The New Tsar (39 page)

The rescue seemed to be an unmitigated victory—except that the men who planned and carried out the raid had not given thought to the effect the gas would have on the weakened hostages. The succcessful raid turned into disaster. The first unconscious victims were brought out at seven o’clock and laid in rows on the theater’s front steps, followed by more and still more. Some had already died, but many more were merely unconscious, left amid the growing piles of corpses. Rescue teams were overwhelmed. They were prepared to treat wounds from bullets or bomb fragments, not people choking on swollen tongues. The authorities had prescribed an antidote to counteract the effects of the gas, but there were not enough doses available. And neither the paramedics on the scene nor the doctors in the hospitals knew how much to administer. In the end 130 hostages died during the siege, only five of them from gunshot wounds. Of the latter, only two were hostages inside the theater. The other three were the woman who had burst into the theater the first day and two other men who were shot as they approached or entered the building during the siege.
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A doctor who participated in the rescue described the confusion and chaos. “It wasn’t an evil plot,” he said. “It was just a Soviet mess.”

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P
utin delivered a televised statement that night. He had appeared sparingly during the siege, shown only in brief clips of his meeting with his security advisers, members of parliament, and Muslim leaders. He was grave, steely-eyed, and seething with coarse fury, referring to the terrorists as “armed scum.” He said he had hoped for the release of the hostages but had prepared for the worst. “An almost impossible thing was accomplished,” he went on. “The lives of hundreds upon hundreds of people were saved. We proved that Russia cannot be brought to its knees.” In Putin’s mind, the rescue had been a victory, though he acknowledged it was a painful one.

“We were unable to save everyone,” he said, before the authorities had disclosed the horrible toll. “Please forgive us.”

The horrific siege hardened Putin’s views that Russia faced an existential
threat. The rebels fighting on the country’s flank would, with international support, tear the country apart, and the only answer was to destroy them. Aslan Maskhadov, through a representative at a gathering of Chechens in Copenhagen, denounced the attack and offered to enter peace talks without any conditions, but the Kremlin refused. Instead Russia’s prosecutors issued an international arrest warrant for Maskhadov’s representative, an actor turned activist, Ahkmed Zakayev, who had been at the conference. Denmark arrested him, but refused to extradite him a month later, saying the Russians had fabricated the evidence implicating him in the siege. In Putin’s mind the West was now harboring the avowed enemies of Russia.

A week after it ended, Shamil Basayev claimed responsibility for the siege, saying he wanted to give Russians “a firsthand insight into all the charms of the war unleashed” by the Kremlin. Instead of seeking to exploit the apparent rift between Basayev and Maskhadov, Putin refused even to consider the possibility of peace talks now. Some believed that might have been the point of the siege all along. A new round of conspiracy theories arose that Putin’s cadre had either orchestrated or done nothing to prevent the siege, exploiting it as they had the apartment bombings three years earlier in order to undercut those calling for a negotiated truce. The FSB’s opacity deepened the suspicion. Officials refused to discuss how forty-one fighters with arms and explosives managed to slip into the capital undetected. They refused to divulge the formula for the gas used to anesthetize those inside the theater. The Duma, under pressure from Putin, refused to authorize an investigation, leaving many of the mysteries forever unsolved. When survivors of the siege sought compensation through the courts, they faced harassment from the authorities and defeat after defeat until they won a measure of justice more than nine years later.
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The doubts—even the questions—infuriated Putin. The next month, after a meeting in Brussels with the European Union, a reporter for
Le Monde
asked him whether the use of land mines in Chechnya killed innocent civilians in addition to the terrorists they were intended to kill. Putin bristled visibly, arguing that Islamic radicals wanted to win Chechnya as part of a worldwide jihad targeting Russia, the United States, and its allies. “If you are a Christian, you are in danger,” he replied, his indignation rising uncontrollably. “If you decide to become a Muslim, this won’t save you either, because they think that traditional Islam is also
hostile to their goals.” He went on, his language so crude that the interpreters did not bother to translate. “If you are determined to become a complete Islamic radical and are ready to undergo circumcision, then I invite you to Moscow. We are a multiconfessional nation. We have experts in this sphere as well. I will recommend the operation be conducted so that nothing on you will grow again.”
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CHAPTER 13

