From Yeltsin to Putin: how Russia’s organised crime became inseparable from politics – Follow the Money

When he embarked on his journey to Russia in the 1990s early in his career as a criminologist, Italian researcher Federico Varese wanted to know whether Russia would become a second Sicily: amid the restructuring of Russia’s economy towards a more capitalist system following the fall of the Soviet Union, Varese sought to find out whether the Russian mafia would take over state functions like the protection of private property rights.

He didn’t get disappointed: during his eight month-long stay in Perm, an industrial hub near the Ural Mountains with a million citizens, he quickly found that his fellow residents in his dormitory didn’t spend their time reading books. Rather, he discovered a gang engaged in the trade of American dollars and German marks in one of the other rooms. Once acquainted with the boss of this gang, Varese gained access to a microcosm of what Russia as a whole was developing into: had the country’s economy once been tightly regulated by the state, it was now a vast bazaar, with everything for sale.

Today, Varese splits his time as a professor between universities in London and Paris, where he dedicates his time to researching the Russian mafia and the history of crime in the country.

In his new book Russia in Four Criminals, published in August this year, Varese sheds his light on Russia’s transition to a market economy after the collapse of the Soviet Union. Using four different people – Vyacheslav Ivankov, Boris Berezovsky, Sergei Savelyev, and Nikita Kuzmin – he sheds light on how deeply intertwined crimes and politics are. 

Varese describes how the Russian underworld emerged as a powerful actor right after the end of the Soviet Union, taking over state functions like the protection of property rights. 

Follow the Money sat down with the Oxford academic to discuss how criminal networks expanded their reach in Russia, whether things have changed since Vladimir Putin took over from Boris Yeltsin, and what this all means for Russia’s war in Ukraine today. 

What made you want to go to Russia at the time?

“I was really fascinated by the transition to the market economy and by questions of economic sociology, ultimately. I wanted to know to what extent the state would be able to govern the transition to a market economy. I was inspired in some sense by my supervisor, who had written a book on the Sicilian mafia. So in a sense, my journey to Russia was to try to see if Russia was going to be another Sicily or something else.”

And did it?

“To an extent it did, especially in the 1990s. Russia as a fresh state lacked the capabilities to manage the transition to capitalism, and its institutions to govern the market were too weak. That is when the mafia steps in and takes over functions as the protection of private property rights. 

I think that the Russia of the 1990s was similar to Sicily. In both cases there was a flawed transition to the market economy that gave rise to the mafia. The Russia of today is more similar to the Stalin period: Russia is now on the path to become a totalitarian state – see the effort by Putin, for example, to indoctrinate the young.”

One of the criminal groups you mention in your book is the vory-v-zakone. What type of organised crime group is this?

“The vory-v-zakone is loosely translated as ‘thieves under the law’. It continues to operate today – I still have some contacts among them. 

In a nutshell, it’s a criminal fraternity which has got some features of traditional mafias. You have an entry ritual, but also tattoos representing your criminal history. So your body becomes a canvas on which your criminal history is written.”

You compiled a database of some 6,000 members of the vory, including their date of birth and criminal history. In your book, you zero in on Vyacheslav Ivankov, one of the most infamous mobsters in the criminal history of Russia. What made Ivankov stand out between those 6,000 people?

“Ivankov was nicknamed ‘Yaponchik’, which is Russian for ‘little Japanese’. He got that nickname thanks to his almond-shaped eyes.

To me, Ivankov represents the transition to a (mafia-like) system of property protection. Once you have a government unable to protect property rights, then you get other people who step in. 

He started off as a criminal in the Soviet underworld in the late sixties, mainly dealing with underground people and illegal businesses: people who obviously could not turn to the law. 

He later moved on from violent crimes – like extortion – to start to organise and govern the market for protection, and then he became a very prominent member of the vory fraternity. He did that even more when the Soviet Union collapsed.”

Oligarchs accumulated vast fortunes under Boris Yeltsin’s rule from 1991 until 1999.  Businessman Boris Berezovsky was amongst them before he fell out with current President Vladimir Putin and fled to London. How did he generate his fortune?

“He epitomises the theft of Russia by the oligarchs. At one point, he boasted publicly about being the secret financer of Yeltsin – or, apparently not so secret. Berezovsky was a typical example of how the state was captured by private interests. 

He was a remarkable person: with his academic degree, he wrote several scientific papers as a mathematician. But more importantly, Berezovsky became very close with the president of Russia, Yeltsin. He helped him win the 1996 elections, for which the oligarchs including Berezovsky went to very far lengths. 

But before that, Berezovsky managed to privatise Avtovaz, a car company belonging to the state, through a very complicated scheme. He was basically a fraudster, a crook, but having the support of president Yeltsin allowed him to become so rich.

He was not a businessman in the sense that he had a great business idea and made money on the market. He made money by using his connection to Yeltsin.”

The influence the oligarchs yielded in the 1990s has diminished ever since Putin’s ascension to power in 1999. What is Putin’s relationship with them and how is it different to that of Yeltsin?

“Of course, Putin changed the role and influence of the oligarchs. But the violent approach to democracy that we find in Putin started under Yeltsin.

So: the general erosion of democracy in Russia started with Yeltsin.  It doesn’t start with Putin.

A lot of features of the Yeltsin regime can be found in the Putin regime, including the connections to the oligarchs. In fact, the foundations of Putin’s authoritarian rule have been shaped by Yeltsin and his coterie of oligarchs.

