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Summer Reading: Putin’s People

May 28, 2021

The abduction of a Belarussian dissident from a Ryanair flight forcibly diverted to Minsk is a timely reminder that in some countries, the international rule of law means nothing when, in the perception of the rulers, the prospect of staying in power is at stake.

This is one of the dominant themes running through Catherine Belton’s book, Putin’s People: How the KGB Took Back Russia and Then Took on the West, which was published in 2020.

Belton’s story, written from the perspective of a former Moscow correspondent of the Financial Times, is not so much about Vladimir Putin, more about the former KGB operatives who surround him, and who, even as the chaotic Yeltsin era unfolded, set about restoring the power networks that underpinned the old Soviet Union before it collapsed. Though not so much for the benefit of the newly-emerged Russian state – more for their own personal enrichment. Once gained, the preservation of those riches would be impossible without the power to control all the levers of state.

Putin is ever-present, of course, but as a cold-eyed, glowering tsar who sits at the top of the pyramid on which he was installed, manipulating his subordinates, playing them off against each other and using them as proxies for his own enrichment. But the book is as much about money as power politics.

The story begins as the Soviet Union crumbles. A faction of the KGB realises that the transformation of the communist party state with its command economy into a form of democracy and a market economy is inevitable. They therefore begin quietly siphoning off money into offshore financial institutions that they can use to sustain their foreign influence networks.

Although Yeltsin’s financial reforms gave the first oligarchs – Khodorkovsky, Berezovsky and others – the opportunity to amass fortunes by often dubious means, the old KGB operatives were also at work, forming unholy alliances with organised criminal gangs, especially in St Petersburg, where Putin was serving as deputy mayor. As Yeltsin’s health deteriorated, they pushed Putin, the former junior KGB officer in Dresden, into positions of increasing power: first as head of the FSB, the successor to the KGB, then as Prime Minister. Finally, they persuaded Yeltsin to give way to him as president, despite the fact that to the average Russian he was a nobody.

Belton takes us through the crises of his first decade in power: the Moscow apartment bombings, the Chechen war, the Moscow theatre hostage crisis and the Beslan school siege. She leaves open the question of the extent to which these events were acts of provocation by the FSB that enabled Putin to establish his credentials as a strong leader, but the implication is clear.

Once he became more secure in his position, Putin took down the original oligarchs. Those whom he didn’t imprison he allowed to keep their wealth, provided that they kept out pf politics and made their wealth available to the state when needed. The likes of Roman Abramovich were left with little doubt that they remained in place on sufferance, and could be taken down in an instant on the say-so of the tsar. As for those whom Putin imprisoned or forced into exile, their fortunes were restored to the state, with large slices hived off to institutions controlled by his cronies.

By the 2010’s Putin had ceased to be the placeman. He was now the puppet master, a man who was setting out with a vengeance to restore Russia’s imperial power. The war with Georgia and the annexation of the Crimea followed. Just as during the communist era, foreign policy was a zero-sum game. Where the West appeared weak, Russia would step in, hence its entry into the Syrian civil war. At home, Western investors, having meekly accepted the take-down of Khodorkovsky, continued to do business with Russia.

Meanwhile, it seems, Putin’s former KGB associates continued to suck vast sums of money out of the country and squirrel it away in the West, often with the assistance of crime gangs via impenetrable money-laundering schemes. Some of those funds were used to corrupt foreign politicians and support nationalist agendas. Much of it ended up in London, which was perceived to be more lax in its regulations than the United States.

Belton goes as far as she can without falling foul of defamation laws to portray Donald Trump as the beneficiary of Russian money, especially at the time when his business empire nearly collapsed. Whether or not he was and is an agent under Putin’s control remains unproven, but again the implication is clear.

Because the book largely focuses on the pursuit and acquisition of wealth and power by Putin’s people, we don’t learn much about the intimidation tactics employed against their opponents, such as Alexander Litvinenko, the Skripals and Alexei Navalny. Nor do we learn about the assassination of one of Putin’s main rivals, Boris Nemtsov. But it becomes clear that under the cloak of deniability, Putin was prepared to go to any lengths to suppress or remove anyone who challenges his rule, just as the KGB did during the Cold War.

