Applied Sciences




(Chapters 6 & 7)


Aslund, Anders. 2007.  Russia’s Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed. Washington, D.C.: Peterson Institute for International Economics.


 I. Vladimir Putin: KGB Lieutenant-Colonel

A. Key Characteristics: loyal to the KGB; no set political views

B. Greatest Quality

1. Ability to make people underestimate him.

2. Ability to flatter supervisors.

“His rise signaled that Russia’s democratic revolution was over, and that the country had entered the stage of post-revolutionary stabilization, when people were tired of politics and wanted little but calm and economic growth.” (p. 199)


C. Why did Yeltsin’s “family” choose Putin?

~He was loyal and tough.


II. Putin’s Assumption of Power: Elections 1999-2000


A. Fall 1999-The “family” decided to form a political party called “Unity”

1. Centrist

2. Chose well-known non-political types as candidates

3. Why?  Russians were tired of politics.


B.  1999 Duma Elections (Remember: The Duma is the Parliament in Russia.)

1. Elections won by the Communists with 24.8% of the vote.

2. “Unity” received 23.8%

*Putin allied with the Communists in the Duma=near majority of power in Duma


C. Oligarchs Power Eclipsed by Presidential Administration:

1. Set into action before Putin assumed presidency

2. Before: Oligarchs could buy votes for pet legislation from the deputies.

3. To stop this corruption, the presidential administration raised the deputies’ salaries to $5,000 a month to discourage them from accepting bribes.

4. This decreased oligarchs’ influence in the Duma.  Still, they could buy votes.  Vote buying continued but now only under permission of the presidential administration.


D. Yeltsin Retires:

He resigned on December 31, 1999.  Putin was chosen as the interim president until the elections.  He began making policy before being formally elected.

1. Putin’s first act: Decree that gave Yeltsin and his family a decent salary and legal immunity

2. March 2000 presidential elections

a. Moving up the elections by 3 months made it very difficult for opposition parties to get a good campaign and candidates.

b. During the time before the elections, Putin did not campaign.

c. There were 10 opposition candidates.

d. Putin won the election with 53% of the vote.


E.  Putin’s Definition of Democracy:

1. May 2000 (shortly after his inauguration)

~ Called for a “managed democracy”

2. Later, he called it “sovereign democracy” = authoritarian rule

3. These definitions were cryptic.  Nobody understood what he meant by these.

*Aslund “Putin’s favorite democracy was no democracy”. P. 207


F. Putin’s Presidential Characteristics:

1. micro-manager

2. slow-decision maker

3. once a decision is made, no changes

4. divided people into friends and foes.  He persecuted foes.

5. KGB man=suspicious and thought in terms of conspiracy theories.

6. Believed in intelligence

7. Acted in secret until he made decisions


G. Goals for immediate action:

1. continuing war in Chechnya

2. media control

3. centralization of federal power

4. economic reform

*First term: Putin was “everything to everyone”. P. 208


I.                First Term Goals

A. Muzzling the Media

Background: Remember, during the Gorbachev era the Soviet Union enjoyed “Glasnost” or openness in the media, etc.  This tradition continued and grew during the Yeltsin era.  The media diversified and reflected the divergent opinions of the populace.  At this time, the media was very competitive.  This period is considered the high point for Russian media.


1. Vladimir Gusinsky and Media-Most

a. Gusinsky was an oligarch.  He owned the most popular TV channel (NTV) and the radio channel Ekho Moskvy.

b. He opposed the Kremlin and supported opposition candidates Luzhkov and Primakov in the 1999 Duma elections.

c. Four days after Putin’s inauguration, Media-Most was invaded by tax police.  On June 13th, Gusinsky was arrested.  In order to get out of prison, Gusinsky had to give the state (Gazprom) Media-Most and leave Russia for good.  After Gazprom took over, journalists and managers were fired.

d. In 2004, the European Court of Human Rights ruled that Gazprom and Russia’s media minister colluded with law enforcement to seize Media-Most.  The court ruled that Russia had to pay damages to Gusinsky.


