Inside Putin’s Russia ANDREW JACK OXFORD UNIVERSITY PRESS Praise for Andrew Jack’s Inside Putin’s Russia “A fluent, detailed, and balanced account of Russian power politics, with a lively emphasis on the Kremlin’s onslaught against independent media and stroppy tycoons.” —The Economist “In describing the big picture, Jack achieves a fine balance, criticizing without animosity and making the right allowances for peculiarities of history and culture.” —Financial Times “Gives even experienced Russia-watchers a better perspective on the man and the milieu he operates in. [Jack] writes with care, more like an historian than an anecdote-laden, self-important journalist à l’Americaine." —Roger Fontaine, Washington Times “In the most comprehensive account of Putin’s first term in office now in print, Jack presents a judicious account of his achievements: tax reform, balanced budgets, sharply reduced international lending, and a booming economy. As Jack details in several excellent chapters, Putin continued a brutal and ineffective war in Chechnya, acquired de facto control of all major national television networks, turned both houses of parliament into rubber stamps, arbitrarily jailed or exiled political foes, rigged regional elections, arrested outspoken journalists, weakened political parties, and increased the role of the FSB (the suc- cessor organization to the KGB).” —Michael McFaul, Washington Post Book World “Jack’s book is, as the title suggests, an attempt to see Russia from with- in, to understand it on its own terms. Jack is not sympathetic to the regime, but he is fascinated by the country. We learn a huge amount about Putin’s Russia along the way. The restraint and the skepticism that run through Jack’s book do even more credit to the author now that Putin’s credentials are going up in smoke.” —Robert Cottrell, New York Review of Books “A helpful overview of the Putin era since 2000. Jack, who is Moscow bureau chief for the Financial Times, gives us a country with ‘chill breezes returning from the past,’ possibly headed toward a new political Ice Age.” —Carlin Romano, The Philadelphia Inquirer “A must-read for avid Russia-watchers . masterfully reveals the inner workings of Putin’s Kremlin. Jack draws on extensive first-hand knowledge from his six years as Moscow bureau chief for London’s Financial Times to enliven his narrative. Jack’s book is well-written and meticulously researched, exhibiting refreshingly few of the over- simplifications that too often pepper popular accounts of contempo- rary Russian politics. An impressive book that goes a long way toward improving our collective understanding of what motivates Russian politics today.” —Juliet Johnson, Globe & Mail “Jack gives considerable attention to the regime’s takeover of NTV, the most independent of the Russian television channels, by the state- controlled energy company Gazprom. This is a story that has been told before, but what makes Mr. Jack’s narrative particularly useful is that he describes the extent to which NTV was corrupt itself. Jack provides valuable background to the Chechen conflict.” —David Satter, The New York Sun “Lively, fluent, and well-informed.” —Guardian “Andrew Jack has been responsible for some of the best coverage of Russian affairs in recent years. Inside Putin’s Russia is intelligent, meticu- lously researched and readable: everything a political biography should be.” —Sunday Times (London) “Admirable. Jack shows in fascinating detail how [the so-called oli- garchs] came by their wealth.” —Spectator “An excellent (and wary) political and economic overview of an often opaque U.S. ally.” —Publishers Weekly “Jack’s work argues persuasively that so far Russia’s democracy has been a ‘virtual democracy’ only and that the Russian people must learn the basics of democracy to make it work.” —Library Journal “A clear-eyed, highly readable look at modern Russia, with all its ongo- ing enigmas and mysteries.” —Kirkus Reviews “Andrew Jack has given us a vivid, sophisticated picture of Russia’s polit- ical and economic culture under President Vladimir Putin. Jack offers a penetrating analysis of Putin’s contradictory path as a modernizer of Russia—and of where this path might lead.” —Mark Medish, former senior director for Russian affairs, U.S. National Security Council “Inside Putin’s Russia provides astute and accurate observations on what Russia has become under President Putin. In a lucid and highly read- able book, Jack shows devastatingly how Putin has systematically cur- tailed democracy in Russia, while capitalism has triumphed. No other book gives such a clear feel of Putin’s Russia.” —Anders Åslund, Senior Associate, Carnegie Endowment for International Peace “Andrew Jack’s work is a valuable contribution to the literature on Russia at the start of the 21st Century: intelligent, fair-minded, and enlivened by the author’s experiences as a journalist in Russia, and by his meetings with some of the leading figures there.” —Anatol Lieven, author of America Right or Wrong: An Anatomy of American Nationalism INSIDE PUTIN’S RUSSIA ANDREW JACK Oxford University Press, Inc., publishes works that further Oxford University’s objective of excellence in research, scholarship, and education. