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Russia Profile
www.RussiaProfile.org
February 22, 2005
Group Dynamics
The Vague Science of Neo-Kremlinology
By Dmitry Babich

The Soviet Union may be long gone, but Kremlinology appears to be making a comeback.

Generations of politicians, academics and journalists made their names, and livings, trying to determine whose voices and interests were most important to an understanding of the nature of government policy in Russia. For much of the Soviet period, explanations focused on largely conjecture based on the interplay of groups representing various lobbies, including those from state security and military organizations, and reformers of different ilks. Theories generally stressed the importance of particular interests and alliances at the top of state power that shaped the Kremlin's decisions. But the opaque nature of the decision-making process itself meant that speculation and guesswork usually formed the basis of the explanations.

The workings within the Kremlin, and within the Politburo in particular, were laid open to a significant degree under the Soviet Union's last leader, Mikhail Gorbachev, as the names, the faces and the different policy preferences became easier to identify. Boris Yeltsin's administration continued the trend, as the roles of the so-called "oligarchs" and a group labeled "the Family" in pressuring the country's first post-Communist president toward favoring particular policies became more open. That many members of the former group made their fortunes on the shady privatization deals of the era and were themselves significant players within the family, which, appropriately enough, included one of Yeltsin's daughters, helped explain who was who and who got what.

Determining the nature of the present Kremlin team, under President Vladimir Putin, seems to represent at least a partial return to the reading of tea leaves. The balance of powers within the Kremlin and the particular characters of the different policy-formulation participants are, once again, the focus of speculation, with views ranging from state-centered economic liberalism to the establishment of a secret-security based policy apparatus.

"We are ruled by St.Petersburg's Chekists, the worst representatives of the Soviet secret police," said Gennady Zyuganov, evoking the name of the first Soviet security agency, which ultimately grew into the KGB. For those who are in opposition to the Kremlin's current occupants, such as Zyuganov, who fought and lost two presidential elections as the Communist Party candidate against Yeltsin, as well as much of the press, foreign and domestic, the security backgrounds of many of those close to Putin is a common theme.

"These people aren't capable of doing anything but reporting on each other," said Sergei Parkhomenko, the editor of Itogi news magazine during the 1990s, when the publication followed a strong liberal editorial line and was financed by the media magnate Vladimir Gusinsky, a Yeltsin ally who fell out of favor after Putin came to power in 2000, and now lives in exile in Israel. The animosity on the part of both Parkhomenko and Zyuganov to the current Kremlin team can be, at least partially, explained by the fall in their political and professional fortunes since Putin took power. But the fact remains that many of those considered to be closest to Putin share the president's security background. This has added a new term to the Kremlinology lexicon ­ "siloviki" ­ denoting representatives of the so-called "power ministries."

Both Defense Minister Sergei Ivanov and the deputy head of the presidential administration, Viktor Ivanov, had long careers in the KGB and post-Soviet business structures before being brought to the Kremlin by Putin. Viktor Cherkesov, who served as Putin's envoy to the Northwest Federal District before taking over as the head of the Federal Anti-Narcotics Agency, also served in the KGB and the general wisdom is that the time spent by deputy presidential administration head Igor Sechin working as an interpreter in Angola also involved work for the security agencies.

Other experts, however, stress different characteristics in the common backgrounds of Putin's team. Alexei Makarkin, an analyst with the Center for Political Technologies, in Moscow, and the author of "The Political-Economic Clans of Modern Russia," which devotes a number of chapters to the members of Putin's "St. Petersburg Clan," said that the basis for selection of the president's closest circle is based on a broad set of criteria.

Most important, according to Makarkin, is loyalty. Anyone with connections to the Yeltsin-era oligarchic structures was viewed with a measure of distrust when Putin came to office. Concerns over questions of "double loyalties," according to Makarkin, led to most of these figures ultimately being eased out of the administration, with the dismissal last year of Prime Minister Mikhail Kasyanov, the last major remnant of the Yeltsin-era Kremlin, representing the final chapter of the Putin takeover.

