FSB: The Spies Who Rule Russia

Promote Ukraine today reports about the conclusions of the analytical report of the Centre for Investigations headed by Mikhail Khodorkovsky: “Lubyanka Federation: how the FSB determines Russia’s policy and economy.”

Since 2024 is coming up, the discussions on whether power in Russia consists of several Kremlin towers, or whether it is just one key tower with many supervisors and a star on the top, have resumed. Although Vladimir Putin once promised not to amend the Constitution to increase his presidential powers, he eventually did this.

Of course, the court found it legal – for this, it is intended. Whether Putin will remain on Olympus is not entirely clear (there are rumours of his bad health), but we cannot call Putin a “lame duck” yet. Putin has created a system of power that can exist even after him, but only if all parties involved agree on a new arbitrator. What is the role of the Russian Federal Security Service (FSB) in this system? We will not consider the functions and tasks of the FSB provided by law but instead focus on the “side functions” of the agency, along with its informal role in government processes.

From the KGB to the FSB

The FSB becomes more and more similar to its predecessor, the KGB. Yet there are differences between the two organisations because they exist between Putin’s system and the Soviet system. The FSB tries to preserve the president’s personal power, not Soviet power and the ideals of communism. If the Soviet “chekists” carried out mass repressions, the FSB switched to targeted individual repressions. Unlike the KGB, modern spies can interfere in the economy and accumulate enormous wealth. Communists banned private property and entrepreneurship, except for the illegal activities by some factory directors, who set up informal production within state-owned companies and appropriated profits.

Kremlin-controlled capitalism opens up new opportunities for the FSB in offering “protective” services to entrepreneurs. However, during Putin’s presidential term, the FSB did not shy away from their KGB legacy and made the FSB a true successor to the VNK (Russian Emergency Commission – ed.). Monuments to Felix Dzerzhinskiy, the founder of the VNK, are still being erected near the FSB regional offices.

In the first months after the USSR collapse, the highest positions in the new Russian Federation were held by KGB and Ministry of Internal Affairs (MIA) officials, who then managed to prove their loyalty to the president. Many of them saved their Soviet-era mentality: “Russia is surrounded by enemies!”

Dossier researchers noted that from 1991 to 2003, the FSB lived three stages of development: commercialisation, criminalisation, and emancipation.

Commercialisation of the service

One of the pre-conditions for the FSB commercialisation and criminalisation (which occurred almost simultaneously) was the issue of security personnel identification. In the second half of the 1980s and early 1990s, political changes led to the service “de-ideologisation,” and not everyone was ready for that. Some officers decided to defend Orthodox Russia, but not all of them were Orthodox Christians. In the early 1990s, officers’ salaries were low, so many of them decided to use their power for their benefit. In addition to their core responsibilities, intelligence officers began to look for sources of additional income.

Newly established private companies desperately needed protection from racketeering, which flourished during the brutal post-Soviet capitalism, and in which the rule of law was far from adequate. FSB officers engaged in corruption schemes, including illegal financial transactions, especially in the banking sector. The Dossier report states that the FSB directly controls almost every illegal banking transaction in Russia, which brings enormous profits to some groups of FSB employees and members of their “clan.”

An essential change during the 1990s was the FSB’s Economic Security Department establishment, which expanded the scope for intervening in financial and business matters. The first high-profile scandal, which revealed the FSB interference in business to the public, occurred in 2000 in the “three whales” case. Several high-ranking FSB officers with close ties to Putin kept importing furniture from China without paying customs duties. The president himself vouched for them, and none of the main suspects were punished. Several officials had to resign due to the scandal, but the accused persons were free to pursue their careers in the public and private spheres. The conclusion of the case pointed to a new reality: the FSB became inviolable.

The criminalisation

FSB officers responsible for security issues related to organised crime used their job responsibilities as an excuse to communicate with members of organised crime. But they did it for their benefit, not the state’s. The Union of Criminals and Law Enforcement in St. Petersburg had particularly far-reaching consequences for the whole of Russia. The Dossier report states that the FSB in St. Petersburg, together with bureaucrats and criminal authorities, formed a long-running criminal coalition that led to systemic corruption in international relations. It resembled the best examples of the Italian mafia.

Vladimir Putin, as a local government official in St. Petersburg, was the first person who linked the three branches of this coalition – the city government, the local FSB, and criminals. In 1998, when he headed the FSB, he replaced the top leadership of the agency with his acquaintances from St. Petersburg. Members of Putin’s circle began moving from the “Northern Capital” to Moscow, where they started to hold government and business positions. When Putin became the president, the FSB role in the power system increased. Thus, organised criminal groups gained new opportunities in Russia.

