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Russia’s Espiocrats

By Bruce Sterling – September 20, 2007 | 11:40:04 PM

(((The plutocrats have been tamed, and replaced by a vast horde of
spies. Much as this ominous prospect gives me pause, I have to think
that maybe the siloviki are an *improvement* over the former
semibankyrshina. Those moguls were a deeply unpleasant lot, and think
what you may of Putin’s spy petrocracy with its giant bombs, oil
blackmail and hideously poisoned dissidents, he is hugely popular with
the general Russian population. Ivan Sixpack loves that guy. Even
Ivana Winecooler gets all hot and bothered when she sees Putin on
vacation half-naked in camou pants.))) ‘SILOVIKI’ TAKE THE REINS IN
POST-OLIGARCHY RUSSIA

By Victor Yasmann

The speculation surrounding Russia’s upcoming Duma elections in
December and the March 2008 presidential election swung into high gear
this month, but the key question is not whether the country will take
a new direction but rather how the status quo, the existing
arrangement of political forces, will be maintained.

Virtually all key positions in Russian political life — in government
and the economy — are controlled by the so-called "siloviki," a
blanket term to describe the network of former and current
state-security officers with personal ties to the Soviet-era KGB and
its successor agencies. The unexpected replacement of former Prime
Minister Mikhail Fradkov by former Federal Financial Monitoring
Service Director Viktor Zubkov is the latest consolidation of this
group’s grip on power in Russia. Although Zubkov is not an
intelligence officer by background, he has become one de facto during
his years at the Financial Monitoring Service, and he has intimate
knowledge of where the country’s legal and illegal assets are to be
found.

The core of the siloviki group, led by former KGB officer and Federal
Security Service (FSB) Director Vladimir Putin himself, comprises
about 6,000 security-service alumni who entered the corridors of power
during Putin’s first term. Now, as Putin’s second term winds down,
their clout is virtually unassailable. Their locus of power is in the
presidential administration: deputy chief of staff Igor Sechin cut his
teeth in the KGB’s First Main Directorate, which oversaw foreign
intelligence operations and has since been transformed into the
Foreign Intelligence Service (SVR). Fellow deputy chief of staff
Viktor Ivanov worked for the KGB’s main successor organization, the
FSB, which is responsible for counterintelligence operations.

First Deputy Prime Minister and former Defense Minister Sergei Ivanov
is a retired SVR colonel general, and he currently oversees the
military-industrial sector and the high-tech sectors of the
economy. He also supervises the Defense Ministry, which is nominally
run by a civilian, Anatoly Serdyukov.

As might be expected (although not always the case), an FSB colonel
general, Nikolai Patrushev, heads the FSB. In addition, FSB Army
General Rashid Nurgaliyev heads the Interior Ministry, which controls
both ordinary police and some 180,000 internal troops. Andrei
Belyaninov, a colleague of Putin’s from his days as a KGB agent in
Germany in the 1980s, heads the Federal Customs Service, while FSB
Lieutenant General Konstantin Romodanovsky is the director of the
Federal Migration Service. In their current roles, Belyaninov and
Romodanovsky are able to monitor the movement of goods and people to
and from Russia. Former FSB Director Colonel General Valentin Sobolev
is acting secretary of the Russian Security Council.

Siloviki figures also dominate Russia’s relations with neighboring
countries. FSB Army General Nikolai Bordyuzha chairs the Collective
Security Treaty Organization (CSTO), a pro-Russian alliance comprising
Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and
Uzbekistan. SVR Lieutenant General Grigory Rapota presides over the
Eurasian Economic Community, which unites the same countries except
Armenia.

Other key siloviki are Rosoboroneksport head Sergei Chemezov, who also
served in Germany with Putin, and Boris Boyarskov, who heads the
Culture and Mass Communications Ministry agency that supervises the
mass media, telecommunications, and cultural heritage.

Never in Russian or Soviet history has the political and economic
influence of the security organs been as pervasive as it is now. And
as the March 2008 presidential election approaches, three of the four
most commonly named potential successors are siloviki.

Sergei Ivanov is widely viewed as the current front-runner. A close
confidante of Putin’s, he, like the president, began his career in the
Leningrad KGB’s Main Directorate. Ivanov made his debut with
international business and financial elites at the St. Petersburg
Economic Forum, where he delivered a forward-looking address laying
out Russia’s course through the year 2020. Ivanov sounded both liberal
and presidential, beginning his speech with a promise that Russia in
15 years will be a democratic state "based on the rule of law and
respecting the rights of the individual."