The Gods Slept on Their Heads

O
n February 19, 2003, Putin held another of his periodic meetings in the Kremlin with Russia’s bankers, industrialists, and oil men: the oligarchs who so dominated the post-Soviet era. In their first meeting in 2000, Putin had come to terms with most of them—Gusinsky and Berezovsky notwithstanding—in an informal pact: they could keep their wealth as long as they stayed out of the affairs of the state. He would not reverse the controversial privatizations of the 1990s, leaving the oligarchs their prizes, as long as they ended their reckless, often bloody battles for still greater riches in deference to the Kremlin. “What then should be the relationship with the so-called oligarchs? The same as with anyone else. The same as with an owner of a small bakery or a shoe-repair shop,” he wrote in his open letter to voters in
Izvestia
during his campaign.
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When Putin came to power, journalists and political observers accustomed to the Kremlinology of the 1990s had looked for evidence of the influence of the oligarchs, misunderstanding that they would no longer be pulling the strings. Vladimir Gusinsky had fled the country. So had Boris Berezovsky, who presumptuously declared himself the leader of the opposition in exile. The rest adapted to the Putin era.

The agreement in 2000 was a negotiated truce; by and large both sides abided by its terms. Contrary to the popular perception, Putin did not insist that the oligarchs stay out of politics altogether—some, like Roman Abramovich, held elected office—but rather that they do nothing to oppose the Kremlin. The tycoons, in turn, agreed to pay taxes and avoid public disputes with Putin over policies that might affect their fortunes. They also dutifully joined the Russian Union of Industrialists and Entrepreneurs, which became the institutionalized forum for discussing issues facing Russia’s economy. Their subsequent meetings with Putin had been low-key, devoted to taxes and legal reforms, the prospects
for joining the World Trade Organization, and the fate of the struggling automotive industry.

Now, in 2003, two dozen of the country’s richest men—their collective worth greater than many countries’ entire economies—gathered again to discuss something far more sensitive, the intersection of business and government, that shadowy nexus where corruption flourished. In the Kremlin’s Catherine Hall, an oval chamber of pale blue and gold decorated with allegorical sculptures called “Russia” and “Justice,” Putin opened the meeting with an outline of his proposals for administrative reforms, which he had promised when they met the year before. “We spoke about random interpretation of law by some agencies, the arbitrary actions of bureaucrats and so on,” Putin told them in the clipped managerial tone he used for his televised appearances. “In this connection the question of corruption and its tenacity in the country was repeatedly raised,” he said, sounding like the reformer he had promised to be when he took office. “It is obvious that corruption cannot be eradicated only by punitive measures. Far more can be achieved by creating conditions in the market in which it would be easier to obey the rules than to break them.”

The tycoons had agreed in advance on an agenda to present to Putin, and they expected it to be a fraught encounter. Aleksei Mordashov of Severstal, a steel and mining company, spoke first, reporting on the administrative obstacles to the development of small and medium-sized business. The second speaker was Mikhail Khodorkovsky. Only thirty-nine, he headed a banking and oil empire that included Yukos Oil, which he had acquired through a privatization deal as murky as most in the 1990s. He had been a member of Komsomol as a student in Soviet times, but he was too young to have experienced working in the Soviet system and “had never learned to fear it.”
²
Khodorkovsky was an intense man with cropped, already graying hair. He was less flamboyant than other oligarchs of the 1990s who flouted the rules and flaunted their influence, though no less powerful. Having abandoned the shaggy style and mustache he preferred as a young man, he fashioned himself as a corporate ascetic, a Russian Bill Gates. He wore rimless glasses and preferred turtleneck sweaters over suits. He turned to foreigners, especially Americans, to provide expertise in oil extraction and to make Yukos a model of a modern, transparent international corporation. As a businessman he was ambitious—many thought ruthlessly so—but by the time of Putin’s ascent his ambitions had moved beyond the mere accumulation
of wealth. Like the robber barons of America in the Gilded Age, he turned to philanthropy to burnish his image, donating money for scholarships and assistance for disaster victims. In 2001 he created an organization called Open Russia, modeled on George Soros’s Open Society Institute, to support community development, health and social welfare, and small business. Although many viewed him cynically, he imagined that he could create the kind of society that Komsomol never did in Soviet times: open, educated, freely swimming in the free market, and increasingly connected to the entire world.

