The New Tsar (34 page)

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T
he men with whom Putin had worked in Petersburg under Sobchak now joined him in the upper echelons of the Kremlin. They included Dmitri Medvedev, who became deputy chief of staff, and Aleksei Kudrin, who had repeatedly helped him find his way in Moscow and who became minister of finance. His former KGB friends—Viktor Cherkesov, Viktor Ivanov, and Sergei Ivanov—all took up senior security positions. Putin installed so many friends from his hometown that his government became known as the Petersburg clan and was viewed suspiciously by the Moscow political elite, which was used to a monopoly on power and its perquisites. Many even speculated, with no basis in reality, that he would once again move Russia’s capital to Petersburg, just as Peter the Great had. To protect himself from the Byzantine political intrigues of Moscow, Putin turned to those he could trust explicitly. It became a remarkable personalization of authority in the Kremlin,
reflecting his deep distrust of the country’s political elite. “I have a lot of friends, but only a few people are really close to me,” he acknowledged. “They have never gone away. They have never betrayed me, and I haven’t betrayed them either.”
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He kept some prominent Yeltsin allies on his staff, including his chief of staff, Aleksandr Voloshin, and Anatoly Chubais, the reviled father of “shock therapy” who remained the chairman of the state electricity monopoly, but the character of the Kremlin hierarchy soon changed dramatically. On the day of his inauguration, he officially appointed as his prime minister Mikhail Kasyanov, who had risen through the ranks of the Soviet and post-Soviet economic and finance ministries and was known as a pragmatic negotiator respected by his counterparts in the West. The muckraking media nicknamed him Misha Two Percent because of rumors that he extracted a cut in the finance deals he negotiated with bankers—which he fervently denied—but his credentials as a market economist were unquestioned, and his appointment signaled Putin’s careful but steady embrace of the privatization of the 1990s. More important after the political turmoil that had seen six prime ministers since 1998, Kasyanov’s appointment did not provoke a new constitutional crisis with the parliament.

Putin’s early policy choices reflected liberalizing reforms that were cheered on by big business at home and abroad. He imposed a flat income tax of 13 percent on individuals and cut the tax on corporate profits to 24 percent from 35, effective January 2002. He pledged that Russia would have lower taxes but also expect people—and businesses—to pay them, after a decade in which almost every Russian avoided them by any means available. Putin’s new government adopted land codes that allowed private property to be bought and sold, and institutionalized labor rules governing private employment, removing some of the uncertainties that had paralyzed investment and invited corruption and lawlessness. Buoyed by rising oil prices and the slow recovery from the 1998 default, Russia for the first time balanced its budget. It began to pay off its debts to the IMF and others—ahead of schedule. Yeltsin’s presidency had been erratic, but it had laid the foundation for an economic boom. The gross domestic product, which grew 5 percent in 1999, doubled that in Putin’s first year in office and then averaged more than 6 percent for the next seven years.
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The Wild West capitalism of the 1990s had created a decadent upper class and a host of shops, restaurants, and clubs that catered to ridiculously exclusive tastes, but now the fruits of
a market economy began to trickle down to the middle ranks of society, especially in Moscow and other cities. Putin seemed to be the competent, efficient manager he had been as an underling in Petersburg and then Moscow.

He embodied the contradictions of Russia’s progress, resting somewhere between a modern democracy and Soviet traditions it had not yet shaken. Putin’s initial steps reflected both, and opinions on his leadership split according to which side of Putin one embraced. Putin himself seemed at times to struggle to decide which side he was on. Nevertheless, in a matter of a few short months, he offered Russians a break from the chronic chaos of the Yeltsin years. His goal was not to accelerate Russia’s transition to capitalism and democracy but rather to move cautiously, to provide a modicum of what most people wanted, as he would say over and over: stability. And even as war raged in the distant Caucasus, he largely succeeded.

