Putin

In the nineties crime lords arose out of nowhere, suddenly rich, powerful, and well armed with all the weapons the country was awash in. At one point Yeltsin declared they controlled 40 percent of the economy. Gangs shot it out on the streets. At one of their favorite hangouts, the still trendy Aist (Stork) restaurant in central Moscow, the diners looked on in horror as a gangster rolled a grenade like a bowling ball along the floor toward a rival’s table. (A dud, as it turned out.)

Though Russian gangsters were making small fortunes via extortion, protection, drugs, and casinos, the great fortunes would end up in the hands of educated men like Berezovsky, who held a Ph.D. in mathematics, and Mikhail Khodorkovsky, who, before he became Russia’s richest man and its most famous prisoner, earned a degree in engineering.

Khodorkovsky was born in 1963 in Moscow, the only child of a mixed marriage, his father Jewish, his mother Russian. In a sense that left him being neither fish nor fowl because Jews trace lineage through the mother and Russians through the father. People like Khodorkovsky had the choice of having their internal passports marked either “Russian” or “Jewish,” which was considered a nationality. There were any number of advantages in choosing “Russian,” though they only went so far, as a famous joke illustrates: A friend comes running into Moishe’s apartment all excited, saying: “Moishe, down on the square they’re beating up Jews!” Moishe replies grandly: “What do I care? My passport is marked ‘Russian.’” “Moishe, they’re not punching them in the passport, they’re punching them in the face!”

A little prince in a dingy apartment, Khodorkovsky grew up adored and protected by his parents, who chose never to air anti-Soviet sentiments when their child was around. Khodorkovsky, who as a little boy wanted only to be a factory manager when he grew up and was nicknamed “the Director” by his classmates in kindergarten, proved adept at working the first system he encountered—the Young Communist League, the Komsomol. Founded right after the revolution in 1918 for people between fourteen and twenty-eight, the Komsomol had two basic purposes—to harness the energy of the young into clubs and supervised events like dance and sports, and to help make good little Soviet citizens out of them. It was also an organizational structure for the politically ambitious to climb, a transition between the Pioneers (Communist boy scouts) and the Communist Party itself.

By the time Khodorkovsky joined the Komsomol in the late 1970s there were precious few true believers left. Membership was a purely practical matter, a cynical choice. Moved by ambition, cool calculation, and his own natural zeal, Khodorkovsky thrived in the Komsomol, building a good reputation and strong connections that would stand him in very good stead later on. He graduated from the Mendeleev Institute of Chemical Technology in 1986, the year after Gorbachev had come to power. Fate, in the guise of institutionalized Soviet anti-Semitism, did him a favor by denying him a job in the defense industry. He took advantage of the greater economic freedom under Gorbachev to try his hand at business; his first enterprise was a flop, but he caught on quick.

His first serious success came from working the Soviet financial system, in which there were three kinds of money—foreign or “hard” currency; regular cash (or “wooden rubles” as they were sometime derisively called), which was used to pay salaries; and noncash rubles, which existed on the books of various enterprises and institutions but were difficult to transform into usable, spendable money. Those with a small-time-hustler mentality went into the black market for hard currencies, paying much more than the absurdly low government-set rate. Those who thought bigger like Khodorkovsky saw that a handsome profit was to be made by turning noncash rubles into real cash rubles, then ultimately changing them into hard currency, i.e., dollars or, as they were affectionately known, bucksy and greeny.

Using the connections he had built up during his Komsomol years, Khodorkovsky convinced them to let him handle their noncash rubles to increase their organizations’ real wealth while of course cutting himself and his associates in for a healthy piece of the action. The money flowed, fueling Khodorkovsky’s various other enterprises, which included construction and importing computers that could be sold for a 600 percent profit. There was a great headiness to it all, an odd combination of cool, sober calculation and the elation of sudden wealth.