The little grey man

There was officially no capitalism in the Soviet Union then, but in practice everyone also played the black market: you had to, to survive. There certainly was an economy, trading something you have for something that you want, from goods to favours. The young man was growing up in a poor, working-class neighbourhood of a Leningrad still recovering from the devastation and mass starvation of the Second World War blockade, when the city was besieged and battered for 872 days. 

He didn’t have a lot, but, unsurprisingly, he wanted more and was determined to get it. By taking business law, the wannabe spy (or secret policeman) found himself in a faculty that attracted young, liberal, pro-Western intellectuals who were aware that the Soviet economy simply wasn’t working because there were fundamental contradictions between the rigid ideology that the government sought to enforce through its laws and the way commerce actually worked on the ground. This was, after all, a time when blat – meaning pull, or favours – was as much a currency as those over-valued rubles.

Many of these young liberals would in the 1980s go on to work in the new, reformist government under Gorbachev and then post-Soviet Russia’s first president, Boris Yeltsin, but meanwhile most wouldn’t let their respect for the Western business law model get in the way of breaking their own country’s laws when they wanted to enrich themselves. The young man looked up to these new thought leaders. In 1975, he successfully defended his thesis, “The Most Favoured Nation Principle in International Law”, focusing on a norm that would become the bedrock of the World Trade Organization: if a WTO member grants one country a special favour, then it has to do the same for all members. 

The young man, coming from an essentially proletarian family with no particular assets, status or blat, may have quite appreciated the thought of a level playing field. After all, by dint of hard work he had found himself at one of the Soviet Union’s most prestigious universities. Most of his peers came from nomenklatura families, those who had already made it into the Party and the state’s elite, confident in the privileged lives that awaited them. Vladimir Vladimirovich Putin was an outsider, and was going to have to work and fight for what he wanted.

He did work hard, both at his studies and in conforming to his new milieu. He joined the Communist Party, which was essentially a prerequisite to any serious career, not least in the KGB, and did the basic reserve officer training, which was the price for avoiding national service. Upon graduation, the young man did indeed get to join the KGB and, after some training, began working in counterintelligence. This was apparently something of a disappointment to someone who had set his eyes on the agency’s elite First Chief Directorate, the intelligence officers working abroad, but he set about his duties, monitoring consular officials, foreigners and anyone who interacted with foreigners. 

His was a routine of by-the-book interviews to find any traces of espionage or sedition in the rare, though usually innocuous, interactions that Soviet citizens had with foreigners, and the ‘prophylactic chats’ the KGB used to intimidate those who might be getting too close to the line. He was a small, grey man with cold eyes who liked beer and making friends, especially when there was a material incentive. 

Bland and forgettable, he could nonetheless be amicable and even open: one of his colleagues in the KGB recalled him as projecting an image of an easy-going kind of chap, the sort to swing his arms casually as he walked the corridors of the Lubyanka, the service’s headquarters.

Some say that even though he worked for the KGB, he developed a perverse kind of affection for some of the dissidents to whom he sometimes had to talk, and ultimately had to suppress. While he couldn’t openly say anything so subversive, he would, for example, share his admiration for Alexander Solzhenitsyn over a beer in the kitchen. It was not that he was a liberal so much as that even he recognised that the whole Soviet system was not just corrupt, but crumbling – and the institution he had worked so hard to join, the ‘Sword and Shield of the Communist Party’ as the KGB styled itself, was engaged in an exercise in futility.

However, the moment when it became possible to talk openly about all these things outside of one’s kitchen, when a new Party leadership under Mikhail Gorbachev was sparking hope of reform, of actually building something in which it was worth believing, that was when the young man was sent off to serve in Dresden, East Germany, one of the backwaters of the Warsaw Pact.

While it had better beer than back home, he missed out entirely on the optimism, change and hope that his country experienced in those brief five years. Instead, he spent his time collecting newspaper clippings and holding meetings as a KGB liaison officer, little more than a glorified clerk.

After returning from Dresden in 1990, watching an empire he had sworn to protect crumble, 38-year-old Vladimir Putin left the KGB. But he had few job prospects, by his own account getting by as a taxi driver as he watched others begin to get rich cannibalising the scraps of a bankrupt country. In 1991, though, he got a job working for Anatoly Sobchak, one of his professors from his university days, who had become mayor of Leningrad. 

