At 7.30pm on December 25 1991, the Soviet flag was lowered from the Kremlin and the white, red and blue tricolour of Russia was raised in its place. There was no ceremony, only a mix of bewilderment, excitement for some and alarm for others. I drove from Red Square a few miles down the road to the home of Lev Kerbel, the USSR’s most decorated sculptor. Just about every giant Lenin or Marx worth its marble around the world was his creation. I had got to know him well, and it seemed appropriate that, on the day the Soviet Union died, I should go and see a man born on the day of the Bolshevik revolution. He was hunched in his small kitchen watching a re-broadcast of President Gorbachev’s farewell speech on his flickering screen. He made tea, poured some brandy and tried to make sense of it. “We fought fascism, we fought for the Soviet Union, and now we are told it’s no longer there,” he said.
Kerbel lived another dozen years. He saw the exhilarating, if chaotic, early years of the rule of Boris Yeltsin. He saw it degenerate into a haze of corruption, nepotism and no little alcohol, as Russia was sold off on the cheap to a bunch of crooks-cum-aspiring-businessmen, often under the encouraging eyes of Western economists preaching the mantra of privatisation. Everything and everyone was there to be bought. By the new millennium, the new class of oligarchs and their friends in the Yeltsin “family”, as the elite was known, wanted a pliant leader to take over. By the end of 1999, they had alighted on a certain Vladimir Putin, a diminutive, former middle-ranking KGB agent in East Germany.
They assumed he would do their bidding. Yet, within a few months, he had turned the arrangement on its head. He summoned the men who had made billions out of oil and gas, aluminium and other natural resources, and gave them a message: you can make as much money as you like, as long as you don’t meddle in politics. There was a further, unspoken, part of the deal. They should look after the new boss and everyone in his circle. The three arms of the state – politics, business and the security services – were rolled into one.
For the first few years of his rule, even as he imprisoned businessmen who refused to do his bidding (politically and financially), and journalists who asked too many questions were found at the bottom of stairwells, Putin flirted with the West. In so doing, he put himself outside his comfort zone.
In a bizarre encounter I had with Putin back in 2004, when a small group of international visitors had a four-hour late-night meeting with him in his Novo-Ogarevo residence outside Moscow, Putin gave vent to his resentments. He had given the green light for the US to establish bases in the Central Asian republics from which to invade Afghanistan in 2001 (he seemingly forgot that these countries were notionally independent). He didn’t cause trouble over the Iraq war in 2003, even though he vehemently disagreed with it. He didn’t object too strongly when the Baltic states went back into the Western fold. And what had he got in return? The West had thanked him by fomenting anti-Kremlin unrest in Georgia and Ukraine, goading them to join the European Union and Nato.
The events of the past month and a half, from the violent suppression of protests in Kiev’s Independence Square, to the snatching back of Crimea, to bellicose rhetoric towards the West, should be seen within the context of the past 20 years. For people of Putin’s ilk, the events of the 1990s are not remembered for the opening up of society after decades of dictatorship. Instead, this was a time of pozor – shame. It was when Russia allowed itself to be humiliated. No more.
Western politicians have for many years allowed their hopes to trump sensible expectation. The mindset of the Putinistas has for long been fixed. This is where greed meets grievance. Putin’s state-of-the-union speech in 2005 was instructive. “The collapse of the Soviet Union was the biggest geopolitical catastrophe of the century,” he declared, adding ominously: “Our place in the modern world will be defined only by how successful and strong we are.” In other words: if we don’t get them, they’ll get us. He had ordered new guidelines for schools to give children a “balanced” picture of Stalin’s rule.
Over the dozen years of Putin’s reign (and his job swap between president and prime minister and back was a constitutional ruse), the group around him has stayed largely the same. Some economic liberals, and even the odd political liberal, have been brought into the fold, but they tend not to last long.
At the helm is a small cabal, many of whom have known Putin for some time. They share similar characteristics – they are, to varying degrees, nationalistic and anti-Western; they believe in Chinese-style state capitalism; they have always been suspicious of the integration of Russia into Western institutions; they abhor the notions of transparency and accountability; they believe they are entitled to run whatever companies or institutions they like; and they look after each other.
Many of Putin’s team met by a lake – not literally. In 1996, a group of business, political and security acquaintances from St Petersburg clubbed together to found a dacha condominium outside the city. It was called Ozero, or “lake”. When Putin came to power a few years later, they were given top posts in the government and/or in major corporations. The two are considered interchangeable. Igor Sechin, one of Putin’s longest-standing confidants, was put in charge of the oil giant Rosneft. President-cum-prime-minister-cum-right-hand-man Dmitry Medvedev was chair of Gazprom. Vladimir Yakunin was given responsibility for the railway network. Once asked about the Ozero connection, he said it “was not the reason for certain people’s appointments, but the fact that we were all from Leningrad, that we knew each other, that everyone had experience behind them… I also choose my deputies on their experience, knowledge, my personal impression of a person. It’s natural”.
