How Putin Put Kremlin Back on Top

Editor's note: This article, the first in a series about President Vladimir Putin's legacy, examines his creation of the power vertical.

Kremlin spin doctor Gleb Pavlovsky compared the emerging "power vertical" to a phallic symbol in October 2003, saying in a speech that no one should expect it to grow too big.

President Vladimir Putin was the main motor behind this consolidation of Kremlin power, often at the expense of state and public institutions. And as he prepares to leave office this spring, the power vertical has clearly proven to be workable, especially in sensitive endeavors such as wholesale political reforms.

With the power vertical, Putin has accomplished the Herculean task of restoring the state's ability to act, but the whole state machinery has been modeled to serve the Kremlin rather than to develop the country, politicians and political analysts said.

"I haven't seen how the power vertical has helped solve social problems. What it does best is election fraud, when the whole state machinery works to ensure the results that the Kremlin wants," said Viktor Alksnis, an independent deputy who served in the State Duma from 1999 to 2007 and lost his seat because of Kremlin-backed legislation meant to strengthen the power vertical.

Putin took his first step toward building the power vertical shortly after his election in 2000, when he moved to sideline the governors who had wielded considerable power under his predecessor, President Boris Yeltsin. At the time, Russia faced a very real threat of falling apart, with fighting raging in Chechnya, Tatarstan seeking to adopt the Latin alphabet, Ingushetia allowing polygamy, and most regional law enforcement agencies answering to governors, not the president in Moscow.

The governors sat in the Federation Council, the upper chamber of the parliament, and had the power to block legislation and approve the nominations of senior government officials, including the prosecutor general. They had a tacit agreement with Yeltsin to deliver votes for the Kremlin when needed in exchange for being allowed to run their regions as they wished.

"This was indeed a useful undertaking. Putin put an end to corrupt regional leaders' aspirations to rule at home and ignore federal laws," said Gennady Gudkov, a United Russia deputy for most of his 2003-07 term in the Duma and now a deputy with A Just Russia.

In June 2000, the Duma passed a Kremlin-backed bill to deprive governors and regional legislature speakers of their seats in the Federation Council and the immunity from prosecution that came with them. The governors in the Federation Council vetoed the bill, but the Duma overrode their veto and in late July the governors bowed to the Kremlin's wishes. They also reluctantly backed a Kremlin proposal to create seven super districts led by presidential envoys charged with making sure the regions in each district obeyed federal law.

The president also secured the right to dismiss governors under criminal investigation, even if charges had not been filed.

Mayor Yury Luzhkov, who fiercely opposed the changes, denounced them at the time. "The general purpose of all these measures is to concentrate power in the president's hands," he said. Luzhkov serves as the mayor and governor of Moscow, which holds the status of both city and region.

Delivering his first state-of the-nation address in July 2000, Putin said the weakness of the state had stalled economic and other reforms. "Power should be based on the law and the vertical created in accordance with it," he said.

Interestingly, Putin used the word "vertical" three times in his first state-of-the-nation speech. He never used the word in the seven following ones.

Having inherited a largely dysfunctional state from Yeltsin, Putin faced the urgent need to create a stronger state, said Lilia Shevtsova, a political analyst with the Carnegie Moscow Center. "He also tapped into public demand for a strong state and offered the Russian elite a familiar notion: a centralized state," she said.

In the fall of 2000, the Kremlin pushed a new Tax Code through the Duma that obliged regions to send most tax revenues to federal authorities, who then decided how to allocate the money among the regions. The change meant governors could no longer withhold funds to show dissent. It also spelled an end to independent social polices in the regions. The new rules applied to regions that relied on federal subsidies to cover budget shortfalls, and only a few, including Moscow and St. Petersburg, did not need the state handouts.

Alksnis and Gudkov said Putin should have stopped with the governors. But he did not.

Many current and former officials in Moscow and the regions contacted for this report expressed a reluctance to discuss Putin's power vertical. A Communist spokesman said no one from the party would comment. Requests to United Russia over the past month went unanswered. Insiders explained privately that politicians hoping to keep their jobs or return to politics did not want to be seen as critical of the Kremlin. Incidentally, former Duma Deputy Sergei Glazyev, who sharply criticized Putin when he ran against him in the 2004 presidential election, refused to comment for this report on Jan. 23, and just two days later was appointed deputy secretary-general of the Customs Union of the Eurasian Economic Community, a trade body that unites Russia, Belarus, Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan.

