Publication: Prism Volume: 2 Issue: 11

The Emperor of Russia’s Warehouses

by Alla Davidova

Pavel Borodin, head of Russia’s Presidential Management Office,for the second straight year, has held a solid place on the listof Russia’s 100 most influential politicians. He is one of BorisNikolayevich [Yeltsin’s] closest associates and is regarded asone of the most powerful people in the country. Although Borodinhimself likes to demur: "I’m just a manager, but a high-rankingone. Politics has never been my job. It’s not my thing."

But some facts just stare you in the face. Borodin is the headof a powerful economic empire, which has an enormous influenceon politicians, and hence, on politics as well. The responsibilityfor providing supplies for the deputies in the State Duma, membersof the president’s staff, members of the Constitutional, Supreme,and Arbitration Courts, and members of the Central Election Commissionis in his hands. Soon, officials of the Ministry of Foreign Affairsand the Ministry of Foreign Economic Relations will be added tothis list.

The president has taken the property which used to belong to theGeneral Affairs Departments of the Central Committee of the CPSU,the Supreme Soviet, the Council of Ministers, and the Fourth CentralDirectorate of the Ministry of Health of the USSR and the RSFSR,and put it all under the jurisdiction of the Russian Federation’sPresidential Management Office. Under Borodin, this office hasgradually grown into an enormous conglomerate, including 200 firms,directorates, enterprises, and organizations. It has a large fleetof automobiles: 600 to 700 cars are bought by his office everyyear–mostly Audis, Mercedes, and Saabs. It includes an ultramodernmedical center, hotels, including the President-Hotel, the Arbat,and the Zolotoe Koltso [Golden Ring], dachas, sanatoria,a large number of apartment buildings, catering facilities, cafeterias,tailor’s shops, and publishing houses. In addition, more than300 buildings come under its jurisdiction, beginning with thesmall offices on Staraya Ploshchad, and ending with unique edificessuch as the Kremlin, the Russian White House, and the buildingshousing the State Duma and the Federation Council. Over 80,000people work in the Presidential Management Office’s various subdivisionsand another 30,000 are employed to serve it–including builders,guards, and firemen. All these subdivisions function perfectly,just as in the best Soviet times…

So how did Borodin wind up in the highest corridors of power?His biography is typical for a party economic manager [partkhozaktiv]of the Brezhnev period. He was born in 1946 in Kyzyl. He graduatedfrom the Ulyanovsk Agricultural Institute as an economist, wastransferred to the north, where he gradually moved up the ranks,from sector economist all the way up to deputy general directorof the Yakutsk Geological Office. He graduated from the KhabarovskHigher Party School, headed the Yakutsk Council of People’s Deputies,and later became mayor of Yakutsk. It was in this post that BorisYeltsin first noticed him, when he visited Yakutsk in 1990. Thatyear, Borodin was elected a People’s Deputy of the RSFSR, andbecame a member of the Committee on Women’s and Family Issuesin the Supreme Soviet.

Borodin moved over to the executive branch in 1993. Kremlin officialsrecall that Boris Yeltsin pondered long before picking Borodin.The reasons for his choice remain a riddle–the Yakutsk mayordid not belong to any Moscow group, neither to the radical democratsnor to any other political clan, and therefore was not supportedby any of them. Moreover, at that very time, rumors started circulatingin Kremlin offices of serious abuses of power on Borodin’s partin Yakutia, unaccompanied, however, by any documentary proof.Nevertheless, the president called Borodin under his banner and,according to these same sources, later emphasized that he madethe right choice.

It didn’t bother Borodin at all that the office he moved intoon Staraya Ploshchad was previously occupied by the headof the CPSU’s General Affairs Department, Nikolai Kruchina, whoselife ended tragically when he jumped out the window after thefailure of the August 1991 putsch. Whenever people reminded himof his predecessor’s fate, he joked: "I’m not a superstitiousman–this cup will pass me by. Only someone who has his hand inthe till needs to be scared. And I don’t."

Under its new owner, the office has seen substantial changes:instead of Vladimir Ilyich [Lenin]’s portrait, Boris Nikolayevich[Yeltsin]’s now hangs there. The walls are adorned with a "Madonnaand Child" (a copy), and prints, and porcelain and bronzeknick-knacks have appeared. On his desk, there is a telephonewith a direct line to the president; it is said that he uses itmore than many other high-ranking leader in the government andthe president’s administration. Sometimes he meets with BorisNikolayevich personally three times in one day, and recently,he has begun to accompany him on all his trips.

It must be noted that in taking over the Presidential ManagementOffice, Borodin has not conducted a harsh purge of the staff heinherited from the Communist party; on the contrary, he has carefullypreserved it. He explains his position in this way: "If aman’s doing his job, then why should I fire him? We’re not a politicalorganization; we’re a management office. We sweep up the squaresand wash the dishes. Should we really sweep the squares wherethe communists meet worse than those where the democrats meet?It doesn’t matter whom we serve–Soviet leaders or democraticones–the main thing is that they must be served. And served welland tastefully. Of course, now we do a lot of things differently.Before, it was quite simple: you asked for a budget, and you gota budget. Now, we’re forced to rack our brains to find the moneyourselves, and get involved in commercial activities and foreigntrade."