Unfortunately for him, some of his extreme measures have resulted in economic sanctions by western countries including the US, the EU and Britain. The knock-on effect of those sanctions has been to increase the gap between his wealthy cronies and the ordinary Russian. Widespread impoverishment has led to a decrease in his popularity, to the extent that many of his actions are now driven by fear of insurrection. Hence the brutal tactics employed by his security services to repress protest.

According to Belton, Putin is now more isolated in his Kremlin citadel than ever. He knows that if he steps down he might face serious consequences. In effect, he is trapped in office, presiding over a government of quarrelling factions with no ideology and no purpose beyond the projection of power and the continuation of his rule and that of his people.

Putin’s People is compelling, exhaustive and exhausting. It now serves as a reference whenever I read about some of the movers and shakers in Russia. The other day I came across about a court case currently being heard in London involving three oligarchs. I went straight to the book, and from there back to a section in which Belton describes the links of the three litigants to Russian organised crime.

If I have a criticism, it’s that the narrative would be easier to follow if it included a network diagram showing the relationships between the massive number of players – the oligarchs, the ex-KGB courtiers and the crime gangs. The trouble is that it would probably fill a wall.

Does the book alter my perspective on the Putin years? Not really – I’ve followed events in Russia quite closely for much of my life. But it does intensify the impression of what many call a kleptocracy, a mafia state. The level of detail, winkled out of those brave individuals who were prepared to speak to Belton, is impressive. But much more remains to be discovered. Putin’s people are good at covering their tracks.

What to make of this territorially vast, nuclear-armed state that was never the West’s friend, despite the imaginings of Western politicians who believed that Boris Yeltsin had written a new chapter in the relations between Russia and its Cold War adversaries? Should we judge Putin and his people by the standards that prevailed in the West before black Russian cash seemingly corrupted so many of its institutions? Or should we see him as a man who, by establishing a cloak of secrecy over the financial dealings of the state and destroying the independence of institutions designed to bring a degree of accountability to government, simply turned back the clock? And does that place Russia among other nations that have never had such accountability, such as the monarchies of the Middle East, with which we are happy to do business?

The difference, perhaps, is that the likes of Saudi Arabia and the UAE are not able to threaten their rivals with nuclear weapons, don’t (Jamal Khashoggi excepted) liquidate critics on foreign soil, and (at least since the mid-seventies) have refrained from using their oil and gas as an economic and political weapon.

One of Catherine Belton’s most telling observations is that Putin and his former KGB associates have created a “KGB simulation of a normal market economy”, with the willing complicity of the West:

Institutions of power and the market that were meant to be independent were in fact no more than Kremlin fronts. The rulings handed down by Russian courts looked, on paper, as if they could be legitimate. In the Khodorkovsky case, the oil tycoon went through more than two years of court hearings and two sets of criminal charges, the second of which accused him of stealing all the oil Yukos had ever produced, the same oil that he’d previously been accused of evading tax on. But in reality, the court’s rulings were not rulings, but Kremlin directives. The court system was not a court system, but an arm of the Kremlin. Anyone who crossed the Kremlin could be jailed at any moment on rigged or trumped-up charges.

In a system where stealing was pervasive, where property was constantly being divided up on a nod and a bribe to the relevant person in the Kremlin and law enforcement, Putin’s men had compromising information on everyone. The country had returned to the time of informants….

How much time, effort and resources went into the transformation of Russia into a nation governed under the cover of questionable appearances is anybody’s guess, but one of Putin’s critics estimated that without the systematic appropriation of wealth by its ruling class, the country would at the time of writing have been the fifth largest economy in the world, whereas it was actually ranked thirteenth.

As with China – and other allies and adversaries whose systems of government don’t sit well with those who live in liberal democracies – future relations between the West and Russia should surely be based not on the premise of dealing with big bad wolves, but on a deep understanding of the realities, strengths and weaknesses of those systems. And we should never become so consumed by paranoia that we forget the humanity of those who live within those systems. If they’re to change for what we see as the better, it will be the ordinary citizens who will have to do the heavy lifting.

The last thing we need is to return to an era when every misunderstanding between Cold War rivals threatened to spill over into nuclear conflagration. To avoid that outcome, we need to eliminate the potential for misunderstanding, which means replacing supposition with hard knowledge. And, since knowledge and disinformation directly influence our decisions as to who we should elect to govern us, any well-researched piece of investigative journalism, properly corroborated, that reaches a wider audience is surely helpful.

To that end, Putin’s People is a fine piece of work.

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