Emancipation, expansion

Emancipation occurred when the FSB lost democratic control. That happened when Putin strengthened authoritarian rule in the country. The main structural changes since the late 1990s have been in line with this trend: the FSB has seen the creation of new departments and the expansion of existing ones that could be controlled by other law enforcement agencies – the prosecutor’s office, the Investigative Committee, the Interior Ministry, customs, the Federal Defense Service, and others.

In 1999, the FSB participated in the dismissal of General Prosecutor Yuriy Skuratov, who was investigating possible violations by Boris Yeltsin’s daughter Tatiana Dyachenko and Deputy Prime Ministers Anatoly Chubais and Valery Serov. That was the first time that the FSB was engaged in “infighting” among elites on such a scale. And here Putin has not shown loyalty to the rule of law, but to the Yeltsin family.

It all began in 1998 when Skuratov launched an investigation into hundreds of government officials suspected of abusing power to make a profit on the short-term bond market. Skuratov believed that Chubais, Serov and Dyachenko were also among these officials.

In the same year, Skuratov filed a lawsuit against the Yeltsin administration, noting that an official in the administration received a bribe of about $60 million for providing lucrative construction contracts. A few months later, a video appeared on public television showing “a man like Skuratov” having fun with prostitutes. The FSB opened a criminal case against the General Prosecutor for abuse of power, and Skuratov resigned. Skuratov later wrote that Putin, who then headed the FSB, forced him to leave. The FSB also won its battle with the Interior Ministry. As a result, the Organised Crime Department of the Ministry of Internal Affairs was marginalised in early 2000 and completely liquidated in 2008.

Russia is a “shadow state”

One of the central principles of a democratic government is civilian oversight of government. Firstly, the FSB is subordinate only to Putin, whose power is personalised. Secondly, the FSB’s influence in politics and economics far exceeds its constitutional powers. The FSB can impact other government agencies’ decisions but does not bear any responsibility for them. The Russian government is not fully functioning, and instead, there is a “shadow state” – a system of informal rules known to its members. There is a risk that after Putin’s departure the system may falter, as it can only function if the arbitrator sits in the Kremlin.

The Russian president shares his power with the people around him, and they also create their power system in close cooperation with the FSB. The Security Council Secretary Nickolay Patrushev, Rosneft Executive Director Igor Sechin, Rostech Executive Director Sergey Chemezov, Gazprom CEO Viktor Zubkov, and former Defence Minister Sergey Ivanov are among them.

In 2004 and 2005, Igor Sechin, who was very close to Putin in the real hierarchy of power, created the 6th Department of the FSB Internal Security (also known as Sechin’s special forces). One of the goals of the new department was to get rid of the Department of Organised Crime of the Ministry of Internal Affairs, which was responsible for numerous detentions of FSB officers in the mid-1990s.

The 6th department is also responsible for witness protection and is used both for legitimate purposes and to control FSB opponents. Businessmen are ready to pay huge sums for its services. For example, banker Yevheniy Dvoskin, who helped criminals and kleptocrats to launder money, was under FSB protection. When the Interior Ministry tried to arrest him in 2007, the FSB used an ambulance to help him to escape and avoid arrest.

Conclusions

In Vladimir Putin’s system of power, the FSB plays a crucial role. It is an organisation that overtook the entire law enforcement system with the help of the president. The FSB itself is responsible only to the president, the FSB head, and his subordinates. Such a system can only exist in an authoritarian state. The authors of the Dossier report note that it is stalling Russia’s historical development, as the state can only be run with the help of loyal security forces as long as the guarantor of such a system is alive. When a leader dies, fragmented clans will fight for power. So, it is a situation that is difficult to be resolved peacefully.

Given its crucial role, the FSB has become a battleground for power and resources. Different economic groups have their lobbies in the FSB. In a democratic society, political conflicts are resolved between parties using the law and lobby groups, while financial issues are dealt with in court. However, in modern Russia, these conflicts take the form of clans fighting for power over and within the FSB.

The FSB involvement in economic processes hinders the development of a competitive economy. And this hurts the end consumers – ordinary citizens who do not get the best they could. Without healthy competition, the resources often fall into the hands of those who cannot make decisions, based on rationality and competence, beneficial for the state, because these people work in their interests. According to the Dossier, the combination of these factors led to the decline and stagnation in all spheres of Russian public life.

Konstantin Zigar, International Centre for Countering Russian Propaganda