Both Economic Development and Trade Minister German Gref and finance minister Alexey Kudrin worked with Putin when the latter served as a deputy to then St. Petersburg Mayor Anatoly Sobchak ­ Gref as the city's privatization manager and Kudrin also as a deputy mayor. Both quit the city government after Sobchak was defeated in the gubernatorial elections in 1996, in which Vladimir Yakovlev, another deputy mayor under Sobchak, defeated his former boss. Putin publicly labeled Yakovlev as a "Judas" during the campaign.

The fact that the people Putin chose to man his Kremlin staff team had only minor connections, if any at all, with the "Family" that ran the show under Yeltsin may be attributable to the reformer bent that he brought to office in 2000. The less that his government ministers were beholden to entrenched Moscow interests, the argument goes, the easier it would be to implement changes. The fact that so many of them come from St. Petersburg may have been, in part, calculated to counteract traditional Moscow power groupings.

But the lack of these connections doesn't mean that they were outsiders to government service altogether. Gref and Kudrin, as already mentioned, served in senior posts alongside Putin in the St.Petersburg government. Kudrin actually came to Moscow first, being brought to the capital in 1996 by Anatoly Chubais, who was then the head of Yeltsin's presidential administration. Two more members of the clique from the former imperial capital, long-time Putin right-hand man Dmitry Kozak, who now occupies the highly sensitive post of presidential envoy to the Southern Federal District, and Dmitry Medvedev, another deputy head of the presidential administration, both worked in the legal department of the St. Petersburg government.

Given Putin's own career in the KGB and in the liberal administration of Anatoly Sobchak, it's not surprising that the majority of the members of his team have strong backgrounds in either St. Petersburg or in the security or military services. Some examples, such as Sergei Ivanov, fit both options. These two simple factors have led most commentators to organize the members of the Kremlin organization into two basic groups: the "siloviki," or members of the security ministries, and the St. Peterburg liberals.

But Vladimir Lysenko, the head of the Institute of Modern Politics, a Moscow-based think tank thinks that the typology should be broadened to include one more sub-group.

"I see at least three groups surrounding Putin," Lysenko said. "The first consists of the siloviki, Igor Sechin and Viktor Ivanov. Sechin is rumored to be the one who controls access to Putin. The second consists of the economic liberals, Alexei Kudrin and German Gref. [Dmitry] Kozak and deputy head of the presidential administration Dmitry Medvedev make up the third group, which sees the solution to the country's problems in legal reforms. [Deputy head of the presidential administration, responsible for working with the Duma and political parties Vladislav] Surkov works on his own, knowing that he is irreplaceable in his quality of a genius of political manipulation."

Given the differences in focus and, most likely, interests between the groups, Lysenko said that he did not think it likely that the three groupings, with Surkov as a wild card, could be expected to coexist in the Kremlin, let alone to work effectively together on policy. Alexey Makarkin from the Center for Political Technologies agrees.

"The St.Petersburg clan was once united by the common enemy. This was the Family, the close-knit coalition of oligarchs and state officials once close to president Yeltsin," Makarkin said. "Now that this enemy has been largely removed, rivalry inside St.Petersburg clan is growing."

According to another source with close links to the presidential administration, loose alliances between members of different groups appear to have formed, with some siloviki entering into loose cooperation with members of the liberal camp in order to further their own interests. Cohesion within the different groups, meanwhile, may already be deteriorating, with one source close to the presidential administration saying that the relationship between Kozak and Medvedev has soured. Kozak's removal from the position of chief of staff of the government, where he was essentially the presidential representative in the cabinet, and his appointment to the post in the Southern Federal District has been characterized by insiders as a demotion.

"As the head of the president's Legal Department, Kozak was not allowed to bring the reform of the country's legal system to the end that he had envisaged," a source having access to the Kremlin administration said. "He didn't have enough time to finish the administrative reforms as the government chief of staff either. There are rumors that his 'exile' to the Caucuses was engineered by Surkov."

This, says one expert, is an indication that the basic talents of those at the top of the ladder in the Kremlin might represent both their strength and their weakness.

