FREE MARKETEER: To many observers, Putin, the erstwhile KGB operative in Dresden, was an odd choice to assist the seemingly arch-liberal reformers Chubais and Kudrin—even if he had worked closely with them in St. Petersburg. But Putin had already established himself as a free marketeer, and the KGB was his proving ground. In 1984–85, Putin attended courses at the KGB Red Banner Institute in Moscow. During this period, the KGB was furiously engaged in an effort, initiated by former KGB chairman and recently deceased Soviet leader Yuri Andropov, to save the Soviet system by searching for a new economic model that would include elements of capitalism. The KGB was the only institution that dared examine the Soviet system and recognize how poorly it functioned. Putin, aware that central planning was not working, studied Western textbooks on economics and management. He may have questioned the soundness of the Soviet economy before this period, but his experience in the KGB Institute likely confirmed his suspicions. Later in the 1980s, during his KGB stint in Dresden, Putin was given a further opportunity to see the failure of communism firsthand in what was supposedly the most advanced of the communist states. East Germany had advantages the USSR did not have—better human capital, recent memory of capitalism, advanced industrial and agricultural development—yet it too was failing. Back in St. Petersburg in the 1990s, Putin quickly linked up with the leading Russian free-market advocates of the moment, including Chubais and Kudrin, in the group around Mayor Anatoly Sobchak, his former law professor from Leningrad University.

After a rocky experience with free-market capitalism in the 1990s, many in Russia backed down on the commitment to “the market.” They gave up on capitalism and turned to a “statism” defined as “state control of the economy.” What is distinctive about Putin is that he stuck to his commitment to the principles of the market economy and private enterprise despite the trials of the 1990s and some bruising experiences in St. Petersburg. For Putin, history trumped ideology, and history had delivered its verdict on communism. No matter what Soviet theory had propounded, history proved that the centrally planned, command-administrative economy could not succeed. The market won out, and Putin stayed with the winner. Still, he continued looking for a magic bullet to reconcile private ownership on the one hand with the needs of the Russian state on the other. Putin’s dealings with Russia’s oligarchs over the past decade trace the trajectory of his efforts to compel this unruly, self-interested group of powerful business owners to accept that the state’s interests take precedence over individual corporate ones. Thus Putin has cast himself in the role of enlightened political leader, as a statist who determines the state’s interests but protects entrepreneurs, gives them a free hand, and only intervenes in businesses decisions and operations in extreme cases that appear to threaten state priorities.

CASE OFFICER: Putin’s former role as a KGB case officer was important in his approach to the oligarchs. Once again, his notion of history shaped this role. In 1997, the FSB (the successor to the KGB) launched a series of annual scientific workshops entitled “Historical Lectures at the Lubyanka.” The workshops were organized by the Center for Public Relations of the FSB and the FSB Academy. They invited scholars, including those from civilian universities, to present and discuss papers on various aspects of the security agencies’ history. We do not have direct evidence about Putin’s role in initiating these lectures, but we can assume he knew about them. By 1998, he was head of the FSB and ultimately in charge.

The theme of the 1998 conference was “The Russian Special Services at a Turning Point of Epochs: The End of the Nineteenth Century through 1922.” One lecture delivered by Professor Yelena Shcherbakova of the FSB Academy was entitled “The Bourgeois Intelligentsia of the 1860s as a Potential Adversary of the Political Police.” Shcherbakova examined and critiqued the efforts of the Third Section of His Imperial Majesty’s Own Chancellery, a small department formed to serve as the czars’ secret police, to understand the mindset and concerns of the opposition intellectuals of the time. The Third Section could have done a better job, she suggested, adding that today’s KGB/FSB should draw the proper lessons from this history:

One of the most important tasks for the security organs is to provide a competent social prognosis, so that it will be possible to prevent the emergence of certain tendencies rather than have to combat the results of those tendencies. This is especially important in times of troubles and social instability.