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O
n May 11, four days after Putin’s inauguration, dozens of FSB officers raided the downtown headquarters of Russia’s largest private media company, Media-Most, which included the popular television channel NTV. They arrived in the morning, ordered the staff into the cafeteria, and for hours combed through the offices, seizing documents, computers, and, among other oddities, a decorative pistol belonging to the company’s owner, Vladimir Gusinsky.
³⁹
Gusinsky’s early life had striking parallels to Putin’s. He was born a day earlier, on October 6, 1952, and lived in a one-room apartment with his uneducated, loving parents; his father too was a veteran of the Great Patriotic War and a factory worker. Like Putin, he considered himself a “product of the street”; he learned to fight to defend himself against drunkards and thugs in the courtyards of a bleak Soviet apartment block.

The parallels ended there. Gusinsky’s grandfather died in Stalin’s purges, and though Gusinsky served in the army, he dabbled in blackmarket trades and eventually took up drama.
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All of it—his education, his experiences as a Jew in the bigoted Soviet bureaucracy—made him a rebel against the system that Putin became so loyal to. He also became spectacularly wealthy, opening a consulting company at the end of the 1980s and befriending a city bureaucrat who oversaw the city’s fruit and vegetable markets, Yuri Luzhkov. His business soon expanded into banking, housing reconstruction, and the media. His Media-Most, named after the automated banking network he had seen during a visit to the
United States, created a newspaper,
Sevodnya
, and later the network, NTV, which would ultimately provoke Putin’s wrath.

NTV became Russia’s first modern private television network, with a feisty news department that irritated Yeltsin’s Kremlin with critical, often sensationalized reportage. Just as Berezovsky used the state channel, ORT, to attack Yeltsin’s opponents before the election in 1999, Gusinsky wielded NTV as a cudgel against Yeltsin’s “Family.” The rivalry between the two television moguls was so personal and intense that Yeltsin’s former chief of security, Aleksandr Korzhakov, claimed Berezovsky asked him to assassinate Gusinsky.
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NTV kept up its critical coverage during Putin’s campaign and aired a documentary about the apartment bombings that insinuated government involvement. Worse, from the Kremlin’s perspective, its coverage of the war in Chechnya did not flinch from reporting the scale of brutality and suffering, as the state channels learned to do. NTV’s owner and its journalists were slow to realize that the Kremlin’s tolerance for criticism had diminished under its new leader. Putin had a particular dislike for the way he was portrayed on the channel’s weekly satirical puppet program,
Kukly
, whose creator, Viktor Shenderovich, had been skewering the country’s politicians since 1994. The caricature of Putin—jug-eared and bug-eyed, portrayed alternately as timid or malevolent—did not seem funny at all to the new president. In one episode after Putin’s election in March, the puppet was portayed as a tsar, overwhelmed by a taller, plumper cooing bride representing all of Russia. “But she’s so big,” he whispered to his courtiers. “I don’t have experience with anything of this scale.” A puppet representing his chief of staff, Aleksandr Voloshin, replied, “Just do what we’ve all done to her.”
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Aides in the Kremlin promptly made it clear to the show’s producers that the presidential puppet should no longer appear in its weekly satires.

The motives behind the police raid at Media-Most were not immediately clear, muddled as they were by contradictory statements from the tax police, the prosecutor, and other officials. Putin, however, strongly defended the action the following day, saying that no one would be above the law. It was clearly a signal, and it established a pattern that would become a familiar one. “There will be no such oligarchs as a class,” Putin had declared on the eve of the election.
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The raid did not immediately affect Gusinsky’s media holdings, which covered the events with zealous outrage. Putin insisted there would be no limits on freedom of speech, but no one on Gusinsky’s side believed him.

