Contemporary Russia’s power vertical: Clans controlled by the Kremlin

Photo: Pavel Kazachkov (CC) commons.wikimedia.org

The political turbulence facing the country over the last few decades (not to mention the last several centuries) profoundly impacted the development of its political system. Between 1990 and today, three main political trends and historic “waves” influenced the political realities of certain periods and thus how the country, as an independent actor of international politics, behaved within those same timeframes.” These three waves include:

• A tangible democratic republic (1991-1995): The first round of Boris Yeltsin’s presidency was affiliated with political chaos and criminal plurality;
• An oligarchic republic (1996-1999): Reflected with a new type of governance labelled as the semibankirshina – a simple local influential tycoon council dominated by kleptocratic rulers in the Kremlin; and
• The Putinisation republic (1999-today): The endorsement of the so-called sovereign democracy concept and restoration of Soviet symbols and governance style. 

Putinising the power vertical

The third wave introduced above is the most significant one in terms of the political transformation. This period took place in conjunction with a greater level of autocratic governance and the closing of society to supposedly non-Russian cultures and values. However, the most recent part of this wave could be considered separately as the socio-political situation in contemporary Russia is worsening. The economic situation reveals continued deflation of the rouble, a result of the sanctions carried out by the West against Russia in the wake of its aggression in Ukraine. The rate may soon become 1 US dollar to 100 Russian roubles. This could lead to catastrophic budget problems and possibly “sequestration” – a term from the Russian секвестирование, which means the suspension of federal programmes, the freezing of social projects, and the reduction of allocations towards the military-industrial complex.

The internal political situation has become tense and the Kremlin-created “power vertical” has begun to gradually freeze. The Kremlin is assisted by the Russian stabilisation fund in which the following institutions are united: state corporations, the national wealth fund, and the reserve fund. The strategic reserves of the stabilisation fund are around 300 billion US dollars (in 2013, this amount was equal to around 850 billion US dollars). Despite this drastic drop and the general precariousness of the current economic situation, Vladimir Putin’s approval ratings are still quite high. According to data from surveys conducted in the autumn of 2015 by the influential Levada Center, around 80 per cent of the questioned population supported Putin.

Yet more recent surveys by the Levada Center indicate that his support may be seriously weakening and could reach a new low of 49 per cent. Putin’s personal popularity could fall, or at least become a moot point, as he and the inner circle surrounding him continue to exploit Russian resources for their own gains. The vertical system, built earlier by Yeltsin, functions to establish and maintain a patrimonial state – a system in which the highest political leader considers the country to be his own personal property. According to some reports, Putin is a successful oligarch who personally controls 37 per cent of stock in the oil corporation Surgutneftgaz, the value of which is around 20 billion US dollars. Putin also controls 4.5 per cent of Gazprom and is reported to have 50 per cent of the shares in a company called Gunver, a global energy trading business. Based on several sources, the financial capital and revenue flows of Putin varies and incredibly so. According to reports from 2006 to 2017, the financial turnover of this company was 40 billion US dollars and net profit was eight billion dollars. Based on different sources, the personal capital of Putin could be as high as 30 billion US dollars. As one of the leading specialists in Russian politics, political analyst Stanislav Belkovsky has claimed that Putin’s financial fortune reaches 70 billion dollars while Bloomberg has gone even further, citing his fortune at 84 billion dollars.

In general, the power vertical is the integral structure of Russia’s executive government, which acts on the principle “from top to bottom”. Today’s model is built on a clan-based patrimonial hierarchy and the principle of a balance of power. The clans are all controlled by Putin and the system is reminiscent of the Soviet politburo system. These clans can be categorized according labels such as siloviki, military, liberal (often also associated with St Petersburg), technocratic and oligarch, as outlined below.

