strong support from Western governments. (This is a mixed blessing, in view of the widespread anti-Westernism in Russia, fueled by the state-dominated media.) More importantly, he is gaining in stature and popularity at home, especially after sacking in September Moscow’s flagrantly corrupt mayor, Yury Luzhkov. A poll conducted by Russia’s Levada Center in the third week in October showed Medvedev’s approval rating (76 percent) to be almost equal to that of Putin (77 percent) for the first time. His growing appeal does not go unnoticed by those at the top of the political leadership, whose greatest fear, despite the apparent political lethargy of the general population at the moment, is a “color revolution,” of the type that has happened in Ukraine and Georgia.

If Medvedev does end up being Russia’s president for a second term—and his recent, rather bland, annual state-of-the-nation speech offered few hints about his intentions—he might find it increasingly difficult to perform his balancing act of talking about modernization and democracy while doing little to oppose the vested interests of the siloviki. There may come a time when ordinary Russians get fed up with having their dilapidated Ladas shoved off the road by foreign cars with flashing lights. Then Medvedev will have to do a lot more to reform the system than he has thus far. As Soldatov and Borogan conclude, “If President Medvedev is serious about modernizing Russia and ending the ‘legal nihilism’ that has run wild in recent years, he will need defenders of the state who are in tune with this goal, not a service deeply mired in the past.” In short, he will have to take on the “new nobility,” and that will be a very hard task.
________________________________________
EXCERPTS FROM MIKHAIL KHODORKOVSKY’S FINAL STATEMENT TO THE COURT ON NOVEMBER 2, 2010

…A state that destroys its best companies; a country that holds its own citizens in contempt, trusting only the bureaucracy and the special services, is a sick state….
I will not be exaggerating if I say that millions of eyes throughout Russia and the world are watching this trial. They are watching with the hope that Russia will still become a country of freedom and law, where the law is above the bureaucrat. Where supporting opposition parties is not a cause for reprisals. Where special services protect the people and the law, and not the bureaucracy from the people and the law. Where human rights no longer depend on the mood of the czar, good or evil. Where, on the contrary, power truly depends on the citizens and the court, only on law and God. Call this conscience, if you prefer.

I believe this will be. I am not a perfect person, but I am a person with an idea. For me, as for anybody, it is hard to live in jail, and I do not want to die there. But if I have to, I will. The things I believe in are worth dying for. I think I have proved this.

And you, my opponents? What do you believe in? That the bosses are always right? Do you believe in money? In the impunity of “the system”?

Your Honor! Much more than our two fates are in your hands. Here and now the fate of every citizen of our country is being decided: of those who do not intend to become victims of police lawlessness on the streets of Moscow and Chita, St. Petersburg and Tomsk or other cities and settlements; of those who have set up a business, built a house, achieved a measure of success and want to pass it on to their children—not to raiders in uniform—and, finally, of those who want to honorably carry out their jobs for a fair wage, not expecting to be fired at any moment by corrupt bosses.

This is not about me and Platon [Lebedev, his partner and codefendant]—at any rate, not only about us. It is about hope for many citizens of Russia. About hope that tomorrow the court will be able to protect their rights, if yet another bureaucrat-official gets it into his head to brazenly and demonstratively violate these rights….
Everybody understands that your verdict in this case—whatever it will be—is going to become part of the history of Russia. It will shape Russia for future generations. The names of these prosecutors and judges will remain in history, like the names that have remained in history after the infamous Soviet trials.

Your Honor, I can imagine perfectly well that this must not be very easy at all for you, perhaps even frightening, and I wish you courage!

1. See my “Who Killed Anna Politkovskaya,” The New York Review , November 6, 2008. ↩
2. See my “Death in Detention: Russia’s Prison Scandal,” NYR Blog, January 7, 2010. ↩
3. The cases of Khodorkovsky and Hermitage Capital are probably only a small sample of the persecution of Russian businessmen by representatives of the siloviki . Many entrepreneurs in the regions outside Moscow and St. Petersburg suffer similar fates. According to statistics released by the Ministry of Interior (MVD) for 2009, Russian law enforcement agencies brought criminal charges for fraud ( moshennichestvo )—a vague article in the penal code bringing severe sentences of up to ten years in prison—in 78,000 cases, which was an increase of 4.4 percent from the year before. Of course, it is impossible to know how many of these cases were legitimate, but the statistics suggest that arrests for economic crimes might be a convenient method for the siloviki in the regions to further their own financial and political interests. ↩
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