Khodorkovsky did not know Putin well—they met only after the latter had become prime minister—and he had some doubts about him as Yeltsin’s replacement. Still, he wanted to help Putin strengthen the legal foundations for modern capitalism. He believed in Putin’s democratic instincts, though his first impression of Putin was of “an ordinary, normal person” whose upbringing in the courtyard in Leningrad and in the KGB left an indelible impression on him: he believed no one except “his own,” meaning his people.
³
By the time of the meeting in 2003, Khodorkovsky had become Russia’s richest man, and Putin had become its most powerful. A clash was probably inevitable, but on that winter day, no one saw it coming.

Beneath the dome of Catherine Hall, infused with the wan light of winter, Khodorkovsky delivered a speech on behalf of the industrialists’ union, which another tycoon, Mikhail Fridman, was supposed to give, but refused. He read from a PowerPoint presentation with a searing title, “Corruption in Russia: A Brake on Economic Growth.” Khodorkovsky did not appear overly confident. He looked “extremely nervous, pale,” and his voice broke at times, as if the import of the words seized his throat.
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He cited opinion polls and government statistics showing that corruption permeated the country, accounting for as much as $30 billion a year, roughly a quarter of the state’s budget. Russians feared going to court because of the bribes required, he said, while young students rushed to the institutes that trained tax inspectors and civil servants—and paid bribes to get in—because a career in government was the surest way to enrich themselves in the same way. Putin interjected that his damnation of civil servants was too sweeping, but Khodorkovsky carried on, this time turning to the state’s struggling oil company, Rosneft, whose president and chairman of the board were also in the room. He questioned its purchase of Northern Oil, a small producer on the edge of the Arctic, for a staggering sum of $600 million, far more than analysts and other
companies, including his own, had estimated it was worth. He suggested that the overpayment amounted to little more than a kickback to Rosneft’s executives—that is, to officials of Putin’s government.

Khodorkovsky had gone too far. Putin’s temper flashed. “Putin was not ready for this remark and simply blew up,” his prime minister, Mikhail Kasyanov, recalled later. “And everything he said—it was not a prepared answer, but a pure emotional reaction.”
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In a cutting tone, Putin replied that Rosneft needed new reserves like any other company. Anyway, Yukos had “excessive reserves.”

“How did it obtain them?” he pointedly asked. He also noted that Yukos had had tax problems in its checkered past and had worked with the government to resolve them, “but how did they arise in the first place?

“Maybe that’s why there are five applications for every vacancy at the Tax Academy,” he said. A smirk appeared on Putin’s face, a reflection of satisfaction and confidence that he had shamed Khodorkovsky back into his place.

“I’m returning the hockey puck to you.”

Those in attendance were surprised by the visceral, personal emotion that erupted over a relatively small sale that was of no real consequence for a company as large as Yukos or for the government itself. Another of Putin’s economic advisers at the meeting, Andrei Illarionov, had never seen Putin so angry before. Illarionov himself was surprised by Khodorkovsky’s accusation. He had assumed the inflated price of Northern Oil was a mistake or a bad investment. Maybe it even involved bribes and kickbacks, but what major contract in Russia did not?
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