The siloviki clan

The term siloviki is derived from the Russian word sila, meaning “force”. This clan refers to Russian politicians and governmental officials who come from security and intelligence agencies, special forces or the military – many of whom were recruited to top posts by Putin himself. The clan includes leaders of key agencies: Nikolai Patrushev, secretary of the security council; Igor Sechin, chairman of the fuel and energy committee of Russia (a former officer of the GRU, then the main Soviet directorate for foreign intelligence); Viktor Ivanov, leader of the Federal Service of Drug Control; and Mikhail Fradkov, head of the foreign intelligence service and a former prime minister (2004-07). Political lobbying of the clan is done by Vladimir Zhirinovsky, chairman of the Liberal-Democratic party (and also a former GRU officer). Sergei Ivanov, chief of presidential administration, and Sergei Naryshkin, director of foreign intelligence and a former minister of defence, are also considered to be members of the clan. Commander of the National Guard of Russia, Viktor Zolotov, is also an influential member of the group.

This particular clan controls several media holdings, such as NTV (a Russian television channel) and several newspapers including Izvestia. They own the Rosneft oil company – the vice president of which is Aleksei Patrushev (son of Nikolai), and Igor Sechin is the chairman of its board of directors. One of the clan’s achievements is the federal rule on the establishment of special services and private protection services by business corporations, which was adopted in 2006 by the state council. In addition, the clan controls the special purpose centre of the Federal Security Services (the FSB, led by Aleksander Bortnikov). The siloviki are by far the most influential grouping in the entire hierarchal clan structure.

The military clan

The military clan is led by former deputy Prime Minister, Dmitry Rogozin, and the current Minister of Defence, Sergei Shoigu. This clan strongly co-operates with the siloviki. Financial support for the clan comes through the military-industrial complex as well as the weapons export industry, led by Viktor Chemezov (Putin’s close friend). In 2015 Russia gained 10 billion US dollars via its arms sales abroad. In addition, special federal financial programmes, in the range of nearly 1.2 trillion dollars support the military clan and its activities. With this mass quantity of resources, the defence ministry has developed new warfare technologies and weaponry, including new strategic weapons and space technologies (such as the fifth generation T-50 fighter jet). At the same time, the military clan controls the export of Russian-made weapons on the black market, which, according to some reports, brought in an additional four billion dollars in 2015 alone. The clan controls important media holdings, such as the television channel Zvezda.

It also leads the GRU – which still survives its Soviet predecessor as a strategic military intelligence agency – and operates special purpose brigades (of which there are approximately ten). Ramzan Kadyrov, the leader of the Chechen Republic who co-operates closely with both the military clan as well as the siloviki clan, has his own personal guard of about 10,000 soldiers. These so-called death squadrons are subordinate to Kadyrov and implement special clandestine operations (for example, the murders of the well-known human rights protector, Anna Politkovskaya and opposition leader, Boris Nemtsov). The structure of the death squadrons is concealed and is very hierarchical. They have separate bases, special burial grounds for weapons and documents, and secret bank accounts by which they receive money.

The liberal and St Petersburg clans

This clan of liberals is made up of figures like Prime Minister Dmitry Medvedev and Foreign Minister Sergei Lavrov. It has close ties with Arkady Dvorkovich, who was deputy prime minister until May last year. The clan controls the whole apparatus of the ministry of foreign affairs and the state and corporate structures of foreign economic orientation – for instance, Vneshekonombank, Vneshtorgovii Bank (VTB), etc. They also have some influence over Gazprom (Medvedev is chairman of the supervisory board). The clan controls the media holding Russia Today and is considered a more intellectual and technical grouping.

Similarly, the St Petersburg clan mostly includes representatives of powerful groups which were active during the Yeltsin period.  It is led by Anatoly Chubais, chairman of the board of RAO UES (the main electricity provider in Russia), Sergei Kiriyenko, head of Rosatom and former prime minister, and Leonid Melamed, former head of Rosnano, a state-owned venture capital fund. Other members include Vladislav Putilin, chairman of Rosatom’s supervisory board, and Andrei Fursenko, Russia’s minister of education. The clan has a strong financial base. In 2014 the revenue of Chubais’s corporation was 20 million roubles and Rosnano has capital in the range of 130 billion roubles. The clan’s leaders have strong intellectual power but are weaker as a political grouping. Still, the St Petersburg clan has some influence over foreign policy, particularly Anatoly Chubais’a geopolitical doctrine of “liberal imperialism”, which argues for soft power geopolitical influence in the neo-imperialist “near abroad”. Lobbying is done by political parties such as the Union of Right Forces (led by Leonid Gozman), Mikhail Barshchevsky’s Civilian Power, and Mikhail Prokhorov’s Civic Platform. The clan is more economically liberal-oriented and has tense relations with the siloviki clan.

