Russia: From Silovik Power To A Corporate State

(RFE/RL) September 25, 2007 (RFE/RL) -- The domination of the siloviki -- people who emerged from the KGB or its successor organizations -- in Russian political and economic life is an accomplished fact. Over the seven years of President Vladimir Putin's administration, a core group of some 6,000 siloviki has moved into key controlling positions throughout government and business. But the question remains: for what purpose have these products of the country's totalitarian past taken over and what can we expect to see in Russia's domestic and foreign policies?

Some observers have argued that the siloviki of today's Russia differ substantially from the monolith of the Soviet KGB that kept a huge swath of the world in terror for decades. They argue that today's siloviki have no consolidating center, espouse no common ideology, and are riven into viciously competing factions. Sometimes this competition breaks out into open conflict, sometimes even leading to kidnappings or killings. In at least one case, Putin was compelled to intervene and reshuffle part of the community.

Conspiracy Theory?

Along the lines of this thinking, apn.ru, a website run by the conservative National Strategy Institute, ran several publications this month arguing that the talk of "silovik power" is just "a conspiracy theory," a figment of the imagination of "liberals" who are only scaring themselves and others. The articles argue that Russian policies are irrational and opaque and that power in the country remains concentrated in the hands of the "raw-materials oligarchs." Putin and the siloviki have neither a long-term strategy nor a coherent ideology.

Many analysts, however, are inclined to disagree. The Institute of Social Planning, a Moscow think tank, issued a study this year that found the influence of the siloviki in politics and the economy is "enormous," while that of the purported oligarch is "negligibly small." The aggregate opinion of the 670 experts surveyed for the study is that the siloviki influence on Russian policy manifests itself primarily via the networked influence of their representatives in the regions on policies in their regions.

At the federal level, Putin and the siloviki have acted in ways that betray their sense that the upcoming legislative and presidential elections don't matter much. Putin has initiated several ambitious national programs operating on a timetable extending for years into the future, while Sergei Ivanov, then a first deputy prime minister and a leading contender to succeed Putin in March 2008, presented to the St. Petersburg International Economic Forum in February a plan to push Russia into the ranks of the world's five most developed economies by 2020.

The state budget adopted this year covered not the usual 12 months, but the entire period until 2010. At the same time, Russia has been acting in a consistently aggressive manner in the international arena, particularly on global energy markets. These facts and others seem to indicate that the silovik-based community that has come to monopolize power in Russia is implementing a coherent, long-term strategy. Many elements of this plan have been incorporated into the campaign program of the pro-Kremlin Unified Russia party, which is called "Putin's Plan." And recently published books, memoirs, and available KGB documents may offer insight into the nature of their ambitions.

Putin's Plan

Putin's rise to power in 1999 and 2000 marked the second time in recent history that a state-security chief became the country's supreme leader. The first was Yury Andropov, a KGB chairman who was much admired by Putin and who was elected general secretary of the Soviet Communist Party in November 1982. Although Andropov only ruled the Soviet Union for 15 months before his death, he had an ambitious vision for reforming the Soviet economy and making it competitive with the West. Andropov had a keen understanding of the weaknesses of the Soviet system both because of the information at his disposal when he ran the KGB and because of his experience at the KGB itself. Interestingly, the KGB and the Soviet military-industrial complex were the only two Soviet entities that functioned successfully -- precisely because, like Soviet Olympic athletes, they had to perform in constant competition with the best counterparts that the outside world had to offer.

Author and journalist Maksim Kalashnikov (real name: Vladimir Kucherenko) in 2003 wrote a book called "Forward To The USSR-2" in which he laid out what he claimed to be Andropov's reform plan. Its essence was to combine the strengths of the military-industrial complex and the KGB by carrying out an authoritarian modernization plan that would result in a modern corporate state. Kalashnikov's has collaborated on other books with banker Sergei Kugushev, who in 1983 was a young economist working in an analytical group studying modernization proposals under Andropov. He claims he personally helped draft this version, which he calls the "Red Star Corporation."

A key part of the purported Andropov plan was to be played by the KGB's Sixth Directorate, which was concerned with economic-intelligence gathering. This directorate had accumulated masses of classified technologies taken from Soviet innovators and stolen from the West by KGB operatives. This information would be used to spark a scientific-technical revolution that would drive the country's modernization.

