Putin and the kleptocrats

Putin and the kleptocrats

Kicking the Kremlin: Russia’s New Dissidents and the Battle to Topple Putin

by Marc Bennetts

Bloomsbury, $27.99 pb, 318 pp, 9781780743486

Book Cover 2 Small

Putin and the Oligarch: The Khodorkovsky–Yukos Affair

by Richard Sakwa

I.B. Tauris, £20 hb, 318 pp, 9781780764597

Moscow’s annexation of Crimea in March was a dramatic sign of Russia’s sense that it had recovered from its post-Soviet weakness. Viewed in the West as an outrage, in Russia the seizure was portrayed as a triumph, the culmination of a national resurgence under Vladimir Putin. It remains to be seen how long this mood of triumph will last. 

President Putin’s popularity has long been buoyed by high prices for oil, Russia’s main export. On top of this oil bonanza, which saw national GDP double in a decade, Putin’s popularity has spiked after shows of strength like Russia’s 2008 invasion of the Caucasian republic of Georgia. In 2011–12 his standing slumped when his return to the presidency ruled out a new liberal era in Russian politics. The seizure of Crimea has sent Putin’s approval rating back to 2008 levels, demonstrating the link between Kremlin muscle-flexing and the political balance inside Russia.

These two books illuminate the domestic arena in which this cause and effect play out. Marc Bennetts, a British journalist resident in Moscow, surveys Putin’s opponents as they have emerged over the last decade, from right-wing extremists to the feminist performance artists Pussy Riot. Richard Sakwa reaches further back to trace the contest between Putin and Mikhail Khodorkovsky, the most ambitious of the Russian oligarchs who built their fortunes on the wreckage of the Soviet economy. Sakwa is Professor of Russian and European Politics at the University of Kent.

The Khodorkovsky saga began in the 1980s, when the policy of perestroika (reform) opened up financial opportunities. By 1986 the twenty-three-year-old apprentice oligarch was running a café and importing computers and cognac. In 1995 Khodorkovsky became the most spectacular beneficiary of the egregious transactions known as ‘loans for shares’. For US$350 million, Khodorkovsky obtained control of the oil company Yukos, which had the largest oil reserves in Russia. This and other shady deals between the Kremlin and the oligarchs have seen the period dubbed an era of ‘piratisation’, and the clique clustered around then-President Boris Yeltsin – which included the media magnates Boris Berezovsky and Vladimir Gusinsky – a ‘kleptocracy’.

Later, Khodorkovsky would concede that the oligarchs had amassed their fortunes in a lawless climate: ‘People did what they wanted,’ he said of the 1990s. By 2004, Forbes magazine estimated him to be the sixteenth-richest person in the world, but by then he was in jail, essentially because he had behaved as if he was entitled to a political role commensurate with his financial weight – one rivalling that of the president himself. Putin disagreed.

While Khodorkovsky was expanding his Yukos empire, Putin, a former KGB officer, was beginning his own ascent to power. Putin joined Yeltsin’s administration in 1996 before becoming head of the Federal Security Service, successor to the KGB. By then an increasingly incapable Yeltsin had surrendered control to the kleptocracy, but as the presidential elections of 2000 approached, the oligarchs worried that any successor to Yeltsin would seek to reverse the ‘piratisation’ process. Calculating that if he was made president, Putin could be easily manipulated and thus prevented from trying to claw back the kleptocracy’s ill-gotten gains, Berezovksy threw the weight of his media empire behind Putin’s election campaign.

But Berezovksy underestimated Putin. The former KGB officer was determined that, unlike Yeltsin, his presidential authority would not be at the behest of the oligarchs. He turned against Berezovksy and Gusinsky, who both fled the country. Although Putin made no outright move to reverse the outcome of ‘piratisation’, he did proclaim a new policy towards the oligarchs – ‘equidistance’. In practice, this meant that the oligarchs would have to follow the Kremlin’s economic policy and would have to eschew politics altogether. Khodorkovsky did neither.

Rather, Khodorkovsky moved to open Yukos, by now the fourth-largest oil company in the world, to foreign part-ownership – anathema to Putin and his hard-line economic nationalist advisers. On the political front, Khodorkovsky financed the liberal opposition in the Duma, the Russian parliament, and openly criticised the Kremlin. Contributing to his downfall was Khodorkovsky’s cultivation of an international audience and self-promotion as a ‘defiant democrat’. But like Berezovsky before him, Khodorkovsky had underestimated Putin. Arrested in October 2003 and convicted for fraud and taxation, Khodorkovsky was only released in December 2013. He now lives in Switzerland.

‘Like Berezovsky before him, Khodorkovsky had underestimated Putin.’

Khodorkovsky’s high international profile hastened his fall because it exposed him to the xenophobia that resonates so powerfully in Russia, a phobia which the West has, on several occasions, inflamed to Putin’s advantage. Instances include Washington’s proposal to base anti-ballistic missiles in Poland (which would have diluted Russia’s nuclear deterrent) and of NATO membership for the former Soviet states Georgia and Ukraine. Russian anger at what is seen as opportunistic Western meddling in the former Soviet Union peaked with Ukraine’s 2004 Orange Revolution. This, a ‘people’s power’ revolution which prevented the Moscow-leaning politician Victor Yanukovych from assuming the presidency after a fraudulent election, was financially backed by Western institutions, including the US State Department. Such open Western involvement in the humiliation of Russia’s candidate on its own doorstep shocked the Kremlin. It also demonstrated that it was ‘people’s power’, and not formal parliamentary opposition, which posed the big danger to regional autocrats.