Another often-mentioned possible successor is Deputy Prime Minister
Sergei Naryshkin. According to some reports (including "Kommersant" in
February), Naryshkin studied in the same group as Putin at the KGB’s
foreign intelligence training center. In the 1980s, he served at the
Soviet Embassy in Brussels, possibly as a KGB agent. In February,
Putin placed Naryshkin in charge of foreign trade and relations with
the CIS. He also heads the board of directors of the Channel One state
television network. Because of his last name — the Naryshkins are an
old noble family that included the mother of Peter the Great — he is
often associated with the growing monarchist sentiment in Russia.

The third silovik-connected potential presidential successor is
Russian Railways President Vladimir Yakunin. During the Soviet era,
Yakunin worked abroad for the Committee on Foreign Trade Relations and
the Soviet mission to the United Nations, both of which were fronts
for KGB foreign intelligence operations. Interestingly, during this
period he was awarded a state order of military merit, which is
normally awarded only for combat service.

Yakunin heads the board of trustees of the St. Andrew Foundation, a
powerful patriotic organization set up in 1992 to promote the
restoration of national values. Under Yakunin, the foundation has
launched several high-profile projects, including the repatriation and
reburial of two anticommunist heroes — White Guard General Anton
Denikin and philosopher Ivan Ilin. Yakunin also heads the Center of
National Military Glory. The media often refer to this body as "the
order of Russian Orthodox Chekists" because its boards also include
Ivanov, FSB Colonel General Viktor Cherkesov (who heads the Federal
Antinarcotics Committee), and FSB Major General Georgy Poltavchenko
(who is Putin’s envoy to the Central Federal District).

The true size of the siloviki community is difficult to assess
accurately because many Soviet citizens cooperated covertly with the
KGB, and lustration in Russia has been staunchly resisted. The media
occasionally reported, for instance, that former Prime Minister
Fradkov, who worked abroad for Soviet foreign-trade organizations in
the 1980s, had links to the KGB. At least one of his sons is known to
be an FSB officer. Likewise, there have been persistent media reports
that Russian Orthodox Patriarch Aleksy II cooperated with the KGB
while a priest in Estonia. The Orthodox Church denies these reports.

As the siloviki clan has tightened its grip politically, it has also
made vast inroads into the Russian economy, spearheading the
accelerating expansion of the state sector and the formation of new
state corporations. Its members have played key roles in the
renationalization of the Russian oil industry; since 2001, about 44
percent of the oil sector has returned to state ownership. Much of the
process has been quiet, but it came to international attention with
the crackdown and destruction of oil major Yukos beginning in
2004. The primary beneficiary of the dismantling of Yukos was Rosneft
— whose board is headed by deputy presidential chief of staff and
silovik clan leader Sechin. Rosneft is now Russia’s biggest oil
company, with a capitalization of $78 billion and annual production of
about 100 million tons.

Renationalization in the oil sector continues, with former Russneft
head Mikhail Gutseriyev becoming the latest victim. He has been forced
to flee the country to avoid arrest, and the assets of Russneft,
Russia’s seventh-largest oil company, have been frozen by a court
order. A poll of leading political and economic experts by the Moscow
Institute of Situation Analysis in April concluded that the political
influence of the richest businesspeople is "negligibly small" compared
to that of the siloviki.

The next, more ambitious step in the silovik concentration of economic
power is believed to be the creation of state-controlled
megacorporations that would dominate key sectors of the economy by
merging the major companies within them. The goal seems to be a form
of authoritarian capitalism such as can be found in some Southeast
Asian countries.

In May, the Kremlin created the United Aviation Corporation, which
combines leading civilian and military aircraft producers such as MiG,
Sukhoi, and Tupolev. United Aviation is headed by Sergei Ivanov. Two
months later, the Kremlin followed up with the United Shipbuilding
Company that combines all Russia’s civilian and naval
shipbuilders. United Shipbuilding is headed by Naryshkin.

Similar state-driven consolidation is afoot in the banking sector as
well. After a series of merging acquisitions, state-controlled
Vneshtorgbank (VTB) has emerged as the first major Russian player on
global financial markets. Two of the bank’s vice presidents — former
FSB Economics Department head Yury Zaostrovtsev and Dmitry Patrushev,
son of the current FSB director — anchor this financial giant firmly
to the silovik group.

Such megacorporations are expected to swallow up Russia’s defense,
nuclear, and automaking sectors in the near future, and it is a safe
bet siloviki will be found to head all of them.

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