'Best And Brightest'

The plan also envisions the cultivation of the Soviet Union's "best and brightest," who would be recruited into the KGB. Many KGB officers had an intimate knowledge of the strengths and weaknesses of market-based economies and open, muliparty political systems. Interestingly, the main reservoir of cadres for the KGB was the Komsomol Soviet youth organization, from which many of the post-Soviet Russian oligarchs also emerged.

Andropov, though, died after just over a year in office and, beginning in 1986, Soviet leader Mikhail Gorbachev attempted a different reform plan that led to the collapse of the Soviet Union.

Many critics blame President Boris Yeltsin and his circle for failing to dismantle the KGB after they came to power in 1991. Many of those who were in power at the time failed to understand the strength and resilience of the KGB, while others had less excusable reasons for failing to act. At any rate, it would have been Herculean task to dismantle completely an organization that had controlled so much of Soviet life for decades and that numbered more than 500,000 uniformed officers and uncounted millions of secret informers.

Nevertheless, Yeltsin was wary of the KGB and succeeded in breaking up its monolithic structure into a number of successor agencies. He made efforts to reform the state-security apparatus and to institute some oversight mechanisms. One result of these half-hearted and incomplete reforms, though, was a mass exodus of KGB officers out of state service and into the private sector. By some estimates, some 100,000 former KGB officers took up jobs in business.

During the mid-1990s, when the process of the privatization of Russia's natural-resources sectors was in full swing, Yeltsin made the mistake of instructing hundreds of state-security officers to monitor the handover of state entities and strategic resources and reserves. The Yeltsin administration felt the former KGB officers could prevent the process from descending into chaos and help identify desirable new owners. The budding oligarchs themselves made the mistake of trying to "privatize" the KGB by bringing hundreds of former officers into their own organizations as analysts, consultants, and security personnel. Looking with hindsight at the fates of former oligarchs like Boris Berezovsky, Vladimir Gusinsky, and Mikhail Khodorkovsky, it is less than certain who used whom.

In 2005, a book called "Project Russia," by unnamed authors, appeared on the website of a state-security veterans organization in St. Petersburg. The book describes the role that KGB veterans played in selecting and molding the aggressive young entrepreneurs who by the mid-1990s had come to be known as the Russian oligarchs.

The book claims that the emerging siloviki viewed privatization as a temporary process from the outset and, therefore, took pains to select new owners whose main trait was not their managerial genius but their controllability. "Project Russia" refers to them dismissively as "toy oligarchs." Although the siloviki tried to eliminate people with "large-scale thinking and political ambitions," some of the finalists did "cross the line." "But today all these 'politicians' have either fled the country, are serving time, or died under obscure circumstances," the book declares.

The dispossession of the oligarchs has accelerated the shift of power in Russia toward the siloviki, and the remaining so-called oligarchs are notable primarily for their docility. Kremlin-friendly billionaire Oleg Deripaska recently affirmed that he is ready to "return" all his assets to the state at a moment's notice, and he and fellow billionaire Roman Abramovich fall all over themselves to make generous donations to Kremlin-backed projects like the 2014 Winter Olympics in Sochi. "Kommersant-Dengi" this month published an impressive list of the industrial and financial enterprises that have been renationalized since 2002.

But the property of the oligarchs was never the end goal of the siloviki effort. They are seeking total, state control of the national economy. A distinguishing characteristic of the siloviki -- unlike the old oligarchs -- is that, with very few exceptions, there are no billionaires among them. They are content to control property rather than own it, and prefer to exercise that control from the boardrooms of state megacorporations that dominate major sectors of the economy and that are tied together in an informal network. They envision a corporate state.

Many Western analysts resist applying the term "corporate state" to Russia because of its associations with Italy under Benito Mussolini, Spain under Francisco Franco, and Portugal under Antonio Salazar. Russian analysts, politicians, and officials, however, use the term freely. Central Election Commission Chairman Vladimir Churov told NTV on August 31, for example, that Russia has formed "a corporate state." "We have a state corporation and we are electing the top management of our state corporation," he said.

It remains unclear how far the siloviki intend to and will be able to carry out this reform vision. But Kalashnikov's "Forward To The USSR-2" gives one ominous vision:

"It is a clandestine state, operating covertly under a seal of secrecy. It is invisible to the West and the majority of Russia. It is a hybrid of the special services, a nearly religious order (a group of people who passionately want to create a Russian miracle), a network of high-technology projects, financial-investment structures, and a web of propaganda.... Figures from this secret state say where to invest money. They choose projects and technologies. They direct investments and plan operations to take over whole branches of industry both on the territory of the late USSR-1 and right up to Europe and the United States. A transnational business network is being built -- the USSR-2."