The Next Step

After curbing the governors' powers, Putin faced two paths toward strengthening the state, Gudkov said. "He could have strengthened the system of oversight that the various branches of power exercised over one another, but he opted to strengthen only the executive branch of power at the expense of the others," he said.

Shortly after Putin's inauguration in May 2000, the Kremlin mounted a drive to strip other political players of their decision-making powers, cracking down on big businesses and their media outlets.

Lacking broad public support in the mid-1990s, Yeltsin turned to the country's super-rich, the oligarchs, for assistance. The oligarchs got a say in politics, both directly in government decisions and through powerful media outlets such as ORT television, controlled by billionaire Boris Berezovsky, and NTV television, owned by Vladimir Gusinsky.

In February 2000, days before being elected president, Putin declared that big businesses should keep away from political decision-making. Several months later, Gusinsky was jailed briefly and then allowed to leave the country after agreeing to pass control of NTV to state-owned Gazprom. Berezovsky also fled Russia in late 2000 as investigators began opening criminal cases against him and his associates. ORT, now known as Channel One, became at the time perhaps the Kremlin's loudest mouthpiece.

Since then, many private media outlets -- smaller television channels, radio stations and national newspapers -- have been methodically bought by state-controlled companies or Kremlin-friendly businesses.

The most stinging blow to the political ambitions of the oligarchs most likely came with the 2003 arrest of former Yukos CEO Mikhail Khodorkovsky, once the country's most wealthiest businessman. Jailed for eight years on fraud and tax evasion charges after a lengthy and scandalous trial, Khodorkovsky has served as a warning to other business leaders of what to expect if they upset the authorities, analysts said. Another oil billionaire, Mikhail Gutseriyev, fled Russia last year, fearing arrest after his company bought Yukos assets coveted by state-owned Rosneft.

Rise of the Siloviki

While the number of institutions with a say in politics and the economy has dwindled under Putin, those who are making the decisions have become less representative of the population, said Dmitry Badovsky, an analyst at the Institute of Social Systems with Moscow State University.

"The siloviki swiftly replaced the regional, business and media elites that played a very important role in politics under Yeltsin," he said. The siloviki are the hawkish clan of security and military officers brought by Putin to the Kremlin.

Taking control of the court system posed little challenge for the Kremlin, given that the government decides the financing of the courts and Putin personally appoints federal judges. Also, many judges are retired prosecutors and police investigators linked to the siloviki, although no exact statistics are kept.

Some reforms have been drafted to liberalize the courts, but they have largely remained on paper, with prosecutors remaining overwhelmingly in control of the courtrooms. Judges are now acquitting around 0.5 percent of defendants, while the acquittal rate for jury trials is closer to 20 percent, according to statistics from the Supreme Court.

"Basmanny justice" has become a catchphrase in describing Russia's court system after Moscow's Basmanny District Court issued a series of controversial verdicts favoring prosecutors in recent years, including those in the Khodorkovsky case.

The hostage crisis in the Beslan school in September 2004 gave new impetus to the Kremlin's drive to strengthen its grip over the other branches of power.

Shortly after the terrorist attack, Putin warned that the country was in danger of falling apart and announced sweeping reforms that he said were needed to strengthen the state. He canceled popular elections for governors, and they are now effectively appointed by the president. The Duma is now formed on a proportional system, with no more independent -- and often outspoken -- deputies.

In addition to strengthening the state, Putin said, the changes would improve discipline among officials and make them more responsible.

The First Backlash

The reforms sailed through the United Russia-controlled Duma in late 2004, and almost immediately the country saw firsthand a drawback of the power vertical. In January 2005, thousands of people took to the streets to protest a law that replaced discounted social services with small cash payments.

"This was a blatant failure of the power vertical," Gudkov said. "The Kremlin pushed this very sensitive legislation, which affected the lives of millions of people, through the parliament in just three months, and no serious discussion of it was allowed in the walls of the State Duma."

While United Russia saw its popularity ratings dip, Putin managed to escape the scandal unscathed by laying the blame on regional authorities, who he said had failed to properly calculate the payment amounts in advance.

"This is ridiculous because officials in the regions were expecting orders from the Kremlin but didn't get them," Alksnis said.

The power vertical was further strengthened in May 2005, when the Duma passed legislation that raised the threshold to win Duma seats from 5 percent to 7 percent and banned political blocs and movements from running for the Duma. Smaller parties had teamed up in blocs in the past.

