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 reemerge 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 organization’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 organized meetings in Dresden with some of the extremist organizations they supported in the West and around the world. One former member of the Red Army Faction—the West German terrorist organization, also known as the Baader-Meinhof gang, that killed dozens of people during its heyday—told Belton that 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 four and a half 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 important, 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’s 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. Later, Putin won the confidence of the Russian oligarchs of President Boris Yeltsin’s era, in part by promising them immunity from prosecution after Yeltsin resigned; once he took power, he eliminated them from the game, arresting some throughout the early 2000s and chasing others out of the country. In the years that he has been president, his cronies have launched a series of major operations—the Deutsche Bank “mirror trading” scheme, the Moldovan “laundromat,” the Danske Bank scandal—all of which used Western banks to help move stolen money out of Russia. Similar schemes continue to the present day.
But the pivotal political event for Putin took place in 2005, when a pro-Western president, Viktor Yushchenko, came to power in Ukraine after a street revolution. The Russian president blamed these events on American money and the CIA (an organization that, for better or worse, never had anything like that kind of influence in Ukraine). “It was the worst nightmare of Putin’s KGB men that, inspired by events in neighboring countries, Russian oppositionists funded by the West would seek to topple Putin’s regime too,” Belton writes. “This was the dark paranoia that colored and drove many of the actions they were to take from then on.” Not coincidentally, this scenario—pro-Western-democracy protesters overthrowing a corrupt and unpopular regime—was precisely the one that Putin had lived through in Dresden. Putin was so upset by events in Kyiv that he even considered resigning, Belton reports. Instead, he decided to stay on and fight back, using the only methods he knew.
Although the American electorate awoke to the reality of Russian influence operations only in 2016, they had begun more than a decade earlier, after that first power change in Ukraine. Already in 2005, two of Putin’s closest colleagues, the oligarchs Vladimir Yakunin and Konstantin Malofeyev, had begun setting up the organizations that would promote an “alternative” to democracy and integration all across Europe. With the help of intermediaries and friendly companies, and more recently with the assistance of troll farms and online disinformation operations, they promoted a whole network of think tanks and fake “experts.” Sometimes they aided existing political parties—the National Front in France, for example, and the Northern League in Italy—and sometimes they helped create new ones, such as the far-right Alternative for Germany. The most important funder of the British Brexit campaign had odd Russian contacts. So did some cabinet ministers in Poland’s supposedly anti-Russian, hard-right government, elected after a campaign marked by online disinformation in 2015.
The pro-Russian “separatists” who would later launch a war in eastern Ukraine got their start around 2005 too, with an even more apocalyptic result. Russian propaganda deliberately sought to divide Ukraine and polarize its citizens, while Russian corruption reached deep into the economy. Within a decade, the Russian operations in Ukraine led to mass violence. Some of the Ukrainians who attended Kremlin youth camps or joined the Eurasian Youth movement during the 2000s—often funded by the “charities” created by Malofeyev, Yakunin, and others—took part in the storming of Donetsk’s city-administration buildings in 2014, and then in the horrific Russian-Ukrainian war, which has disrupted European politics and claimed more than 13,000 lives. Russian soldiers, weapons, and advisers fuel the fighting in eastern Ukraine even now.
All of these Russian-backed groups, from refined Dutch far-right politicians in elegant suits to the Donetsk thugs, share a common dislike for the European Union, for NATO, for any united concept of “the West,” and in many cases for democracy itself. In a very deep sense, they are Putin’s ideological answer to the trauma he experienced in 1989. Instead of democracy, autocracy; instead of unity, division; instead of open societies, xenophobia. Amazingly, quite a few people, even some American conservatives, are taken in by Russian tactics. It is incredible, but a group of cynical, corrupt ex-KGB officers with access to vast quantities of illegal money—operating in a country with religious discrimination, extremely low church attendance, and a large Muslim minority—have somehow made themselves into the world’s biggest promoters of “Christian values,” opposing feminism, gay rights, and laws against domestic violence, and supporting “white” identity politics. This is an old geopolitical struggle disguised as a new culture war. Yakunin himself told Belton, frankly, that “this battle is used by Russia to restore its global position.”
Ultimately, all of these tactics had their culmination in the career of Donald Trump. In the last chapter of Putin’s People, Belton documents the activities of the biznesmeny who have circled around Trump for 30 years, bailing him out, buying apartments in his buildings for cash, offering him “deals,” always operating in “the half-light between the Russian security services and the mob, with both sides using the other to their own benefit.” Among them are Shalva Tchigirinsky, a Georgian black marketeer who met Trump in Atlantic City in 1990; Felix Sater, a Russian with mob links whose company served, among other things, as the intermediary for Trump buildings in Manhattan, Fort Lauderdale, and Phoenix; Alex Shnaider, a Russian metals trader who developed the Trump hotel in Toronto; and Dmitry Rybolovlev, an oligarch who purchased Trump’s Palm Beach mansion in 2008 for $95 million, more than double what Trump had paid for it in 2004, just as the financial crisis hit Trump’s companies.
While many of these stories have been written before, Belton puts them in the larger context. The hard truth is that Trump was not exceptional. He was just another amoral Western businessman, one of many whom the ex-KGB elite have promoted and sponsored around the world, with the hope that they might eventually be of some political or commercial use. Many of these bets didn’t pay off, but in 2016, Putin finally hit the jackpot: His operatives helped elect an American president with long-standing Russian links who would not only sow chaos, but systematically undermine America’s alliances, erode American influence, and even, in the spring of 2020, render the American federal government dysfunctional, damaging the reputation of both the U.S. and democracy more broadly.
A huge success for Putin’s people has proved a terrible tragedy for the rest of the world—a tragedy that also touches ordinary Russians. In her epilogue, Belton notes that in seeking to restore their country’s significance, Putin’s KGB cronies have repeated many of the mistakes their Soviet predecessors made at home. They have once again created a calcified, authoritarian political system in Russia, and a corrupt economy that discourages innovation and entrepreneurship. Instead of experiencing the prosperity and political dynamism that still seemed possible in the ’90s, Russia is once again impoverished and apathetic. But Putin and his people are thriving—and that was the most important goal all along.
This article appears in the September 2020 print edition with the headline “The World Putin Made.”