The prosecutorial assault on Media-Most coincided with the first official visit by President Clinton to Moscow under Russia’s new president. Putin had not made foreign policy the first priority of his presidency, though in April he succeeded in getting the Duma to ratify the START II agreement negotiated by Yeltsin nearly a decade earlier to reduce the nuclear arsenals of the United States and Russia. Clinton was now eager to persuade the new Russian leader to accept American plans to build a missile defense despite the limits imposed by the Anti-Ballistic Missile Treaty, a crucial Cold War pact credited with preventing an ever-esclating nuclear arms race. Clinton hoped to make missile defenses one of his last achievements before stepping down, but ever since Ronald Reagan first proposed his “Star Wars” vision of a missile shield, Soviet and then Russian leaders had furiously opposed any proposals to allow them. Putin would be no different, fearing that even the rudimentary defensive system Clinton was considering could ultimately undermine the last leverage Russia had as a superpower. Although Clinton wanted to make a deal, Putin calculated that he would have better odds negotiating with the next American president. His wariness toward the Americans had been heightened by Clinton’s admonishments over the war in Chechnya. This time Clinton also raised objections to the assault on Media-Most—with Putin and, pointedly, in an interview with a radio station, Ekho Moskvy, that was owned by Gusinsky’s company. Clinton later paid a visit to Boris Yeltsin, whom after eight years in office he considered a friend. “Boris, you’ve got democracy in your heart,” Clinton told him. “You’ve got the trust of the people in your bones. You’ve got the fire in your belly of a real democrat and a real reformer. I’m not sure Putin has that.”
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Clinton’s visit ended inconclusively. He did not win Putin’s support for changes that would allow missile defenses. Nor did Putin heed his encouragement to respect a free media. Nine days after he left, the new prosecutor general, Vladimir Ustinov, summoned Gusinsky, ostensibly to question him about the bullets for the decorative pistol found in his headquarters. Gusinsky arrived late and was immediately arrested.

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O
n August 12, during the lazy month of summer holidays, Putin finished a last round of meetings with his national security advisers at the Kremlin and then departed with his family for Sochi, the Black Sea resort beloved by Soviet leaders for decades. They stayed at the presidential dacha that he and Lyudmila had admired from a distance during
Brezhnev’s rule. He would barely have time to rest. The next morning he received a telephone call from the minister of defense, Marshal Igor Sergeyev. The early hour could only mean bad news, and it proved to be the gravest test yet of his young presidency.

Russia’s newest nuclear submarine, the
Kursk
, had lost contact with the Northern Fleet during a training exercise in the Barents Sea. Construction of the
Kursk
had begun in Soviet times and was completed in 1994, when the country’s once mighty military reached the nadir of its post-Soviet decay. It was the pride of Russia’s navy, a giant warship designed to battle American aircraft carriers. Now it had gone missing in territorial waters off Murmansk and no one knew why. Sergeyev, it seems, misled Putin about the severity of the crisis, perhaps because he had been misled himself by the navy. The commander of the Northern Fleet, Admiral Vyacheslav Popov, released a statement declaring the exercise a resounding success but made no mention of the disaster that was clear not only to Russian commanders, but also to American and other foreign militaries who had been monitoring this exercise closely.

Just before Putin left Moscow, an explosion had ripped through the
Kursk
’s bow, triggered by a misfiring torpedo. The blast ignited a blaze in the fore compartments, which was followed two minutes and fifteen seconds later by a much larger explosion, which was detected by two nearby American submarines and seismic sensors as far away as Alaska.
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The explosions sent the
Kursk
to the bottom of the sea, 354 feet below the stormy surface. The submarine had a crew of 113 officers and sailors, accompanied by five more senior fleet officers who were monitoring the exercise, the largest in the Barents since the Soviet Union collapsed. Most died instantly, but a group of twenty-three sailors managed to seal themselves inside a rear compartment, where they waited in the dark and cold for a rescue that was not forthcoming. A young officer, Captain-Lieutenant Dmitri Kolesnikov, gathered the survivors, took roll, and wrote notes to his commanders and to his wife. The last, scribbled on lined ledger paper, was dated August 12 at 3:15 in the afternoon, nearly eight hours after the first explosion. He folded it in plastic and put it inside his uniform.

It’s too dark to write here, but I’ll try blind
.

It looks like there is no chance, % 10–20
.

We will hope
,