Putin soon rose to become deputy mayor, heading the External Affairs Committee, which curated business and sought to attract foreign investment to the city. Crucially, he also chaired the Supervisory Council for Casinos and Gambling Business, which ensured that the city government had a controlling share in every new casino.

Today, the humble beginnings of the man who would eventually rise to the apex of Russian state power have been woven into spectacular conspiracies. All along, these stories read, the ambitious bureaucrat and his corrupt friends were channelling money into special and secret accounts so that one day they could rebuild the Soviet Union and finally accomplish their dream of revenge and world domination. It’s a compelling story, but a closer look at the real experiences of those who actually served in the KGB shows a sadder, more mundane picture of disillusionment, cynicism and a struggle to rebuild their lives when the system to which they were committed collapsed. Like everyone else, they were using every contact, skill and opportunity they had to get through today and make some money tomorrow.

Vova was a social climber who craved to be part of an elite both for its prestige and its material perks. But virtually overnight, the elite he had joined had been stripped of any status, any meaning. No wonder corruption became ubiquitous: in the absence of values, what other motivation was there but money? ‘We considered ourselves an elite force,’ a disillusioned Federal Security Service (FSB) captain lamented about the early 1990s. ‘“What are we, cops, to take bribes?” we used to say. First, we began noticing that our generals were living beyond their means. We thought they were behaving strangely, but they were just running businesses.’

Another KGB officer, who continued working for the agency after it became the FSB, recalled how the idealistic purity that first drew him into the service disappeared after 1990. ‘When I started working in the KGB the difference [from today] was that we didn’t mix [personal gain with legal responsibility]. People went there – and I know this about myself and my colleagues – for the sake of an idea. The idea of the government, of government law and order. But now there is no central idea in Russia. However bad the idea that Russia used to have, it was still there. Now, there is nothing. What is it that we are trying to attain? Personal profit? But then where are the boundaries?’

For Putin, disillusioned by the lack of direction, the answer was administrative entrepreneurism, using his office not simply to extort bribes but in effect to create business monopolies. Under the guise of ‘bringing order to St Petersburg’s gambling business’, as he put it, in effect he went into the business himself. His committee didn’t own any casinos, but through a separate company controlled 51 per cent of the shares in any within the city, in the name of the local government, the FSB and the tax police. As shareholders, they (the exact word Vladimir Putin used is ‘the government’) were to profit from the dividends.

Of course, on paper, they never did. Putin claimed that the gambling establishments were ‘laughing at us and showing us losses’. In practice, the casinos were making money hand over fist, and so too were those they had to pay off. Money flowed into Vova’s coffers and those of his friends: that was the way of thousands of KGB officers like him, who monetised their clout, their connections and their authority. 

‘We, the patriots of the KGB, were moving millions and millions of dollars into bank vaults,’ admitted one KGB officer. ‘And along those same channels also moved money from organised crime, to the point that I would not be able to tell which monies belonged to the KGB and which to the mafia. In response to my timid questions, they responded: just move the damn money. And I did.’ The practice, at least in part, originally followed a Party Central Committee decree from 1990 authorising a sort of rainy day ‘cash box’ for future political operations.

But after 1991, whatever designs the Communist Party may or may not have had for this fund were rendered moot, because the governing structures of that Party were dissolved and the only man who knew for sure where all the money was, Central Committee treasurer Nikolai Kruchina, fortuitously fell out of a window. 

That collective obshchak – a word borrowed from criminal slang for a gang’s common kitty – was not used to fund some nefarious and ambitious political conspiracy so much as plundered, largely by the very KGB officers who had assembled it.

But what about those, like Putin, who had not been involved in this high-level embezzlement? Instead, they were able to exploit the symbiotic relationship that developed very early between the newly emerging private business enterprises and the thousands of KGB officers – like Putin – who proved instrumental for their connections and their muscle. One had or could make the money; the other could offer access and security. Both ended up empowering each other, but at the cost of enabling and perpetuating the lawlessness that had pushed them into each other’s arms in the first place. As marriages went, it certainly had not been made in heaven. 

An edited extract from “Downfall: Prigozhin, Putin, and the new fight for the future of Russia”, by Anna Arutunyan and Mark Galeotti (Ebury Press £18.99)