The top echelons of government and industry are filled with Putin loyalists — many of whom served with him in the former KGB — and government jobs throughout the country come with opportunities to make far more than an official salary.
The most successful have expensive property, investments and big bank accounts abroad. They send their children to study at the world’s prestigious universities. They live in fancy houses, all while earning relatively small government salaries. Friends of Putin built him a billion-dollar palace, according to a whistleblower’s account published in The Washington Post and strenuously denied by Putin’s spokesman.
Putin and a circle of his friends control 15 percent of the gross domestic product, according to a study by Russian journalists and economists published in the New Times magazine. Russians routinely call their country corrupt, but Andrei Illarionov, a former Putin economic adviser, said few understand the size and depth of the corruption.
State-controlled Gazprom, the world’s largest gas company, offers an example of how the system works. Gazprom represents about 10 percent of Russia’s GDP, which the World Bank put at $1.47 trillion in 2010. It not only produces extraordinary wealth but also owns a host of subsidiaries, including TV stations that reliably reflect official tastes and messages.
As Putin was tightening his command over Russia after becoming president in 2000, Gazprom was a priority. In 2001, he made Alexei Miller, an old friend from St. Petersburg, the chief executive. The next year, another St. Petersburg stalwart became chairman of the board. That was Dmitry Medvedev, who went on to become Russia’s president in 2008, when Putin had to step aside because of term limits and became prime minister.
In September, Medvedev said he would give up the presidency for Putin to take it back. That swap helped set off the protests that began in December with a demand for honest elections.
“Putin controls Gazprom,” said Illarionov, who worked for Putin from 2000 to 2005, when he criticized the stifling of democracy and resigned. “Certainly he doesn’t own it legally, but if he issues an order to Mr. Miller, it will be fulfilled.”
In Putin’s Russia, the political power, government structure and a substantial chunk of economic resources are controlled by a network — what Illarionov called a corporation — of “siloviki.” The word comes from the Russian for strength and refers to officials from the police, military and secret services.