Paul Klebnikov, editor of the Russian edition of Forbes and author of, among other works, Godfather of the Kremlin, was gunned down as he left his office in Moscow Friday night. The details have been published repeatedly over the last several days, and yet the shock remains. The first western journalist killed since 1996, Klebnikov was young, had remarkable access to some of the most influential political and economic figures in contemporary Russia, and seemed to have done little to attract the ire of the Russian business community except publish the names and estimated wealth of its richest members. That, of course, is enough when such attention can attract prosecutors and tax investigators.
In the final interview granted before his death, Klebnikov discussed some of the comparisons between Russia in the 1990s and Putins Russia. When asked specifically what has happened "since the 1990s"? Klebnikov responds, "Not that much, if you ask me. Like before, just a few men control a substantial part of the economy. Like before, these men wield influence with state policy." (1)
Later in the interview, he does hedge his comments by acknowledging the differences between powerful businessmen in the 1990s and now, in the age of Putin and Khodorkovsky:
"A lot of business tycoons improved their behavior indeed. They pay taxes, invest in domestic projects, participate in charity campaigns. They are aware of their responsibilities now."
Question: These days, they fear the president they used to control
"Khlebnikov: Thats great. That they fear, I mean. Restoration of respect the state commands in society and major businesses is to be welcomed. Unfortunately, the state is currently bullying its way into another extreme. (
Klebnikov has been eulogized, memorialized, well by his friends, colleagues and associates. And while his name stirs strong sentiments, favorable and not, among analysts, his writings remain to speak for him, and of him to generations of Russia-watchers. It is therefore, the indelible impression left by his prose from Godfather of the Kremlin that serves as this tribute to the writer.
"Any doubts about the first years of the Yeltsin era being a disaster were dispelled by the demographic statistics. These numbers, even in their most general form, suggested a catastrophe without precedent in modern history the only parallel was countries destroyed by war, genocide, or famine.
Between 1990 and 1994, male mortality rates rose 53 percent, female mortality rates 27 percent. (
) Each month thousands of Russians were dying prematurely. (
) Many premature deaths occurred among the elderly the babushkas, church ladies, and old men people who had seen their life savings disappear in the great inflation of 1992, who had seen their pension checks turn worthless, who did not have families to support them, and who simply could not scrape together enough money for a nutritious diet or medicine. (3)
The most pitiful victims of Russias social and economic decline were the children. In 1992, 1.6 million children were born in Russia; that same year, 67,286 children (4 percent of all births) were abandoned by their parents. By 1997, the breakdown of parenting had grown to catastrophic levels. That year 1.3 million children were born, but 113,000 children (equivalent to 9 percent of all newborns) were abandoned. Russia had no real program of adoption or foster care, so most of these children ended up on the street." (4)
As the initial wave of shock therapy appears with disastrous effects, Klebnikov interviewed the "reformers" around Yeltsin for their view of the situation. He found their attitudes chilling: "Many members of the Yeltsin government often spoke about their country with such icy detachment that you thought they were describing a foreign land." (5) According to a Yeltsin economic adviser, Yevgeni Yasin, "This country must drink the cup to the bitter end." (6) And drink they did.
Kremlin business meeting
A week before Paul Klebnikovs murder and just as Yukos was hit with another tax bill (this time for $3.4 billion), and had its assets frozen, President Putin gathered with "representatives of the business community" in the Kremlin to discuss issues of social responsibility and economic vitality and tax collection.
Among those in attendance at the meeting were Arkadi Volsky and other delegates from the Russian Union of Industrialists and Entrepreneurs, the Russian Chamber of Commerce and Industry President, Yevgeni Primakov, P.M. Mikhail Fradkov, Kremlin Apparat Chief Dmitri Medvedev, Oleg Deripaska (Russky Alyuminy), Andrei Kostin (Vneshtorgbank), Aleksei Miller (Chairman of the Gazprom Board), Vladimir Potanin (Interros), Mikhail Fridman (Alfa-Bank), Aleksandr Abramov (Evraz Holding), Vladimir Yevtushenko (Sistema), Boris Titov (Interkhimprom) and Aleksandr Shokhin (former Yeltsin government member and Chairman of the Renaissance Capital Board). (7)
Anatoli Chubais, who had met earlier with the Prime Minister to discuss and debate plans for reform of the energy sector, was notably absent from this Presidential-level Kremlin get together. The participants also claimed to be unaware of the moves made against Yukos until after the end of the meeting. According to Arkadi Volsky, if he had known about the latest round of attacks against the oil conglomerate, "we would have raised the issue." (8)
Putin apparently told the business leaders that he expected them to forego tax shelter schemes, in recognition of the states attempts to lower social taxes and VAT. The actions taken against Yukos appeared to reinforce his message and sends a strong signal that Putins expectations of their behavior clearly wouldnt need to rely solely on their social consciences.
