Fri, Dec 28, 2007 page9

• Vladimir Putin: strongman in transition

  Kremlin intrigue may be behind rumors of Putin acquiring vast personal wealth as the Russian president tries to stay on top

  • By Tom Parfitt / THE OBSERVER
  • • 
    • 
    • 

  Not many people own a watch worth more than their annual salary, but Russian President Vladimir Putin appears to be one.

  In a recent survey of timepieces worn by politicians, Russian GQ magazine noted the president sports a yellow gold Patek Philippe costing an estimated US$85,000. A gift, perhaps, or even a fake (US$700 in a Moscow underpass, although not so clever on the wrist of a world leader advocating intellectual property rights). But intriguing, all the same.

  As Putin, last week named "Person of the Year" by Time magazine, prepares to hand over the reigns of power after seven years in the Kremlin, questions are growing about his personal wealth.

  

  In past weeks, Stanislav Belkovsky, a political analyst in Moscow, has made a series of startling claims: Through complex financial arrangements, Putin has acquired assets in the Russian energy sector worth up to US$40 billion. He alleges that Putin owns 37 percent of Surgutneftegas, worth US$17.9 billion; 4.5 percent of Gazprom, worth US$12.9 billion; and half of Gunvor, a Swiss oil trading company, worth US$9.9 billion.

  Such enormous stakes would place him among the top 10 richest people in the world. Torbjorn Tornqvist, CEO of the Gunvor Group, denied in a letter published in the Guardian that Putin owns any part of Gunvor or is a beneficiary of its activities.

  Officially, Putin's wealth is rather more modest. After registering to run for parliament, the president declared an annual income as head of state of a little more than 2 million roubles (US$81,000). His three bank accounts showed a combined balance of around US$2,000. His assets were a few shares in St Petersburg Bank, a bit of land in the Moscow region, a modest flat in St Petersburg and two creaking 1960s Volga saloons.

  What's most interesting is not that Belkovksy's claims may be true (the companies involved have issued vehement denials and establishing the truth seems almost impossible). It is the fact they have appeared as Putin prepares to vacate the presidency in May after serving the maximum two terms.

  Kompromat, or dirt, is an eternal feature of Russian politics. Putin himself, when he was head of the KGB's successor, the FSB, was instrumental in ousting a Russian prosecutor-general who showed too much relish in investigating Kremlin corruption. The prosecutor was caught in a sex sting in which he was filmed frolicking with two prostitutes.

  More recently, when Mikhail Kasyanov (whose watch is an US$18,000 Breguet Classique) took to opposing the Kremlin, a series of well-sourced articles appeared in the tabloid press accusing the former prime minister of using a shell company to buy a luxurious state dacha for far less than it was worth.

  Until the last few weeks, however, competing groups in the Kremlin had largely kept to an unwritten rule of not to dig the dirt on Putin, a man that many Russians credit with a national revival. Now the agreement seems to be over. Earlier this month, Putin endorsed Deputy Prime Minister Dmitry Medvedev as his successor to the presidency. Putin's public support for Medvedev, a diminutive lawyer and chairman of Gazprom, was the equivalent of an anointment. The president's 80 percent personal rating and the crushing weight of the state machine will push Medvedev through a perfunctory election in March.

  Medvedev promises he will follow Putin's course, ensuring peace and prosperity. So far, so good for Putin. But some in the Kremlin are not happy. Medvedev represents a clan of "liberals" around the president, several from Putin's home town of St Petersburg.

  The siloviki (a Kremlin clan of KGB and military veterans) are irritated by Medvedev's rising star. Analysts believe emerging rumors about Putin's wealth are a warning shot from the siloviki, who are scrabbling for a way to maintain wealth and power.

  Whatever the truth, the bad-mouthing from inside the Kremlin is a new phenomenon. And seven years after former president Boris Yeltsin plucked him from obscurity and handed him the presidency, it is once again posing the question that was put so often in January 2000. Who is Vladimir Putin?

  Back then, for many in the West, the instant analysis seemed pretty straightforward, Putin was a macho KGB spy, a judo expert and a throwback to the era when the state security system that began with Lenin's Cheka in 1917 was the crucial glue that held fast the USSR.

