Putin's People
How the KGB Took Back Russia and Then Took On the West
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Summary
Within the shadowy corridors of power, Vladimir Putin and his cadre of former KGB operatives have spun a web of intrigue that reaches far beyond Russia's borders. Catherine Belton's "Putin’s People" unravels the clandestine ascent of this elite group as they seize control, transforming Russia's economic landscape and manipulating political landscapes across the globe. Charting the odyssey from the chaos of the Soviet Union's collapse to the reassertion of Russian might, Belton's narrative is a gripping exposé of corruption and strategy. As Putin's inner circle replaces oligarchs with loyalists, they not only reshape their nation but also cast a long shadow over Western democracies. This is the definitive tale of ambition and power—where the stakes are nothing less than the global order itself.
Introduction
On a cold December evening in 1999, as the world prepared to celebrate the new millennium, Boris Yeltsin appeared on Russian television to deliver a stunning announcement that would reshape global politics for decades to come. His resignation speech, transferring power to an obscure former KGB officer named Vladimir Putin, marked not merely a changing of the guard, but the culmination of one of history's most audacious political operations. This transformation reveals how a network of intelligence operatives, organized crime figures, and ambitious bureaucrats orchestrated the return of authoritarian rule to Russia while simultaneously extending their influence deep into Western institutions. The story illuminates three critical questions that continue to shape our world today. First, how did democratic institutions collapse so rapidly in a country that had seemingly embraced freedom after seven decades of communist rule? Second, what role did Western naivety and financial greed play in enabling this authoritarian resurgence? And third, how did Russian influence operations evolve from crude Soviet propaganda into sophisticated financial networks that penetrated the heart of global capitalism? Understanding these dynamics proves essential for anyone seeking to comprehend the current state of international relations, the fragility of democratic institutions, and the complex interplay between organized crime, intelligence services, and legitimate business in the modern world. This account proves particularly valuable for policymakers, business leaders, and citizens who must navigate an era where the boundaries between state power, criminal enterprise, and legitimate commerce have become increasingly blurred across the globe.
The Dresden Years: KGB Networks in Cold War's Twilight (1985-1991)
The story begins in an elegant art deco villa on a quiet Dresden street where a young Vladimir Putin spent five crucial years as the Soviet empire crumbled around him. Arriving in 1985 as a thirty-two-year-old KGB officer fresh from the elite Red Banner academy, Putin found himself at the epicenter of a desperate struggle to preserve Soviet intelligence networks as the Berlin Wall fell and Communist regimes collapsed across Eastern Europe. Dresden was far more than the provincial backwater it appeared to be, serving as a crucial hub for smuggling embargoed Western technology to the Soviet bloc through its massive electronics manufacturer, Robotron. Putin worked closely with Stasi operatives like Matthias Warnig, who would later become integral to his regime, running operations that blurred the lines between intelligence gathering, technology theft, and criminal enterprise. The KGB had forged deep alliances with organized crime groups and "friendly firms" that moved billions of dollars worth of raw materials and strategic goods through shadowy networks spanning from Switzerland to the Caribbean. These relationships would prove invaluable in the coming transformation, as traditional state structures gave way to hybrid networks of power and profit. As the Soviet system collapsed, Putin witnessed firsthand the implementation of "Operation Luch," a contingency plan to preserve KGB networks and assets for future use. While publicly the intelligence services appeared to be dismantled, in reality they were going underground, transferring vast sums through offshore companies and cultivating a new generation of agents who could operate in the post-Communist world. The phrase "Moscow is silent" that Putin heard when calling for backup during the fall of the Berlin Wall became a defining moment, crystallizing his belief that the Soviet leadership had betrayed their own operatives. These Dresden years established the template for everything that would follow: the fusion of intelligence operations with criminal enterprise, the use of Western financial systems to hide and move assets, and the cultivation of networks that could survive regime change. The young KGB officer who burned documents in a villa furnace would carry these lessons back to Russia, where they would form the foundation of a new type of authoritarian capitalism that would challenge the Western-dominated world order.