Contrary to some early accounts, Putin was never a spy or a thug in the KGB. (The tough-guy image he projects is largely playacting.) Most of the stories we have collected about the way Putin operates show that he prefers a softer, quieter, more subtle approach. He performs unforgettable favors for people, even strangers, on the theory that one can’t predict how prominent they might become. He collects information about people and circumstances that will help him relate to them. Putin’s job in the KGB was more about persuasion than coercion. Putin was a case officer, and his skill was rabota s lyud’mi (working with people). There is a German account of Putin’s Dresden posting that asserts Putin’s real mission in East Germany was to recruit German Communist Party functionaries and even Stasi secret-police officers to back the Soviet Union and Mikhail Gorbachev, turning them against German leader Erich Honecker, who was actively trying to undermine Gorbachev’s perestroika in the Eastern bloc. Rather than simply being a provincial German backwater, as many Putin biographers have asserted, Dresden was a center for intraparty opposition to Honecker, led by Dresden’s local Communist Party leader Hans Modrow and others. Putin is clearly proud of his assignment in Dresden, and he has spoken in interviews of his ability to communicate and interact with people (sobshenie s lyud’mi) as one of the most important assets from his KGB training and experience. Putin understood the principles of British scholar and intelligence chief John Masterman’s “double-cross system”: Don’t destroy your enemies. Harness them. Control them. Manipulate them, and use them for your own goals.

Putin’s career in Moscow, from his first appearance in the summer of 1996 to the present, is essentially a chronology of the case officer’s task list that Putin learned in the KGB and practiced in Dresden. Through this lens, he viewed the Yeltsin family, the oligarchs and others as destroying the Russian state in the 1990s by essentially dismantling it for their own gain. To Putin, these people were like enemy agents operating on Russian territory. How to deal with them? Run a counteroperation. Putin became the operative in the Kremlin, the man who would recruit and co-opt them and turn them back into servitors of the state on his terms, not theirs.

Identifying, recruiting and running agents is done on a very intimate, one-to-one basis. But having dispatched the Yeltsin family and the oligarchs, Putin now seeks to apply his case-officer tradecraft to the entire nation, to enlist every Russian in the service of the state. How can that possibly work? He cannot hope to co-opt every single Russian individually. This is where history comes in as a key instrument in his toolbox and where Putin has progressively stepped over the line between learning from and applying the lessons of history to manufacturing and manipulating it. By defining history, Putin seeks to win groups and classes to his cause. He determines which groups’ history is part of the inclusive myth and shows which groups are outside the collective history. This is a powerful tool. It allows for a definition of the us and the them, the nashi versus the chuzhiye (which also means “others” or “aliens” in Russian). Both these terms have a particular and piquant salience in contemporary Russia. One of the most important of the Kremlin-sponsored political youth groups is called “Nashi.” Its goal is frequently to demonize and often physically go after thechuzhiye.

USING HISTORY, Putin has scaled his role as case officer up to a national level. Over the course of his career, from Leningrad to Dresden to St. Petersburg to Moscow, he has moved from being an outsider and a peripheral figure to a man who actively makes history. Instead of Fidel Castro–style mass speeches, Putin takes the case officer’s approach, engaging one-on-one with the Russian people in public settings, including televised hotline call-ins and press conferences, where everyone listens to him respond and tailor his answers to the questions of a specific individual. He also resorts to outlandish performance pieces in which he transforms himself into a deep-sea diver, race-car driver, biker, airplane pilot, sportsman––all to appeal directly to different Russian audiences.

Putin’s references to Stolypin and others are similarly deliberate and specifically targeted. As he stated in his Millennium Manifesto, Putin is trying to fix Russia. He sees himself as a historical figure among the pantheon of those who have sought to save the Russian state. Putin knows that he is shaped and constrained by Russia’s past. He must work with what he has and try to improve it without aiming for any radical transformation. He remains ever mindful of the fateful experiences of Gorbachev in the 1980s and Yeltsin in the 1990s, as well as of the myriad failures of various czars. Outside observers may not want to believe him, but this is how he sees himself. If U.S. and other policy makers wish to work with Putin after 2012, they would be well advised to pay attention to and play to his sense of history. Otherwise, Putin, as a good case officer, will certainly figure out ways of “running” them for his own and Russia’s purposes.