The technocratic clan

Vladislav Surkov, head of the government executive office and main Kremlin ideologist, leads the technocratic clan. Surkov formulated the ideological concept of Russian sovereign democracy. The main idea behind sovereign democracy, according to Surkov, is to adjust democratic values to Russian traditions and away from the principles which exist in the West. Its main motto is “The state is everything.” Other leaders of this clan include Valentina Matviyenko, chairman of the Federation Council, and Vyacheslav Volodin, former secretary general of the United Russia party, deputy chair of the government and first deputy chief of staff of the presidential administration. This particular clan has a big impact on regional party leaders and governors who are on the party list. They control a fraction of the leading party in the Duma, the whole party nomenclature, the Young Guard of United Russia youth movement and the All-Russia People’s Front (a political coalition created by Putin in 2011 that acts as a mediator between the ruling party and nongovernmental organisations). Certainly at least two NGOs controlled fully by the Kremlin (independent NGOs in contemporary Russia have it very difficult to work after the adoption of the so-called foreign agents law) creates ”fruitful soil” for promoting the so-called power vertical – an integrated structure of executive power from the top down. The clan controls geopolitical processes in the near abroad and has an eye on the situation in the Russian-occupied Abkhazia and Tskhinvali regions of Georgia. It is an influential, flexible and strong grouping, but is not as stable or as solid as the siloviki and military clans.

The clan of oligarchs

Putin sits atop the clan of oligarchs, which is led by Russia’s three main magnates: Alisher Usmanov, Oleg Deripaska, and Roman Abramovich. Deripaska is the most influential political figure of the oligarch clan. His personal wealth is equal to 21 billion US dollars, and main holdings include the companies Rusal (aluminium production) and Glavmosstoroy (a construction and rental business).  He also owns Basic Element, the largest corporation of mixed business, and has shares in machine-building. The deceased Georgian oligarch, Kakha Benduqidze, was a business partner of Deripska’s through which Mikhail Saakashvili established direct political ties to lobby for Russian private capital in Georgia (which led to the privatization of the Zestaponi Metallurgical Factory). Deripaska later bought Benduqidze’s corporation Powerful Cars (Dzalovani Manqanebi) through the German company Siemens. This action led to Deripaska becoming the main oligarch of the heavy-engineering industry. On Putin’s instructions, Deripaska started to carry out military orders which included the production of intercontinental ballistic missiles. The second most influential oligarch, Usmanov, is often described as Putin’s personal banker and who carries out his personal orders. This clan is quite influential and plays a key political role in the country.

Kremlin-controlled clans fuel the power vertical

This configuration perfectly fits the prolongation of Putin’s reign under the aegis of the power vertical and reflects the monopolising authoritarian regime which dominates Russia. The intricate clan system has proven useful during a time when a “new Cold War” is developing, and Putin’s rhetoric, in his 2019 New Year’s Eve speech, was especially aggressive as he tried to divert attention away from internal turmoil towards external enemies. His personal vow that “Russia has no allies and partners” is fully expressed in the Soviet-style political culture, cronyism and kleptocracy that run rampant in Russia today.

All these ingredients combine to establish and strengthen a new type of political architecture known as the “patrimonial state”, a system of governance where a single ruler treats the state as his personal property. The whole of Russia suffers under this system now – and should the power vertical ever collapse, there is no doubt the country will continue to suffer for long time afterwards.

Vakhtang Maisaia is a professor and head of the MA programme on international security studies at the Caucasus International University, a visiting professor at Tbilisi State University, a visiting professor at the International Black Sea University (IBSU), and a deputy director of IBSU Black Sea Region Geopolitical Research Center. He is also an adjunct professor at the Cardinal Stefan Wyszynski University and Warsaw University, both in Poland.

Kremlin, Putin