St. Petersburg Consolidation: Crime, Cash and Control (1991-1999)
Putin's return to Leningrad in 1990 coincided with the city's transformation into a laboratory for the most ruthless forms of post-Soviet capitalism. Working as deputy to the charismatic mayor Anatoly Sobchak, Putin became the crucial link between the democratic facade of the new Russia and the shadowy networks of former KGB operatives and organized crime groups who were seizing control of the city's most valuable assets. The notorious oil-for-food scheme that Putin administered in the early 1990s exemplified this new model of governance, ostensibly designed to import desperately needed food supplies but instead creating a massive slush fund that enriched Putin's associates while virtually no food ever arrived. Marina Salye's investigation revealed that over ninety-five million dollars in export licenses had been handed out to obscure front companies, many connected to Putin's KGB network. This wasn't corruption in the traditional sense, but rather the systematic creation of what Russian criminals call an "obschak" - a common cash pot for the clan. The alliance between Putin's administration and the Tambov organized crime group became the defining feature of St. Petersburg's political economy, with figures like Ilya Traber and Vladimir Kumarin, the one-armed crime boss known as the city's "night governor," helping Putin's team gain control of the strategic sea port and oil terminal. This partnership followed classic KGB tradecraft, using criminal groups as "infantry" to control territory and eliminate rivals while maintaining plausible deniability for the intelligence operatives pulling the strings. The model perfected in St. Petersburg - where former KGB officers used their knowledge of Western financial systems to create legitimate-seeming businesses that served as fronts for money laundering and asset accumulation - would later be scaled up across the entire Russian Federation. The Ozero dacha cooperative, where Putin and his closest associates built their weekend retreats, became the symbolic heart of this new elite. These were not merely corrupt officials skimming from state resources, but the architects of a new form of state capitalism that would challenge the Western-dominated global order. The networks forged in St. Petersburg's shadows during the chaotic 1990s would soon emerge to reshape not only Russia but the entire international system, as Putin prepared to take his provincial operation to the highest levels of power.
The Kremlin Takeover: From Succession Crisis to Authoritarian Rule (1999-2001)
The transfer of power from Boris Yeltsin to Vladimir Putin was not the democratic transition it appeared to be, but rather the culmination of a carefully orchestrated operation by KGB networks to reclaim control of the Russian state. The crisis began with the Mabetex scandal, where Swiss prosecutors uncovered credit cards issued to the Yeltsin family by a construction company renovating the Kremlin. This seemingly minor corruption case threatened to unravel the entire post-Soviet political settlement and opened the door for Putin's rise, as the embattled president desperately sought a successor who could guarantee his family's immunity from prosecution. Sergei Pugachev, the Orthodox banker who helped engineer Putin's ascent, believed he was installing a manageable puppet who would protect the Yeltsin family while preserving the oligarchic system. The apartment bombings that killed over three hundred Russian civilians in September 1999 provided the perfect crisis to transform Putin from an unknown bureaucrat into a decisive wartime leader. Whether these attacks were genuine terrorism or a false flag operation orchestrated by Putin's FSB associates remains one of the most chilling questions of his rise to power, but their political effect was undeniable. The parliamentary elections of December 1999 demonstrated the effectiveness of the new Kremlin's media manipulation techniques. Boris Berezovsky's ORT television channel waged a devastating campaign against the Primakov-Luzhkov alliance, while state resources were mobilized to support the hastily created Unity party. Putin's approval ratings soared from thirty-one percent to seventy-five percent as Russian forces launched devastating airstrikes against Chechnya, providing the population with a sense of restored national pride after years of humiliation and economic collapse. Yeltsin's New Year's Eve resignation speech, transferring power to Putin as acting president, marked the end of Russia's brief experiment with democratic governance. The elaborate inauguration ceremony in the newly renovated Kremlin halls - paid for through the same corrupt contracts that had compromised the Yeltsin family - symbolized the return of imperial grandeur. But hidden among the applauding officials were the St. Petersburg KGB operatives who would soon reveal their true agenda: the systematic dismantling of democratic institutions and the creation of a new form of authoritarian rule that would challenge the post-Cold War order.