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Copyright © 2004 by Andrew Jack Epilogue © 2006 by Andrew Jack First published in Great Britian by Granta Books, 2004 First published by Oxford University Press, Inc., 2004 198 Madison Avenue, New York, NY 10016 www.oup.com First issued as an Oxford University Press paperback, 2006 ISBN-13: 978-0-19-518909-4 ISBN-10: 0-19-518909-4 Oxford is a registered trademark of Oxford Univerity Press All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press. The Library of Congress has catalogued the cloth edition as follows: Jack, Andrew, 1967– Inside Putin’s Russia / by Andrew Jack. p. cm. “First published in Great Britian by Granta Books 2004”—T.p. verso. ISBN-13: 978-0-19-517797-8 ISBN-10: 0-19-517797-5 1. Russia (Federation)—Politics and government—1991– 2. Putin, Vladimir Vladimirovich, 1952– I. Title. DK510.763.J33 2004 947.086’092—dc22 1 3 5 7 9 10 8 6 4 2 Printed in the United States of America on acid-free paper CONTENTS Dramatis Personae vii Foreword to the US Edition xiii Introduction: In the Kremlin Library 1 Coming to Terms 7 The Man From Nowhere 42 Prisoner of the Caucasus 88 Shooting the Messenger 131 Autumn of the Oligarchs 174 The Price of Reform 216 A Bridge Too Far 255 Towards Liberal Authoritarianism 297 Epilogue 341 Index 353 v This page intentionally left blank DRAMATIS PERSONAE ABRAMOVICH, ROMAN (b. 1966). An intensely secretive orphan who became a successful oil trader during the 1990s. Through friendship with Boris Yeltsin’s ‘Family’ and a series of business deals in association with Boris Berezovsky, he emerged as the multi-billionaire owner of an oil, alu- minium and food empire before selling off many of his assets and acquiring Chelsea Football Club. AUSHEV, RUSLAN (b. 1954). Former Soviet army officer who became president of Russia’s North Caucasus republic of Ingushetia in 1993, steering a more peaceful course than was pursued in neighbouring Chechnya. His policies clashed with those of Putin’s Kremlin, and he stepped down in 2002, clearing the way for the election of an FSB (the Russian successor of the KGB) officer. BEREZOVSKY, BORIS (b. 1946). Fast-talking academic turned tycoon with wide business interests, including media outlets which he used for political objec- tives. The éminence grise of Boris Yeltsin’s second term in 1996–9, he was secretary of the Security Council and the Commonwealth of Independent States. He helped promote Vladimir Putin to president but then became a strong critic and fled into exile abroad. vii DRAMATIS PERSONAE CHERNOMYRDIN, VIKTOR (b. 1938). Energy ministry executive with tight contacts to the state- backed monopoly Gazprom, he was named a compromise prime minister by Yeltsin in 1992 after the turmoil of early market reforms. He remained in power until his sacking in 1998, and was appointed Putin’s ambassador to Ukraine in 2001. CHUBAIS, ANATOLY (b. 1955). Economist turned ruthless ‘Bolshevik’-style architect of 1990s market reforms, including privatizations which created a class of oligarchs. He helped mastermind Yeltsin’s re-election in 1996, and was named head of UES, the state electricity monopoly, in 1998. He continued to pursue political ambitions as a key figure behind SPS, the liberal democratic Union of Right Forces. DZERZHINSKY, FELIX (1877–1926). Founder of the ruthless Cheka, the All-Russian Extraordinary Commission for Combating Counter-Revolution and Sabotage, the forerunner of the KGB, the Soviet-era secret police, and its Russian successor, the FSB. Dzerzhinsky’s name is synonymous with the Red Terror he launched on behalf of Lenin, but his reputation has enjoyed a revival along with that of the KGB. DUDAYEV, JOKHAR (1944–96). Soviet air-force commander who became the first Chechen general in the Soviet forces. He returned to his native Chechnya in 1990, and led the republic into a chaotic self-declared independence. His erratic style and clashes with Yeltsin triggered the first conflict in 1994, and he was killed by a Russian missile after his satellite telephone call was intercepted. GAIDAR, YEGOR (b. 1956). Brilliant economist who was the intellectual father of Russia’s liberal reforms under Yeltsin during the 1990s.