Several of these figures have been specifically targeted by the US government in the second round of sanctions announced on Thursday. Indeed, President Obama’s two hit lists of Russians highlighted for sanctions by the US represent a fairly accurate who’s who of Putin’s inner circle. They include two of his oldest friends and former judo partners, Arkady and Boris Rotenberg; and Yuri Kovalchuk, sometimes referred to as “Putin’s banker” and the largest shareholder in the Rossiya Bank – identified by the Americans as having close links with the Kremlin. Another member of the inner nexus is Gennady Timchenko, who runs a company called Gunvor. Based in Geneva, it is one of the world’s most important oil traders, but very few people have heard of it. In cables released by WikiLeaks, US diplomats described Gunvor as “of special note” in a broader system of opaque dealings. A 2009 cable said the company is “rumoured to be one of Putin’s sources of undisclosed wealth”. Gunvor has always insisted that Putin “is not a beneficiary” of the company or its activities, yet in its documents last week outlining its sanctions, the US Treasury broke its silence about Putin’s investments in the company.
The president’s actual wealth has long been a matter of speculation in Russia and abroad, from parlour games to WikiLeaks cables putting the total in the tens of billions. The official statements are habitually met with ridicule. In disclosures required by the electoral authorities, Putin claimed in 2012 that his annual official income was $187,000, with assets confined to a small apartment and three cheap cars. One of the claims made by a whistleblower, Sergei Kolesnikov, who left Russia in 2010 and is now believed to be in hiding in Europe, is of a “palace” on the Black Sea for which official funds were diverted. Russian newspapers – the small minority of the brave, investigative variety – provided further information, all of which has been denied by the Kremlin.
Even though parliament is a rubber-stamping body, some MPs stand out in their service to the leader. Yelena Mizulina was one of the cheerleaders for the law against “gay propaganda”. The Orthodox Church has, throughout Putin’s reign, pushed him towards ultra-conservatism and nationalism. One of his most important spiritual guides is a priest called Tikhon Shevkunov. Mindful of being seen to be going after a religious institution, the Americans have kept him out of their sights. But his influence is said to be considerable. When asked, he neither confirms nor denies that he is Putin’s confessor, although he often accompanies him on official visits. He came to prominence in 2008 when he directed and starred in a documentary about the collapse of the Byzantine empire, shown three times on prime-time television. It is an unsubtle parable on the demise that meets a great power when it allows perfidious foreign forces to sully its ideological purity. Such has been Russia’s regression into xenophobia that, when the film was first aired, it was considered by many to be over the top. Now it would be classified mainstream propaganda.
Alongside the more shadowy figures are those who hold official political positions. Top of the Americans’ list is Sergei Ivanov, a hawkish figure who has held a number of key positions in the security establishment, including head of the Security Council and defence minister. As chief of staff, he runs Putin’s office and, formally at least, is the go-to person.
Vladislav Surkov is, after Putin, the most important figure in the creation of Russia’s own brand of authoritarian capitalism. The Kremlin’s in-house ideologue, he came up with a term for it – sovereign democracy. Dubbed the “Grey Cardinal”, Surkov was one of the leading lights behind the youth group, Nashi. Part clean-cut ideologues, part street thugs, the organisation (which means “Ours”) went after people it deemed to be hostile to Russia. That included the British ambassador, Tony Brenton, who, in the mid-2000s, had had the temerity to address a Russian opposition party conference. Baby-faced and of part-Russian, part-Chechen extraction, Surkov is regarded by diplomats as one of the masterminds of the Crimea annexation. He responded to the US blacklist with mockery, saying that the only thing he appreciated about America was the rap artist Tupac Shakur.
Twenty-first-century Russia may have sushi and five-star hotels; its oligarchs may lord it about in London and St Tropez, but it is far removed from the open and inviting society that many had hoped it would become in the 1990s. His opinion poll ratings soaring, Putin can now unashamedly define his country against the West. He has his Russia just where he wants it to be.
John Kampfner was The Telegraph’s Moscow bureau chief from 1991 to 1994. His new book, The Rich, is out in October. He is also a former editor of the New Statesman magazine, guides us through the maze of Gordon Brown’s manoeuvrings and the machinations of the Labour party.