Incidentally, organs of state administration are forbidden bylaw to engage in commercial activities. But Borodin quickly founda loophole here, saying that the Presidential Management Officeis not an "organ of state administration" but an "economicstructure within the framework of the highest federal organs,"and thus, this provision of the law did not apply to it.

Moreover, last August, the president issued a special decree regardingthe Presidential Management Office, according to which this structurewas virtually made a ministry, indeed, a very high-ranking one,for from that point forward, it was to be subordinate directlyto the head of state. The Office was given a number of new rightsand powers, including the right "to invest the money at hisdisposal in the capacity of a shareholder in the financing ofcapital investments in the production and non-production spheres,and to participate in economic activities together with otherentities in accordance with the generally established practice."In addition, the Office received official permission to conductforeign trade operations, to handle investment programs, to establishcorporations, and put its property up for rent. At the same time,the enterprises and organizations subordinate to the PresidentialManagement Office received an investment tax credit and were exemptedfrom paying customs duties on goods imported for the purposesof production. In a word, the Office was given "most favoredagency" status.

Pavel Borodin maintains that the decree has had no effect whatsoeveron his own personal situation or on his salary. "All thistalk about my being promoted is a lot of nonsense! If I had wantedmore power than I have now, I could have had myself made a minister.But that means nothing to me. I’m completely satisfied with mypresent job. And my salary, if you include bonuses, comes outto about 2 million rubles a month. I’ve got the use of a governmentcar round the clock, and a whole staff of assistants and secretaries.I’ve got a nice 180-square-meter brick government dacha,for which I pay 300,000 rubles a month in rent. In short, I canallow myself things that even a Western millionaire cannot afford."

From the moment of his arrival in Moscow, Borodin has taken ahard line on preserving the privileges (the very same privilegeswhich Boris Yeltsin had striven so zealously against in his time)of those who dwell on the Olympus of state power, explaining thatthe good things of life must not be accessible only to businessmen.When reproached for this, he usually answers: "What you call’privileges,’ I call the necessary conditions for work. For example,a minister has the right to a government car, three drivers, adacha, a pass to a sanatorium twice a year, tailored suitsand nice shoes. Is this too much for someone who bears such aheavy burden?"

Borodin was responsible for rebuilding the Russian White House,severely damaged in October 1993, and refurbishing the buildingsin which the State Duma and the Federation Council were to behoused. All this was done to the highest standard–luxurious interiors,imported furniture, expensive equipment. It is enough to say thatthe rebuilding of the White House alone cost the treasury $169million. Foreign workers did all the work, and millions of dollarsin contracts went to foreign firms to provide the equipment.

It was Borodin, who, together with the Kremlin’s Commandant’sOffice and the Main Guards Department, organized the grandioserestoration of the Kremlin’s Building No.1, where the president’sofficial residence had been moved a few months before. To criticismsthat this was done at the wrong time, and was burdensome to thetreasury, Borodin replied that he did not want the Kremlin ceilingto fall down one fine day on Clinton’s head, and that if Russianeeded refurbishing, the best place to start was with the Kremlinitself. Five thousand workers participated in the restoration,which took two years. It took Borodin and his specialists a lotof work. In addition to the money (it cost $2,500 per square meter)and sweat, it required a lot of rare materials: valuable woods,non-ferrous metals, marble, crystal, malachite, and jasper ofvarious colors and shades. Ceilings were hand-painted. Furniturewas made the old-fashioned way. Finnish air conditioners, Germanbathroom fixtures, and American electronic equipment were installed.Equipment alone cost $15 million. In luxury, the head of state’sresidence conceded nothing to the Tsar’s palaces: old paintingsand sculptures decorate the halls; there is an exhibition of weaponry.These items were brought over from the Hermitage, the TretyakovGallery, and the Pushkin Fine Arts Museum. Ilya Glazunov and ZurabTsereteli were called in as consultants to the restorers.

It is worth noting that people have already taken notice of Borodinabroad, in the USA and Germany in particular, where he is seenas a competent government manager who has a promising politicalfuture. Recently, Borodin has begun to meet frequently with foreignguests–leaders of large firms and ambassadors. He is also inactive contact with the leading Russian financial and industrialgroups, except for the "Most" group, which, as is well-known,is not in favor at the Kremlin court. Borodin keeps his personalsavings in Stolichny Bank.

In the words of people who know Borodin well, he has an instinctiveability to do the right thing at the right time and always picksthe right patron. Now it is clearly President Yeltsin. "Ifit so happens that there is another president, there won’t bea place for me in the Presidential Management Office any more,"Borodin remarks. But who knows? A good manager, who is able tomake things comfortable for the big bosses will come in handyunder any regime. In any case, Vladimir Zhirinovsky has alreadypromised Borodin that if he wins the election, his place is safeat least until 2004.

Translated by Mark Eckert and Aleksandr Kondorsky