'These people are very good at preventing their enemies from hurting them," the expert said. "But I am not sure that they are as talented in terms of helping the country develop."

One of the explanations for the degree of jockeying between the various siloviki is that, having gained ascendancy over the remnants of the Yeltsin's Family they are now looking to fortify themselves financially ­ if not personally, at least from the standpoint of their particular organizational constituencies. While the former members of the Family still command economic resources superior to those of the crew in the Kremlin, the latter have been strengthening their own hands by putting themselves, or their proxies, on the boards of some of the country's most valuable companies. Viktor Ivanov, for example, became the chairman of the board of directors of Aeroflot, while Igor Sechin took a similar position in state-owned oil company Rosneft.

Those who believe that the siloviki are looking to use their new positions to gain more economic influence point to Rosneft's acquisition of Yuganskneftegaz, the main production unit of troubled oil major Yukos, in December. The auction for the production unit, which was ordered sold to pay off back taxes and penalties owed by Yukos, was won by Baikal Finance Group, an unknown entity at the time, which quickly sold the asset on to Rosneft. Sechin wasn't the only Kremlin insider involved in the deal.

Sergei Bogdanchikov, Rosneft's president, is one of the few people with direct access to Putin, and is also one of the only major players surrounding Putin to have no obvious background in either St. Petersburg or the security services. He rose from the position of engineer through the administrative ranks of state-run oil-drilling concerns on Sakhalin, an island off Russia's Pacific coast. When Bogdanchikov became the CEO at Rosneft in 1998, the company, which the state had hoped in the 1990s would become the leader of Russia's oil industry, was faced with falling production and had lost out on some properties to aggressive moves by oligarch-controlled interests. One of these firms was Sibneft, owned by Roman Abramovich, the governor of the Chukotka region who had strong ties to the Family but, at the same time, appears to have remained in Putin's good graces. Bogdanchikov quickly moved to consolidate the company's control over its holdings and has since made a number of moves, including the Yuganskeneftegaz purchase, to strengthen the company's position. Most experts believe that much of this success is due to Bogdanchikov's ties to the siloviki and, in particular, Sechin.

In order to stay in the good books of the siloviki, "their" businessmen generally have to maintain a low profile and acknowledge the state's leading role in the new set of relations between big business and the government.

"This is a far cry from the situation during the Yeltsin period, when big business tried to dictate the terms to the state," Makarkin said. "The air of Davos [a Swiss ski resort where World Economic Forums are held every year] played a wicked joke on Gusinsky and Berezovsky, who started considering themselves independent players in the world of business. The new Kremlin-friendly oligarchs have to reconcile themselves to a somewhat more modest position."

But this does not necessarily mean the end of the oligarchic nature of Russian capitalism, or that the lines have been clearly drawn between business and political interests.

"Even since Putin came to power, I have not seen any fair privatization tenders," said Yuri Boldyrev, the head of the State Audit Chamber in the 90s and the author of a book on the crooked privatization auctions of the Yeltsin period. "The mere fact that state officials have taken up positions on the boards of directors of major companies does not mean that these companies have begun to serve the people's interests."

In 2000, before leaving the post at the Audit Chamber, Boldyrev prepared a number of lawsuits against both the organizers and the winners of some of 1990s privatizations, but no actions have been filed with the courts by the country's new administration.

"I don't feel pity for Yukos owners," Boldyrev said. "They accuse the new administration of robbing them, but several years ago they did not feel 1 percent of their present holy anger when the whole people of Russia was robbed under their own eyes, and sometimes with their help."

Makarkin, of the Center for Political Technologies, said that, while an understanding of the interplay of forces within the Kremlin is important to understanding the resulting policies and decisions of the presidential administration, including the events surrounding Yukos, Putin's own position at the top of the heap can't be forgotten. Where Yeltsin was often portrayed as a sort of marionette, with his strings being pulled by the oligarchs and other members of the family, there seems to be little question about who calls the shots in the Kremlin today.

"People who say that the siloviki control Putin are wrong," Makarkin said. "It is the other way around, and they will only be powerful for as long as Putin wants them to be powerful."