“Generally, I don’t think that the state and the businessmen are natural enemies. Rather, the state has a cudgel in its hands that you use to hit just once, but on the head.”
Vladimir Putin, to the French newspaper Le Figaro, Oct. 26, 2000
Fifteen years later, in the days of shirtless pictures of the Russian president on horseback, of images of Putin wrestling bears, and constant news of his semisecret invasion of the Ukraine, it’s the sort of statement we’ve come to expect — stark, clear, precise, and tinged with more than a hint of threat. Although Putin hadn’t indicated anyone by name when speaking to the French newspaper, it was common knowledge who he was threatening with his cudgel: a man known in some circles as the godfather of the Kremlin, Boris Berezovsky, perhaps the most famous of the oligarchs who had amassed incredible fortunes in the chaotic “Wild East” of 1990s Russia.
Though today we’d think of such a statement as par for the course, back in 2000 it was a verbal “cudgel” that took Berezovsky — and the rest of the oligarchs who had up until that time ruled Russia with their wealth and political connections — by shock. The fledgling president — less than a year in office — had thrown down the gauntlet, signifying to the oligarchs that everything was going to change. This was made even more surprising by the fact that it was these very same oligarchs who had created Putin, who had handpicked the man because they thought he could be controlled. Putin was supposed to be their cog — a low-level KGB agent plucked from St. Petersburg and installed in the Kremlin because he was a loyal nobody. It was an epic miscalculation and misunderstanding of the man that continues to resonate today.
As detailed in my new book “Once Upon a Time in Russia,” the road to Vladimir Putin was paved in the wild excesses of Russia’s drunken lurch to capitalism. By the early 1990s, communism had collapsed, and rapid privatization was shoved into place under President Boris Yeltsin to fill the vacuum. Yeltsin’s intentions were, on the surface, good: He feared that hard-line communism, which was still popular, might return, so he banked on the idea that if he could get the country’s resources into private hands as quickly as possible, he could create a hedge that would make a return to the old days nearly impossible. Oil, aluminum, nickel, automobile manufacturing — billion-dollar businesses were essentially handed out to the most ambitious, and often ruthless, men who could get their hands on a little bit of capital and had the right connections to Yeltsin’s government.
Into this setting strolled Boris Berezovsky — a former mathematician and one-time car reseller who, after surviving a violent assassination attempt in 1994, had set his sights on politics. He rightly believed that in the turbulent “Wild East” it wasn’t enough to be a wealthy businessman; it was also important to have a “krysha” (or roof) — gangsters who could protect your interests, economically or physically. Worming his way into Yeltsin’s inner circle, dubbed “The Family,” Berezovsky rose to incredible heights. Among his conquests were ORT, the national television network, and Sibneft, the second biggest oil company in the country (eventually sold for $13 billion), which he helped form by himself becoming the krysha to a dashing young charge, Roman Abramovich, whom he had met on a yacht in the Caribbean.
By the late 1990s, Berezovsky and the rest of the oligarchs had risen to immense heights; at one point, seven men controlled 50 percent of Russia’s entire GDP. But the party wasn’t going to go on forever; Yeltsin’s health began to fade, and the oligarchs realized that the only way things could continue was if they found someone to take over who would be malleable to their interests.
They began searching for someone Berezovsky described as a “cog.” And by the end of the ’90s, they believed they had found the man they were looking for: a KGB agent and assistant to the mayor of St. Petersburg, Vladimir Putin. Berezovsky knew Putin because the KGB agent had once helped him when he was setting up a car dealership. Believing Putin to be loyal and easy to control, the oligarchs first placed him as head of the FSB (the modern heir to the KGB), then as prime minister. Finally, in a sort of political Hail Mary, Yeltsin resigned as president in 2000, installing Putin as his replacement.
It wasn’t long before Berezovsky and the oligarchs realized their mistake. A short time after he took power, Putin pulled the ultimate power move. He invited the biggest oligarchs to Stalin’s old home in Moscow. “You have done very well for yourselves,” he told them, “you have built vast fortunes. You can keep what you have. But from here on out, you are businessmen, and only businessmen.” The message was clear. The party was over. Putin was not a cog, and the oligarchs had been told, explicitly, to stay out of his way.
Which brings us back to present day. The question I’m most often asked on my book tour is whether the sanctions being applied over the Ukraine situation will somehow force the oligarchs to band together and take down Putin. In response, I simply point to Putin’s words to Le Figaro 15 years ago. Again, as usual, people misunderstand and underestimate the Russian president. It isn’t the oligarchs who rule Russia anymore, it isn’t the oligarchs wielding the cudgel.
In fact, it’s quite the opposite.
Ben Mezrich is author of “Once Upon a Time in Russia: The Rise of the Oligarchs,” which was just released.