  As time went on, the increasingly populist Putin became characterized as the man who put an end to the chaos and bloodletting that dominated the Yeltsin era. During the reign of Russia's first "president," business oligarchs penetrated the highest echelons of the state, using political positions to rig dodgy privatizations and turn the full firepower of a former police state on their enemies. Yeltsin, often drunk or ill, could not stop the anarchy. Putin was a young, sober patriot with a new mantra: "The stronger the state, the freer the individual."

  "If we understand Yeltsin's rule as a period of `permanent revolution,' then Putin becomes the consolidator, the Napoleon," wrote Richard Sakwa in his book Putin: Russia's Choice. "[He] rebuilds the state and incorporates into the new order the progressive elements of the revolutionary epoch that are necessary for social development, but discards the excesses and the revolutionary froth."

  In this view, Putin is a "liberal Chekist" -- a career state spy with democratic leanings, however poorly nurtured.

  Putin's mindset was forged during his youth in the relative prosperity of the Brezhnev era. He was born in Leningrad in 1952. His parents were already in their 40s and had lost their two previous sons -- Oleg and Viktor.

  Putin's father was a toolmaker after being severely wounded during the defense of Leningrad in 1942. His mother, Maria, barely survived the 900-day blockade of the city by the Germans. She lost her mother and her older brothers during the war.

  The tragic lives Putin's parents led seemed to acquire new meaning with the birth of Vladimir Vladimirovich. Vladimir senior became a party functionary and life became more stable, although the family still lived in a communal apartment. As a boy, Putin hunted rats with his friends.

  He grew up to be a wilful young man who did well at school despite a tearaway streak. He showed a talent for sports, becoming judo champion of Leningrad in 1976.

  Later he would recall: "I was a pure and utterly successful product of Soviet patriotic education."

  But unlike the generation that had gone before him, Putin was less interested in debates over how to preserve the Soviet system with gradual reforms -- the passion that would guide former president Mikhail Gorbachev.

  Sakwa says his passion was for a strong Soviet Union that saw off foreign aggressors -- a "relatively non-ideological patriotism" that had little to do with promoting communist values and more with besting the enemies surrounding the motherland. Putin's favorite television program was Seventeen Moments of Spring, a serial about a Soviet spy in the heart of the Nazi war machine.

  Putin's vision of reviving Russian greatness carried him through law school and into the KGB. From there he moved steadily through the ranks to head the FSB and later to become prime minister.

  As president he has continually obsessed over centralizing state power for the good of freedom and prosperity. In the process, opponents such as Mikhail Khodorkovsky have been mercilessly crushed, other oligarchs have fled abroad and opposition parties have been killed at birth. Television is dominated by crude propaganda.

  Suspicion of the West borders on paranoia.

  "There is a growing influx of foreign cash used directly to meddle in our domestic affairs," Putin told the Federation Council in April. "Some want to return to the past to rob the people and the state, to plunder natural resources and deprive our country of its political and economic independence."

  Such blustering is popular with the electorate. And the growth in prosperity is undeniable. Millions of Russians support Putin because wages have increased, pensions are paid on time and public services are improving.

  Yet the myth that Putin put a lid on the Byzantine struggles in the Kremlin court that dominated the 1990s is quickly crumbling. In parliamentary elections earlier this month, Putin's United Russia party scored a crushing victory, endorsing his wish to stay at the top table of power despite relinquishing the presidency.

  Yet where Putin's future lies remains an open question.

  As the presidential election approaches, he looks like an increasingly desperate peacemaker between warring Kremlin factions. The Chekists are where he came from, the liberals may be where he wants to go, but he has yet to make it.

  The question remains whether he will be able to hold on to power without the protective cloak of the presidency.
• Most Popular

  • 1

    Taipei to join Japan, US response to rare earth ban

  • 2

    Calls for reform after drunk woman publicly assaulted in Taipei station

  • 3

    Torrential rain expected this week, the CWA says

  • 4

    Flight attendants’ union to protest EVA marathon

  • 5

    Urban mining could evade China’s grip