How Vladimir Putin Rose to the Top: He built four circles of power.

Author:Aslund, Anders

With the help of his loyal friends, [Russian President Vladimir] Putin has built three circles of power--the state, the state enterprises, and the cronies' companies. Putin's first term appears to be a masterpiece of consolidation of power by a budding authoritarian. He was everything to everyone. In the eyes of liberals, he pursued excellent market economic reforms and seemed to build the rule of law. The giveaway was his immediate clampdown on independent television, which was well understood by human rights activists, but he pursued an elaborate salami tactic, cutting off one television channel after the other, accusing each one of poor finances or specific crimes.

State power comprises Putin's first circle. As chairman of the FSB in 1998-1999, he seized control over the secret police. In the summer of 2000, he took charge of television. Next, he established his "vertical of power" over the federal and regional administrations. His "dictatorship of law" over the judicial system ensued. In the elections in December 2003, Putin gained solid control over the State Duma and the Federation Council. At the Security Council, the pinnacle of power, his top men are three contemporary KGB generals from St. Petersburg, his successors as FSB chairs--Sergei Ivanov, Nikolai Patrushev, and Alexander Bortnikov.

Putin's second circle consists of the big state enterprises. He seized control of them one by one, starting with Gazprom in May 2001. He appointed his loyalists as chief executives and chairmen of their supervisory boards and rounded off his victory lap with the formation of the state corporations in 2007. The state enterprises have been allowed to expand with cheap state funding, often monopolizing their sector. They have been buttressed with protectionist measures, and the only governance that matters is obedience to Putin. Russian state capitalism is peculiarly disinterested in competition, investment, technological development, entrepreneurship, and productivity. The state sector is treated as a source of power and rents instead of an object of economic growth. The three top state managers are Igor Sechin of Rosneft, Alexei Miller of Gazprom, and Sergei Chemezov of Rostec.

The third circle is more idiosyncratic. It comprises Putin's top private cronies and their companies. The four top cronies appear to be Gennady Timchenko, Arkady and Boris Rotenberg, and Yuri Kovalchuk. Their activity usually appears not only corrupt but kleptocratic. Yet...

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