The Siloviki Ascendant: Oligarchs Fall, State Power Returns (2000-2004)
Putin's first presidential term revealed the true nature of the regime change that had occurred, as the new president moved systematically to eliminate potential rivals and consolidate power in the hands of his security service allies. Within days of his inauguration, masked police commandos raided the offices of media mogul Vladimir Gusinsky, signaling that the era of oligarchic independence was over. The systematic campaign against the Yeltsin-era tycoons was not driven by anti-corruption zeal, but by the determination of Putin's security service allies to eliminate potential rivals and seize control of Russia's most valuable assets for their own networks. The meeting between Putin and twenty-one oligarchs in the Kremlin's Ekaterinovsky Hall in July 2000 established the new rules of the game with brutal clarity. Those who accepted subordination to the state would be allowed to keep their wealth; those who challenged the regime would face the full force of the law enforcement apparatus. The choice of Stalin's dacha for the follow-up barbecue was a deliberate psychological message about the consequences of resistance. Boris Berezovsky and Vladimir Gusinsky, who had used their media empires to criticize Putin's authoritarian tendencies, were forced into exile through a combination of criminal prosecutions and economic pressure. The siloviki - Putin's network of former KGB and military officers - began systematically placing their allies in key positions throughout the government and economy. Figures like Nikolai Patrushev, who replaced Putin as FSB chief, and Igor Sechin, Putin's loyal gatekeeper, represented a new generation of security operatives who combined Soviet-era ruthlessness with capitalist ambition. Unlike the Communist-era KGB, these men saw wealth accumulation as a weapon for restoring Russian imperial power rather than an ideological betrayal, creating a hybrid system that would prove far more effective than traditional authoritarianism. The early liberal reforms - the flat tax, land privatization, and rapprochement with the West - were tactical moves designed to stabilize the economy and gain international legitimacy while the real transformation took place behind the scenes. Putin's cooperation with the United States after September 11th was conditional, based on expectations of reciprocal treatment that were never fulfilled. When President Bush withdrew from the Anti-Ballistic Missile Treaty and NATO continued its eastward expansion, Putin's circle felt betrayed and began planning their response, setting the stage for a confrontation that would reshape global politics and challenge the Western-dominated international order.
Summary
The rise of Vladimir Putin represents more than a simple authoritarian takeover; it exemplifies how intelligence networks can exploit democratic transitions to create new forms of hybrid governance that combine state power with criminal enterprise. The central contradiction running through this history is the transformation of former Soviet operatives from ideological warriors into capitalist predators who used their knowledge of Western systems to undermine those very systems from within. This metamorphosis reveals the adaptability of authoritarian power structures and their ability to exploit the openness and freedoms that democratic societies cherish. Three crucial lessons emerge from this transformation that remain urgently relevant today. First, democratic institutions are far more fragile than they appear, particularly when faced with adversaries who understand how to exploit legal processes, media manipulation, and financial networks for authoritarian ends. Second, the integration of post-Soviet elites into Western financial systems created vulnerabilities that continue to be exploited through money laundering, influence operations, and the systematic corruption of democratic processes. Third, the failure to hold accountable those who looted state resources during transitions from authoritarianism creates the conditions for authoritarian restoration on an even more sophisticated level. For contemporary observers, this history suggests the urgent need for much stronger safeguards around financial transparency, media ownership, and foreign influence in democratic societies. It also highlights the importance of understanding how authoritarian regimes adapt to and exploit globalized systems rather than simply opposing them through traditional means. Most fundamentally, it demonstrates that the price of freedom truly is eternal vigilance - not just against external threats, but against the internal erosion of democratic norms and institutions by those who understand how to game the system from within while maintaining a veneer of legitimacy.
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By Catherine Belton