Putin image 2Russian President Vladimir Putin talks with Khodorkovsky (Credit: title under review)

Putin had already neutered the Duma in the 2003 elections, in which the liberal opposition parties (financed by Khodorkovsky) failed to gain any seats. In fact, Putin’s co-optionof parliament has been so successful that the Duma barely rates a mention in Bennett’s survey of the Russian opposition. Ukraine’s Orange Revolution also inspired a new ‘people’s power’ opposition in Russia, and Bennetts’s subtitle, The Battle to Topple Putin, suggests that this movement presents a real threat to the president’s ascendancy. But his book doesn’t bear this out. For one thing, the opposition is restricted to Russia’s main cities and the intelligentsia; for another, it lacks even a semblance of unity.

Bennetts’s opposition is a mix of nationalists, liberals, and leftists, but Russian political identities don’t sit easily on the familiar left-to-right spectrum. The colourful former New York punk rocker Eduard Limonov emerged in the 1990s as leader of the neo-fascist National Bolshevik Party, but subsequently aligned himself with the liberal Other Russia coalition. Environmental protest groups – some recognisably middle-class, some nationalist and conservative – have sprung up to oppose highways and mines. There is Pussy Riot, whose high profile in the West following their 2012 anti-Putin performance in Moscow’s Christ the Saviour Cathedral gives the impression that they are a mainstay of the opposition. In Bennetts’s view the opposite is true: by choosing the cathedral as a venue, Pussy Riot ‘killed off the opposition’s hopes of making allies of millions of conservative Russians’.

Then there is blogger activist Alexei Navalny, who has circumvented the Kremlin’s analogue-era dominance of the media by adroit use of the Internet. Navalny’s 2011 description of the ruling Kremlin clique as ‘crooks and thieves’ became the opposition catch-cry, and he has been touted as a potential rival to Putin at the presidential election due in 2018. But Navalny’s hip mastery of online politics goes hand in hand with a certain xenophobia and conservatism, and in this sense he exemplifies the ambivalence of the opposition. As one protestor said to Bennetts: ‘We want to be part of Europe, but live in Russia.’

All in all, the seizure of Crimea and the subsequent surge in Putin’s popularity have come as a salutary rebuff to the notions that ‘hard power’ is an anachronism and Internet activism invincible. The Kremlin took advantage of the Ukrainian crisis to launch a crackdown on the Russian opposition, and silenced Navalny with a ban on Internet activity.

Putin image 1Khodorkovsky during the Meshchansky trial (credit: title under review)

In the longer term, the question is not so much whether Putin’s current level of popularity will continue – it won’t. Russia’s economic good times seem to be coming to an end; the oil boom is over and the country is heading into a recession. The question is rather whether the opposition described by Bennetts – brave, principled, and sometimesvery cool – will be able to exploit the resulting popular disenchantment to actually dislodge Putin from power. There is little sign it will be able to.

Published in August 2014, no. 363
Nicholas Hordern

Nicholas Hordern

Nick Hordern took an Arts degree at the University of Sydney, concentrating on Indian history and Islamic studies, before joining the Department of Foreign Affairs. As well as postings in Pakistan and Sri Lanka, his public service career included stints in the Office of National Assessments and the Department of the Prime Minister and Cabinet. For five years he worked in Parliament House Canberra as a political staffer and journalist, then for fifteen years he was an editor and senior writer with the Australian Financial Review in Sydney. He now lives on the South Coast of New South Wales.

Comments (3)

  • Leave a comment Nick Hordern

    Judith Armstrong is quite correct to point out that Khodorkovsky supported the liberal cause. This was both before his arrest, in his financial backing of the liberal opposition in the Duma (as I said in my review); and afterwards in jail, when his writings won plaudits from many sources. But despite this support for liberalism Khodorkovsky’s stance, including his comments that he is not ‘especially a liberal’, that he is ‘for a strong state’, and that it was necessary for former state assets like Yukos to be sold for ‘symbolic prices’ (all quotes from Sakwa's book), is sufficiently nuanced to require a longer analysis than a short review format permitted. And however inspirational his views, Russians – even liberal ones - must wonder whether they would have been better off had Khodorkovsky and his fellow oligarchs not got their hands on Russia’s national wealth for ‘symbolic prices’.

    Friday, 29 August 2014 18:03 Posted by  Nick Hordern
  • Leave a comment Judith Armstrong

    I was very disappointed that the review 'Putin and the Kleptocrats' gave such a misleading impression of Mikhail Khodorkovsky. The reviewer seemed to have no idea of Khodorkovsky's Damascene moments when he began to understand and adhere to the (small l) liberal underpinnings of a civil society, working on many fronts, and of course against the odds, to try to establish it in Russia. Yes, he was imprisoned, but that did not stop him becoming an iconic inspiration, as Richard Sakwa demonstrates but Mr Hordern bypasses. There is much talk of people underestimating others in this review, but in this case the reviewer has vastly underestimated one of the main subjects, as though Khodorkovsky were no different from the other oligarchs. As if!

    Friday, 29 August 2014 13:13 Posted by  Judith Armstrong
  • Leave a comment

    Hey Nick

    Great review. Long time no hear.

    Monday, 11 August 2014 09:19 Posted by  David Leitch

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