In December 1999 Vladimir Putin, a gaunt-looking former KGB operative soon to be Russia’s president, took the podium at an annual celebration of the country’s secret police. “The group of FSB operatives assigned to work undercover in the government have successfully accomplished the first stage of their task,” he told his old colleagues with a barely disguised smirk.
Few people in Russia or the West paid much attention at the time to this KGB-style joke; Russia was still staggering towards a western-like market economy and Putin, handpicked by Boris Yeltsin as prime minister to protect his legacy, was there to give it new momentum. Nobody — not even Putin, probably — could imagine that 20 years later this “group of FSB operatives” would control much of the economy, would have invaded neighbouring countries and would be conducting subversive operations against the West across half the globe.
How these “operatives” got into power and what they did with it is the subject of this long-awaited, must-read book by Catherine Belton, a former Moscow reporter for the Financial Times who spent years investigating the most sensitive subject in Russia — the business dealings of Putin and his circle of cronies (or siloviki). By following the money and diving deep into the squalor, she has pieced together a disturbing picture of a criminalised regime whose methods are more like the mafia than a state.
Inside Track
Belton does not demonise Putin. Instead she looks at the reality of how a group of men, bred by the KGB and driven by greed, have jeopardised Russia’s future and pushed it into a state of war with itself and the world. Its value is not so much in its thesis, as in the detail, and the invaluable descriptions of the inner workings of Putin’s regime, much of it based on original reporting and interviews.
The trail begins in the dying days of the Soviet Union, in Dresden, where Putin served in the late 1980s. Little is known about his activities — most of the documents have been destroyed or removed. In the narrative cultivated by former colleagues, Putin spent much of his time there writing meaningless reports.
Belton’s investigations dispel this cover and suggest that Putin was one of the KGB agents who facilitated the activities of the far-left Red Army Faction (RAF), or Baader-Meinhof Group, which sowed terror in West Germany in the 1970s and 1980s. Dresden was a rendezvous for the RAF and their handlers, a former RAF member told Belton. Putin would be among the leaders in those meetings.
Impossible to verify, Belton’s version elicited a stark warning from a Putin ally in the KGB; the KGB’s involvement with RAF, he said, was extremely sensitive and had never been proved “and you should not try to do so!”
A criminalised regime whose methods are more like the mafia than a state.
The KGB’s “active measures” during the Soviet period formed a template for Russia’s future disruptive operations in the West. But it was its international network of friendly firms and money channels, and ties to organised crime, that allowed Putin and his allies to prosper amid the chaos of the Soviet collapse.
Although the KGB was never accountable to the law, it was nonetheless tightly controlled by the Communist Party. When the party self-destructed, though, the KGB effectively became its own master. What emerged from that chaos, Belton writes, was “an alliance between Putin, his KGB allies and organized crime … and, in particular … the creation of a strategic slush fund that was to preserve their networks and secure their positions for years to come”. After Putin was propelled to the presidency, that slush fund ballooned and its holders became Russia’s richest men.
Oligarch’s End
The turning point in their fortunes and Russia’s trajectory was Mikhail Khodorkovsky’s arrest in 2003 and the expropriation of his Yukos oil firm in the interest of Rosneft, a state-controlled oil firm headed by one of Putin’s henchmen, Igor Sechin. Khodorkovsky landed in jail for 10 years, but his trial and the loss of his company, Belton argues, represented far more than the takeover of an oil firm. It was the takeover of the entire legal system, one that destroyed any notion of justice and property rights, cemented the powers of the siloviki and ultimately led them to take on the West.
As Belton shows, the West was complicit in this process. Its banks lined up to serve Rosneft, London’s Stock Exchange floated its shares and BP eagerly bought into it. This left Putin convinced that, “ultimately, financial interests [of the West] would outweigh concerns about his regime’s abuse of the law and democracy”.
Khodorkovsky’s trial and the loss of his company represented the takeover of the entire legal system, one that destroyed any notion of justice and property rights.
The abuses went well beyond repressing and eliminating opponents. Among many allegations, Belton’s book lends weight to the blood-chilling suspicion that at least some of the terrorist attacks carried out by Chechen fighters in Russia were orchestrated by the FSB to consolidate its power. Western governments have long dismissed these allegations. They also comforted themselves with the thought that corruption was a form of security against war, and that Putin’s cronies would not jeopardise their London houses and Swiss bank accounts for a fight with the West. In fact, corruption, repression and war went hand in hand. The more they abused the legal system, the more assets they grabbed, the less secure and more violent they were at home and aggressive abroad.
By the 2010s the economic growth that bolstered Putin’s popularity in the first two presidential terms began to wane. His ratings were falling. The protest of 2011-12 raised the spectre of upheaval. The regime responded by reviving imperial nationalism, annexing Crimea and starting a war in Ukraine. Putin’s people rationalised this as a way of serving state interests and restoring glory. They probably believe this too; people with great power and wealth rarely think of themselves as petty crooks and thugs. But as Belton’s book shows, this is precisely what they are and this is why they can never leave power of their own will.
When they finally do go, as they will sooner or later, this book will serve not as a testimony of their ambition but as a record of their pettiness and greed.