2. The Kursk Submarine Crisis and Berezovsky

In the wake of the Kursk sub tragedy (August 12, 2000 a nuclear submarine (Kursk) exploded in the Bering Sea and killed 188 sailors), Putin remained on vacation in Sochi and the military lied to the media about various facts about the tragedy.

a. Boris Berezovsky was another prominent media oligarch.  His ORT TV station exposed the military and the governments lies.  By October, Berezovsky was forced out of the country.


3. Mission Accomplished

a. Within a year, Putin had suffocated independent TV.

b. Businessmen close to the Kremlin bought newspapers and magazine companies to help control the media.

c. Putin always claimed that he did not know what the state agencies were doing but that they were acting independently and according to law.

*“Putin reestablished the public lie as the standard as in the Soviet Union.” P. 211

B. Centralization of Federal Power


1. Six days after his inauguration, Putin passed a decree imposing more central control over the federal system.

a. Before: 89 regions had been running independently.  They passed laws that contradicted federal laws. They did not pass on federal revenues collected locally.  They were behind in paying state benefits to pensioners and for salaries.

b. Putin wanted to create a “Vertikal” of control.  He wanted to streamline the chain of command and to put himself in control of it.


2. May 13, 2000, Putin launched a full-fledged attack on the regional governors.

a. Eliminated governors’ position as senators in the Federation Council.  Putin would appoint the senators directly (bye, bye democracy).

b. Divided the country into 7 large regions.  Each region was headed by a new presidential envoy or “supergovernor”, hand-picked by Putin.

c. Putin did not fire the governors.  The Kremlin simply interfered in local elections as the governors’ terms came up for reelection.  Most of the governors bowed under the pressure and joined Putin’s party and became “Putin’s Men”.  In this way, Putin gained full control from the top down.

*”The Kremlin controlled most elections to such an extent that hardly any democracy remained.” P.213


3. Putin the political authoritarian met his goals:

a. muzzled the media

b. brought the Duma under control and tamed the regional governors


4.  Putin’s Government

a. Putin formed his government from siloviki (KGB and police).

b. There was a minor group of liberals, young economists, and lawyers from St. Petersburg. The current Russian president Dmitri Medvedev was one of this group.

c. Putin kept most of Yeltsin’s “family” in his administration.

d. Many prominent businessmen joined Putin’s administration.

C. Dictatorship of Law


Background: Putin is a lawyer and legal reform was a priority for him.  The courts in the regions had become increasingly corrupt because the market-value of their judgments went up.  The judges were acting increasingly independent of any control.

1. December 2001, a series of laws were adapted to remedy this situation

a. enhanced status of judges

b. gave better financing for the court

c. renewed all legal and procedural codes


The judges received higher salaries from the federal government and financing for their courts also.  This allowed them to work more independently of the local regional administration.

=Further centralization under Putin. Now, the judges are dependent on the Kremlin.

D. A Warning to the Oligarchs

July 28, 2000 Putin met with 21 oligarchs to warn them to stay out of politics (financing opposition campaigns, candidates).  He warned them…”stay out of politics and I will not revise the results of privatization.” P. 226.  Remember, most of these oligarchs gained their wealth by illegal privatizations.  Some oligarchs have been called on to help finance special projects.  They do that to keep in favor of the government.



Simply put, Putin acted quickly in his first term to gain control of the government at all levels, subordinate the courts, and control the media. It is becoming clear what he means by “Sovereign Democracy”.


II.             Putin’s Second Term


A. Elections 2003/2004

1. Official Kremlin Party: United Russia

a. Formed December 2001 as with the union of “Unity” and “Fatherland All Russia” (Unity’s former centrist rival)

B. Getting Russians to Vote

1.  Most Russians were apathetic about voting in either the Duma or presidential elections because they felt that elections were controlled, and everyone knew which party would win (United Russia).

2.  The Kremlin hyped up the elections as the peoples’ opportunity to fight the oligarchs.  The Russians were fed-up with the fat-cat oligarchs and the Kremlin used this to their advantage.  The government media exposed that Yukos had funded rival political groups like SPS, Yabloko, and the Communist Party.  So, a vote for United Russia would be a vote against the oligarchs’ political power structure.


C. Duma Results

1.  UR won majority of seats in Duma with 37.6% of the vote.  This translates to a greater than 2/3 majority with 305 of 405 seats in the Duma.