Civil Rights Go Last

Civil rights groups, increasingly powerless in an information vacuum built by the Kremlin-controlled media, were targeted last. In April 2005, the Duma approved the creation of the Public Chamber, a post-Beslan initiative ostensibly designed to represent civil society in its dialogue with the government. The Kremlin, however, directly and indirectly selects the chamber's members, and the government decides its budget.

Respected human rights organizations such as Memorial and the Moscow Helsinki Group have refused to join the chamber, only to be accused by the authorities of accepting money from foreign governments and of acting against Russia's national interests.

In January 2006, Putin signed a prohibitive law on nongovernmental organizations that put their activities and finances under the close scrutiny of the authorities. Many opposition NGOs and public groups were forced to disband, while the difficulties that many others faced trying to reregister under the law signaled how easy it would be for the authorities to close them if they wished.

Overall, analysts said, the power vertical seems to be working because the government is flush with cash and able to offset any management blunders. The system also provides at least a semblance of control over the money that Moscow pumps into the regions to boost their industrial and social development, they said.

"The formation of state corporations and the launch of the so-called national projects -- which consume billions of dollars -- would not have been possible without the creation of the power vertical first," said Alexei Titkov, an analyst with the Institute of Regional Studies.

Concentrating power in the executive branch is a common practice in many countries as they leave their Communist past behind, Badovsky noted.

Admiration for Putin has not grown into a full-fledged personality cult, but the government and Duma's promise to follow a set of policies called Putin's Plan reveals the importance of Putin's role at the top of the power vertical.

With the expected election of Dmitry Medvedev as president in March, political insiders are wondering whether the power vertical will collapse and whether a nascent system of institutional checks and balances might gradually return. Many are asking whether Putin will try to remain at the top as prime minister, a position he has said he would accept in a Medvedev presidency.

In any case, few people these days would probably want to take Pavlovsky's lead and associate Putin with a phallic symbol. A journalist in Ivanovo who dared to compare Putin to a phallic symbol in 2006 was charged by prosecutors with insulting the authorities and fined 20,000 rubles ($850).

Building the Vertical of Power
Key events in President Vladimir Putin's drive to increase Kremlin control

Misha Japaridze / AP
February 2000: Putin, then acting president, declares that big businesses should avoid politics.
May 2000: Putin says in his first state-of the-nation address that the weakness of the state has stalled economic and other reforms. He uses the word "vertical" three times in the speech but never mentions it again in later state-of-the-nation addresses.
June 2000: Media mogul Vladimir Gusinsky is jailed on suspicion of defrauding the state out of $10 million. He is later allowed to leave the country after agreeing to pass control over NTV television to Gazprom. Another powerful businessman, Boris Berezovsky, flees Russia in late 2000 after criminal investigations are opened against him and his associates. In 2007, oil billionaire Mikhail Gutseriyev flees Russia amid a criminal investigation that he calls politically motivated.

Viktor Korotayev / Reuters
June 2000: The State Duma passes a Kremlin-backed bill to deprive governors and regional legislature speakers of their seats in the Federation Council and the immunity from prosecution that comes with them.
Fall 2000: The Kremlin pushes a new Tax Code through the Duma that obliges the regions to send most tax revenues to federal authorities, who then decide how to allocate the money among the regions.
October 2003: Former Yukos CEO Mikhail Khodorkovsky is arrested at gunpoint on his private plane in a criminal investigation widely seen as the Kremlin's punishment for his political ambitions. Khodorkovsky is now serving an eight-year prison sentence after being convicted of fraud and tax evasion charges in 2005.

Vladimir Filonov / MT
Fall 2004: Shortly after the Beslan hostage crisis on Sept. 1-3, Putin warns that the country is in danger of falling apart and announces sweeping reforms aimed at strengthening the state. Among the reforms, Putin cancels popular elections for governors in favor of a system under which the president effectively appoints them. Putin also says the Duma will be formed on a proportional basis, with no more independent -- and often outspoken -- deputies.
January 2005: In the first backlash against the power vertical, thousands of people take to the streets to protest the replacement of discounted social services with small cash payments.
April 2005: The Duma approves the creation of the Public Chamber, which is ostensibly designed to represent civil society in its dialogue with the government. The Kremlin, however, directly and indirectly selects the chamber's members, and the government decides its budget.
May 2005:The Duma passes legislation that raises the threshold to win Duma seats from 5 percent to 7 percent and bans political blocs and movements from running for the parliament.
January 2006: Putin signs a prohibitive law on nongovernmental organizations that put their activities and finances under the close scrutiny of the authorities.
- MT