From Spy to President: Part-1

It was December 1989, the Berlin Wall had fallen, and in Dresden, crowds were gathering outside the headquarters of the Stasi, the East German secret police, shouting insults and demanding access. Nearby, frantic KGB officers – the Soviet advisers whom the Stasi had long referred to as "the friends" – were barricaded inside their villa, burning papers.

"We destroyed everything," remembered one of those officers, Vladimir Putin. "All our communications, our lists of contacts and our agents' networks … We burned so much stuff that the furnace burst."

Toward evening, a group of protesters broke away from the Stasi building and started marching toward the KGB villa. Panicked, Putin called the Soviet military command in Dresden and asked for reinforcements. None were forthcoming.

"I got the feeling then that the country no longer existed. That it had disappeared," Putin told an interviewer years later. "It was clear the union was ailing. And it had a terminal disease without a cure- “a paralysis of power.” The shock was total, and he never forgot it.

For hundreds of millions of people, the fall of  the Berlin Wall was a great triumph: The moment marked the end of hated dictatorships and the beginning of a better era. But for the KGB officers stationed in Dresden, the political revolutions of 1989 marked the end of their empire and the beginning of an era of humiliation.

In interviews, Putin has returned to that moment – the moment when reinforcements did not come – always describing it as a turning point in his own life. Like Scarlett O'Hara shaking her fist at a blood-red sky, Putin swore, it seems, to dedicate his life to restoring his country's glory.

But Putin's cinematic depiction of his last days in Dresden captures only part of what happened. As Catherine Belton demonstrates in Putin's People, large chunks are missing from his story and from the stories of his KGB colleagues – the other members of what would become, two decades later, Russia's ruling class. As the title indicates, Belton's book is not a biography of the Russian dictator, but a portrait of this generation of security agents. And many of them were not, in fact, entirely shocked by the events of 1989.

On the contrary, some of them had been preparing already. In August 1988, a high-ranking official from Moscow arrived in East Berlin and began recruiting German sleeper agents, who continued to work with the KGB, or rather the institutions that replaced the KGB, even after the reunification of Germany and the fall of the Soviet Union itself.

At about the same time, the KGB was also setting up the offshore accounts, fake businesses, and hidden "black cash" funds that would, in the 1990s, propel some of its members to great wealth and power. From 1986 to 1988, for example, the Stasi transferred millions of marks to a network of companies in Switzerland, Liechtenstein, and Singapore, all run by an Austrian businessman named Martin Schlaff. He and his companies would re-emerge years later, Belton writes, as "central cogs in the influence operations of the Putin regime."

The KGB's Dresden team may have also played another role in the organisation's careful preparations for a post-Communist future. Precisely because the city was a backwater – and thus uninteresting to other intelligence agencies – the KGB and the Stasi organised meetings in Dresden with some of the extremist organisations they supported in the West and around the world.

One former member of the Red Army Faction – the West German terrorist group, also known as the Baader-Meinhof gang, that killed dozens of people during its heyday – told Belton one of its most notorious final actions was planned with the help of the KGB and the Stasi in Dresden.

In late November 1989, Alfred Herrhausen, the chairman of Deutsche Bank, died after a bomb hit his car. Herrhausen was, at that time, a close adviser to the German government on the economics of reunification, and a proponent of a more integrated European economy. Why him? Perhaps the KGB had its own ideas about how reunification should proceed and how the European economy should be integrated. Perhaps Russia's secret policemen didn't want any rivals messing things up. Or perhaps they wanted, as their successors still do, to create havoc in Germany and beyond.

Belton does not prove Putin's personal involvement in any of these projects, which isn't surprising. The Russian leader has gone to great lengths to conceal his real role during the 4 ½ years he spent in Dresden. But throughout her book, which will surely now become the definitive account of the rise of Putin and Putinism, she adds enough new details to establish beyond doubt that the future Russian president was working alongside the people who set up the secret bank accounts and held the meetings with subversives and terrorists.

More importantly, she establishes how, years later, these kinds of projects came to benefit him and shape his worldview. Building on the work of others – Masha Gessen's The Man Without a Face: The Unlikely Rise of Vladimir Putin, Karen Dawisha's Putin's Kleptocracy: Who Owns Russia?, Steven Lee Myers' The New Tsar: The Rise and Reign of Vladimir Putin, and Fiona Hill and Clifford Gaddy's Mr. Putin: Operative in the Kremlin, among many books on this subject – Belton, a former Financial Times correspondent in Moscow, incorporates crucial new material from interviews with former KGB operatives, Kremlin insiders, and bankers in various countries. She shows that Putin may have been burning documents in Dresden, but he never lost touch with the people, the tactics, or the operations launched by the KGB at that time.

Step by step, Belton demonstrates how the future president made full use of KGB methods, contacts, and networks at each stage of his career. She describes the famous swindle he ran in St. Petersburg in the '90s, selling oil abroad on the city's behalf, supposedly to buy food for its inhabitants; instead the profits went to create a hard-currency slush fund – known in Russian criminal slang as an obschak – much of which financed other operations and eventually enriched Putin's friends.

The pivotal political event for Putin took place in 2005, when a pro-Western president, Viktor Yushchenko, came to power in Ukraine.

To be continued...