2.  The Duma elections confirmed that the Russian government was becoming increasingly authoritarian.  These elections were described as “free but not fair” by the Council of Europe and the Organization for Security and Cooperation in Europe (OSCE).  The imbalanced and biased media coverage was cited as key to this.


D. Presidential Election.

1. Putin could not get anybody to run against him.  Finally, 6 candidates did run.  Only 2 were true opposition.  As in the first election, Putin did not have any debates with the opposition candidates.

2. Putin won with 71.3% of the vote.


IV. Putin’s Second Term: No Reform and More Control


A.  Government Changes

1. New Prime Minister: The appointment of the weak Mikhail Fradkov as PM signaled the goals of the new Putin government. The siloviki dominated over the reforms.  Result: no new reforms.


B. New Government Structure

1.  Putin reformed the way the state administration was organized.  Organized the Ministry by function.  This squeezed out the young reform-minded policymakers and replaced them with older, conservative heads of departments.

*Results: weakening of government and transfer of power to the presidential administration.


V. Sword Rattling and Alienation of West: A Beginning of a New Cold War???


A.  Beslan Tragedy

On September 1, 2004, Chechen fighters seized a school and held 1,200 adults and children hostage for three days.  The federal government (per Putin) ignored the crisis and minimized the news coverage.  The regional governors refused to go to Beslan to negotiate with the rebels.  On the third day, Russian special forces were sent in and ended the crisis.  Because of the delay of action, many local men and soldiers fought with the Chechens.  As a result, 330 people were killed; 155 were children.  According to Aslund, this demonstrated that the Russian government was callous and incompetent.  Why?

1.  minimized media coverage

2. concealed real number of hostages and victims

3.  demonstrated how poorly overcentralized Putin’s government could react in a crisis


B. Corruption

1. The definition of corruption for this book is: ….”the malfunction of state with politicians and civil servants selling public goods for private benefit.”

2.   Corruption was prevalent throughout the new Russian regime.  It was rampant in the former Soviet Union.

3.  The first term reforms and earlier governmental reforms in the ‘90’s helped to stop a lot of corruption.

4.  However, top level corruption increased under Putin’s reign.  Worse, he has done nothing about it as the siloviki’s wallets get fatter and fatter. They seem to have legal immunity.


C.  Orange Revolution

Putin meddled in the 2004 Ukranian presidential elections.  He campaigned, sent $300 million for the campaign, and sent Russian political advisors to the Ukraine to help Viktor Yanukovich to win the presidency.  Putin did this because he did not want the west-oriented and democratic Viktor Yushenko and his Orange Revolution to win.  He worried that having Yushenko next door would influence similar movements in Russia.  Yushenko won and now Putin ignores the Ukraine.


D.  Pipeline Politics

Before the fall of the Soviet Union, the former republics received subsidies on oil and gas.  This tradition continued until Russia’s oil company (Gazprom) decided to make the former republics (CIS countries now) pay market price for the oil and gas.  This was a sudden and huge hike in costs and Ukraine and Moldova refused to accept this.  Gazprom simply turned off the tap.  This not only affected Ukraine and Moldova, but also the EU as 80% of Gazprom’s exports to the EU flowed through the pipeline in Ukraine.  This caused the EU and the US to protest. The cut-off only lasted for two days, but the affects have lasted.  Combined with Putin’s anti-western actions in the Orange Revolution, the West has begun to see Putin in a new light.


E.  Sword-Rattling

Putin’s hostile rhetoric about the United States and recent sword-rattling about the anti-missle bases in Poland and the Czech Republic are pitting the US and Russia more and more against each other.


VI.  Summary


A. Putin has dismantled all democratic institutions and built an authoritarian system by:

1. Strangling the major media and manipulating public opinion by TV.

2. Abolishing gubernatorial elections and recentralizing the “vertikal” of control to himself.

3. Stifling the political influence of the oligarchs.

4. Subordinating regional judges to the presidential administration.

5. Eliminating democratic contests in Duma elections.

6. Transferring of power from the council of ministers to the presidential administration effectively stopping all reforms.





(Chapters 6 & 7)


Aslund, Anders. 2007.


’s Capitalist Revolution: Why Market Reform Succeeded and Democracy


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