Publication: Eurasia Daily Monitor Volume: 3 Issue: 174

The first week after the September 13 murder of Andrei Kozlov, first deputy chairman of the Russian Central Bank, saw no breaks in the case. Investigators are still examining a range of possible options and do not have a single suspect. The 41-year old official was killed execution-style, along with his driver, as he stepped out of the Spartak arena after a friendly soccer match. Russian President Vladimir Putin called the top law-enforcement chiefs to his summer residence in Sochi, ordering them to organize a special inter-ministerial group, signaling that the murder was not an isolated case but the result of “a flare-up in the situation with fighting economic crime” (Financial Times, September 16; Wall Street Journal, New York Times, September 15).

International media have focused attention on Kozlov’s efforts to shut down “dirty banks.” Most commentaries compared the murder with the violent “business conflicts” in the early days of Russian “bandit capitalism” in the mid-1990s, which is illustrative but not exactly accurate. Putin’s era, often praised for its stability, has produced a long list of contract killings, including Magadan oblast governor Valentin Tsvetkov, liberal politician Sergei Yushenkov, and Dzerz hinsky mayor Viktor Dorkin. While Anatoly Chubais, head of the energy corporation Unified Energy Systems, narrowly escaped an assassination attempt in March 2005. In the last few years, murders of entrepreneurs, such as banker Alexander Slesarev or retired Federal Security Service (FSB) general Anatoly Trofimov, or even business lawyers, for instance Dmitry Shteinberg, have noticeably increased, prompting investigative journalist Yulia Latynina to raise an uncomfortable question: “Why have they started to kill again in Russia?” (Ezhednevny zhurnal, October 13, 2005). Kozlov’s assassination, which Chubais defined as a “brazen challenge to all Russian authorities,” makes it necessary to re-examine this question (, September 15).

Putin has tried to link money laun dering and terrorism, and the mainstream media have quickly picked up the popular theme of a struggle against corruption. The windfall of “petro-rubles” has predictably brought spectacular growth in administrative corruption, painfully familiar to every Russian, and the Central Bank has recently expanded its efforts to block money laundering channels. It might even appear that Putin is on the same wavelength as U.S. President George W. Bush, who initiated a special statement on high-level corruption at the G-8 summit in St. Petersburg last July (Kommersant, September 20). In fact, however, Bush’s campaign against “kleptocracy” aims at the very heart of Putin’s system of power, where unrestrained control without accountability generates a form of corruption far more institutionalized than the “innocent” habit of bribes and kickbacks encouraged by some unredeemed oligarchs.

When the Natural Resources Ministry ignores its own environmental experts on the Sakhalin-2 oil-and-gas development project in order to put pressure on the international consortium that refuses to accept Gazprom as a major partner, it might look like protecting “national interests,” but in reality it is a form of corruption (Vedomosti, September 21). When the FSB director claims credit for the explosion that destroyed Chechen warlord Shamil Basaev or when the minister of defense reports to the president on the full readiness of the nuclear submarine fleet, that could be construed as a mix of useful PR and “strategic” deception, but in essence it is also corruption (see EDM, September 8, 13). Office abuse, graft, embezzlement, and lies intertwine to shape a dense web of corruption hidden by tight control over information and “beautified” by shameless propaganda.

A particularly striking feature of this systemic corruption is the positive identification of personal profit with the passionately proclaimed “state interest.” This is typical for the St. Petersburg cadre that Putin brought into the colossal bureaucratic pyramid in order to enhance his control. These “Putin people,” with backgrounds in the special services, were expected to show discipline, efficiency, and above all clan loyalty. The resentment of losers in the privatization of the 1990s sustained their zeal in restoring the power of the state, but they were not immune to the temptation to mix business with pleasure. Easy access to overflowing streams of money has eroded discipline and efficiency, but it is the very real p rospect of Putin’s retirement that has deeply undermined their loyalty (Ezhednevny zhurnal, September 20). The so-called siloviki, or “power guys,” have turned into feuding gangs that settle their scores in the long Kremlin corridors.

This war to capture the unraveling networks reached a climax in June, when one group of “loyalists” convinced Putin to sack the over-zealous Prosecutor-General Vladimir Ustinov, and another “team” quickly arranged his reassignment as minister of justice. After the summer break, the battles acquired a new intensity, as the cadre reshuffling in the judicial system has taken down Ustinov’s lieutenants who supervised the rigged investigation against the oil giant Yukos and its owner M ikhail Khodorkovsky (Kommersant, September 21). No explanation has been given for the chain of resignations and firing in the FSB central apparatus, but the leaks about internal corruption investigations and corruption in the department of internal investigations are growing into a deluge (Ezhednevny zhurnal, September 18).

It is not clear how Kozlov’s murder fits into this picture. Latynina maintains that one of the “dirty banks” could have simply taken revenge, being sure that the investigation would quickly run into a dead end (Novaya gazeta, September 18). There are, however, opinions advanced by sober conservative commentators to the effect that too many banks are involved in laundering t he same money that fuels the corruption in the FSB structures (Expert, September 18). Putin’s siloviki are at each other’s throats with the fury of cornered rats. This Russian-style economic policy could become more deadly and self-destructive — unless Putin steps in to preserve is power structure.