Kvashnin down, but out? Not yet
Headlines blazed in the past few weeks with gloomy forecasts for the Chief of the General Staff, Anatoli Kvashnin ("Kvashnin will answer for Ingushetia;" "Chief of the General Staff is Doomed"). Clearly however, out isnt always out for good in this game of cat and mouse with the Kremlin.
Kvashnins response to Duma passage of a bill meant to subordinate the General Staff to the Defense Ministry (see previous NIS Observed), was to meet with Duma Security Committee members at the General Staff headquarters. Committee members [including an old Kvashnin friend (and liberator of the Pristina airport) Colonel-General Viktor Zavarzin] heard reports from Kvashnin, GRU Chief Anatoli Korabelnikov, Main Operations Department Head Aleksandr Rukshin and Organization and Mobilization Department Chief Vasili Smirnov. (9) While some speculate that the purpose of the meeting was to discuss secure aspects of the defense budget for 2005, timing suggests that Kvashnins role, and that of the General Staff as a whole, in keeping the Russian armed forces trained, equipped, supplied and armed with appropriate weapons systems, as well as strategic planning and forecasting were elucidated in full detail for the Duma committee. (10)
While it is clear that the Kremlin, and more specifically President Putin and Defense Minister Sergei Ivanov, have launched a full attack on Kvashnins General Staff, it is not entirely obvious that Kvashnin will submit to his seemingly pre-ordained fate. Despite the obvious and straightforward assaults to his command, Kvashnin maintains, "The General Staff has always been and remains the main body of operational command. Nothing has changed in the functions of the chief of the General Staff either. That is why I do not understand what the newspapers mean when they write about some "radical changes in the status of the General Staff."" (11) Denial or bravado?
The short list for Genshtab Chief replacements, should it come to that, seems to focus on current First Deputy Chief of the General Staff, Yuri Baluyevsky. Baluyevsky recently led a Russian mission to China to discuss strategic cooperation. (12)
An interesting comment from Paul Klebnikovs last interview caught my attention and should perhaps be borne in mind by those Kremlin dwellers who would attempt military reform by wrenching control from the General Staff. "[M]ajor businesses have much better lobbyist capacities nowadays than, say, the military or retirees," Klebnikov reportedly said. (13) Funny, thats just the point Pavel Felgenhauer seemed to be making when he relayed the information that "former KGB, Interior Ministry and military-connected Duma deputies are now preparing a letter to Putin on behalf of Russias "millions of military pensioners" (not just pensioners from the military, but also the FSB and other security services), seeking exemption from property tax. (14)
In case there might be any confusion as to what the author is trying to suggest, he spells it out near the end of his piece. "Virtually everyone is telling stories of "total military decay," of Kremlin and Defense Ministry incompetence. Almost everyone is predicting dark things in the future." (15) Especially, one might assume, if the Kremlin disabled the one structure that has lobbied effectively for the military in the past
- "Pavel Khlebnikovs Last Interview," Izvestiya, 13 Jul 04; What the Papers Say (WPS) via Johnsons Russia List (JRL), #8290,13 Jul 04.
- Klebnikov, Paul. Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia. (NY: Harcourt, Inc., 2000), p.103.
- Ibid., p. 108-9
- Ibid., pp.103
- Ibid., p. 102.
- RIA-Novosti, 1 Jul 04 via Lexis-Nexis; Moscow Times, No. 2953, 2 Jul 04 via Lexis-Nexis.
- Moscow Times, Ibid.
- "Kvashnin will Answer for Ingushetia," Nezavisimaya gazeta, 30 Jun 04; WPS via Lexis-Nexis.
- "General Staff Tries to Influence Defense Budget, RIA-Novosti, 2 Jul 04 via Lexis-Nexis.
- Izvestiya, 6 Jul 04; WPS via Lexis-Nexis.
- ITAR-TASS, 1 Jul 04 via Lexis-Nexis.
- Izvestiya, 13 Jul 04, Ibid.
- "General Discontent Rising," by Pavel Felgenhauer via (