That began with the attack on the parliament in 1993 ordered by Yeltsin. He had clashed with the parliament: the parliament wanted to limit presidential powers, but Yeltsin, and by association Berezovsky, were not having it. They sent tanks and troops to the building where the parliament was revolting against Yeltsin. After this episode, the law was adjusted and the presidential powers were significantly expanded. Putin built upon these foundations, on which he eventually became the authoritarian ruler as we know him today.

So: the general erosion of democracy in Russia started with Yeltsin.  It doesn’t start with Putin.

Still, I think Russian democracy really ended in 1993 with the attack on the parliament. And Berezovsky was there, he was in the room with Yeltsin.”

You met Berezovsky once. What was he like?

“Yes, my uncle was a journalist in Moscow and with him I visited Berezovsky’s club Logovaz House. In that period, these kinds of exclusive, private clubs were quite important, and high-level political and business deals were made there.

I remember him to be very hectic and busy and having all these people trying to call him and he was taking phone calls while talking to us. Obviously, he was a very important person at the time, so our relationship wasn’t exactly equal, but I thought it was interesting to see the guy.”

Berezovsky moved to London after Putin’s ascension to power. He died in England in 2013 at the age of 67. What do you think happened?

“There was a lot of talk at the time whether he had committed suicide or whether he had been murdered. The person in charge of the police investigation was quite confident that he had not been murdered, but that he committed suicide. 

That seems plausible, he was a broken man by then. He had lost most of his money. He was living in the house of one of his former wives as a courtesy. He had gone from being a kind of kingmaker, at least in his own mind, in Russia, to being almost poor.

But for me he epitomises an era of greed and corruption, and a really despicable behaviour on the part of Yeltsin, and the way Berezovsky was allowed to acquire all those assets.”

Sergei Savelyev, the third person you portray, seems less of a criminal but more of a convict who became a victim of the rather cruel nature of the Russian prison. Why did you include him?

“Sergei Savelyev is the prisoner who exposed the cruel practices of the Russian prison system, by publishing these videos of torture back in 2021. Thanks to his insights, I could describe how the relationship between the mafia and the state has changed. In the 1990s, the relationship between the Russian mafia and state was more or less equal. But that changed with Putin. 

He has become much more aggressive in the fight against the vory. That is a common feature of authoritarian regimes: they cannot allow a thriving underworld, as this poses a challenge to their rule. Life in prison is hell and that hell includes people being tortured and raped, backed by the authorities.”

The world learned about where the Wagner Group recruited its mercenaries after footage surfaced which showed its owner Yevgeni Prigozhin standing in the middle of a prison square trying to convince convicts. The vory have a commandment that they don’t cooperate with the state. Has the possibility for conscription changed anything for Russian inmates?

“They still can go out and some are going out. They issued a progon (a collective letter written by the community of the vory-v-zakone), in which they say it’s up to you, but they’re not supporting it. So they probably are not doing it really. It’s in line with their position. Now, those who are going are really low-level criminals and murderers. 

And it’s having an effect on Russian society because these people come back after they serve and they go back to society. And these are extremely violent, criminal people. Cases of rape and crime using firearms have been skyrocketing in Russia since the war in Ukraine began.”

Putin has been linked to organised crime groups in the past, like the Tambovskaya gang of St. Petersburg. What is the relationship between the Russian underworld and Putin?

“Putin was the head of the Commission on Foreign Relations of the St. Petersburg administration in the early 1990s, and the Tambovskaya gang controlled part of the docks. Hence, it would have been virtually impossible that their ways would not have crossed. 

If you want to play the capitalist game, you must make sure that the people trained in the use of violence, like the Mafias, are not able to take over state functions. 

Putin must have met people who were underworld figures, because that’s just what you did in the 1990s in such a position, but I would not push it too far. I wouldn’t say that he was in the pocket of the mafia or he was working for them.

I think he was working for himself and the mayor, and they had their deals. So he certainly didn’t shy away or wasn’t driven by morality. The fact that Putin is not driven by morality is not a surprise. But I wouldn’t say that he was in any way different from other people who were in public life and economy at the time.”

The symbiotic ties between the politicians and underworld in Russia have been rather strong in Russia since the 1990s. Is it likely that such a development will occur in other countries as well?

“Absolutely, that could happen even in Italy or the United States. But I think the lessons to be learned about Russia are more specific, because what is very specific about Russia is that there was an end of the Soviet Union, and the beginning of a market economy. So the big lesson is how you privatise and how you govern the market: if you want to play the capitalist game, you must be making sure that the people trained in the use of violence, like the Mafias, are not able to take over state functions. 

There is a concept in sociology and in political science called state capture, which goes much beyond corruption. Corruption is when you pay a bribe and you get something in return. But if you are so powerful that you can get a law passed that fits your interest, it’s not corruption anymore: there is now a law which makes it legal.”

How does the war in Ukraine fit into all this?

“The war paradoxically has reopened some of the features of the Russia that I had met in the 1990s, including the underground markets, the dealings with currency, which is now illegal. In a sense, we come full circle.”

Varese sees Russia’s future as bleak, even if Putin disappears from the scene and the war in Ukraine ends.

“When the war is over, hardened or traumatised soldiers – some of whom have been recruited in prison – will return to Russian society. Many of them will have few normal options for finding work, and are going to be susceptible to recruitment by the underworld. As in the 1990s, this is a recipe for disaster.”