Wednesday, September 21, 2011

Yevgeniy Nazdratenko and the Unmaking of Primorye.

Excerpt from Draft Chapter 12.3
Vladivostok 2000-2002


Yevgeniy Nazdratenko and the Unmaking of Primorye.
In 1992, just after the American Consulate General had opened in Vladivostok, an obscure Russian businessman showed up at the door of the Consulate on Mordovtseva Street and asked to see the new Consul General, Randy LeCocq. When told that Randy was unavailable, the Russian businessman replied, “Do you know who I am? When I’m Governor of Primorye, I’ll come back and give your Consulate a coat rack, since there is no place for me to hang my coat today.” The businessman was Yevgeniy Nazdratenko, and just one year later, he was indeed the Governor of Primorye. He never did deliver on his promise to provide the Consulate with a new coat rack.

Nazdratenko Takes Charge.
During the decade of the 1990’s, the history of the Primorye region, and Vladivostok in particular, was written in the fortunes and misfortunes of one man: Primorye Governor Yevgeniy Ivanovich Nazdratenko. Beginning his career as a humble electrician, Nazdratenko eventually rose to the chairmanship of the Vostok mining company in Dalnegorsk. His political and economic fortunes prospered and in time he was elected to the Russian Congress of People's Deputies.

While serving there, Nazdratenko made the most of the economic chaos following the dissolution of the Soviet Union. Using the money acquired from his financial manipulations, and drawing on his deep connections with Moscow officials and local organized crime bosses, particularly Sergey Baulo, Nazdratenko was able to persuade President Yeltsin, or more accurately, his close advisors, to unseat Primorye's Governor at that time, Vladimir Kuznetsov. Unlike Nazdratenko, Kuznetsov was a liberal reformer, and a Kozyrev man. An oceanographer by profession, an admirer of the West and an English-speaker, Kuznetsov had been personally responsible for opening up Vladivostok to the world and for encouraging the reestablishment of the U.S. Consulate General there. More dangerously, however, from Nazdratenko’s viewpoint, Kuznetsov favored the opening Vladivostok to foreign investors and the establishment of a free economic zone, two policies that posed a direct threat to the economic interests of Primorye’s industrial elite. Kuznetsov had to go, and so he did.

After Kuznetsov was sent into political exile as the Russian Consul General in San Francisco, Nazdratenko and his friends went about the pleasant task of consolidating all of Primorye’s political and economic power into their own hands. Money allocated by the central government for projects in Primorye was stolen, with a percentage being kicked back to officials in Moscow, including the Presidential Administration, to persuade them to look the other way. Nazdratenko also controlled the allocation of the very lucrative timber and fishing quotas, and made quite a bit of money by allowing companies to overfulfill their quotas by a factor of four or five, and then blaming the scarcity of fish and timber on foreign smuggling. Money allocated to repair Primorye’s infrastructure was siphoned off, leading to severe problems for the ordinary citizens of the province, particularly in Vladivostok, where Nazdratenko was seeking to undermine his arch political rival, Mayor Viktor Cherepkov. Various schemes were also hatched to fix prices for goods and services in such a manner that middlemen, usually working for Nazdratenko, profited handsomely.

Nazdratenko built his political power by systematically destroying his rivals, cowing the free press, and transferring the blame for his economic failures to others. He was also adept at duping the electorate. As part of this overall strategy, he sought to distract the people from their day-to-day worries by raising the specter of external enemies, drawing on patriotic resentment at the outcome of the Cold War, as well as popular fears of China (over 200,000 Chinese were expelled from Primorye under Nazdratenko). He also periodically raised the specter of a return to the central command economy, in which all power and money was transferred to Moscow, and even mused publicly about the establishment of a Far Eastern Republic.

By almost any objective standard, Nazdratenko’s stewardship of Primorye was disastrous, at least in terms of the welfare of the 2.2 million citizens he was charged with governing. Nonetheless, he won re-election twice by lopsided margins in 1995 and 1999, even after allowing for the flagrant excesses in the campaigns themselves, as well as in the voting process. It is said that in a democracy, the people deserve their leaders, and this was unfortunately the case in Primorye.

Nazdratenko did not restrict his search for political allies to Moscow. He also cultivated good relations with foreign dictators who were in many respects his soul mates, including Kim Jong-il of North Korea and Aleksandr Lukashenko of Belarus. During the latter’s February 1998 visit to Vladivostok, Nazdratenko even went to the extreme of presenting Lukashenko with the skin of a Siberian Tiger, causing an uproar among environmentalists, who castigated the Governor for encouraging illegal trafficking in the pelts of an endangered species.

Yeltsin Wakes Up, Then Goes Back to Sleep.
As he expanded his political power, and as evidence of his misrule accumulated, Nazdratenko and his allies had to spend increasing amounts of time and money fending off attempts by Moscow to reassert control. Nazdratenko lost his chief patron in the Presidential Administration, Aleksandr Korzhakov, when Yeltsin fired him just before the 1996 Presidential election. Even worse, from Nazdratenko’s viewpoint, Yeltsin appointed Anatoliy Chubais as head of the Presidential Administration. Chubais and Nazdratenko had been enemies for years, a rivalry resulting from disagreements over the privatization process in Primorye. Chubais wanted the process to be open, and of course, Nazdratenko and his allies wanted to control everything themselves. One of the first results of this change in the power balance in Moscow was that in June of 1997 President Yeltsin appointed then-FSB Primorye Chief Viktor Kondratov as his personal representative in the region, giving him the power to control the issuance of lucrative fishing and timber quotas and other financial powers, but presumably also charging him to accumulate “Kompromat” on the wily Governor.

Kondratov did his job, and filed a report with startling details on the links between many of Nazdratenko’s deputies and organized crime figures. Among other things, Kondratov alleged that Nazdratenko’s minions had systematically used law enforcement agencies and organized crime bosses to enhance their profits, stole money intended to buy fuel oil, and organized a syndicate to smuggle goods via Chechnya. Nazdratenko’s principal deputy, Konstantin Tolstoshein, was alleged to have collaborated with organized crime leader Viktor Alekseyenkov to sell the Vladivostok Hotel and skim off the profits; to have organized the systematic coercion of commercial competitors and unfriendly journalists with the help of organized crime; and to have used members of Vladivostok’s principal organized crime groups to provide security for his many enterprises. Vice Governor Mikhail Chechelnitskiy was alleged to have participated in fuel theft in cooperation with organized crime figures (the case was dropped due to Chechelnitskiy’s “sudden death”), and former Vice Governor Nikolay Sadomskiy was alleged to have participated the Chechnya smuggling scheme. In all, six Vice Governors, all with longstanding connections to Nazdratenko, were named in the report.

In a Western country, such a report would have been political dynamite, to say the very least. In Vladivostok, it was merely cause for Nazdratenko and his crew to start political maneuvering in earnest. With economic crisis consuming Russia in 1998, Nazdratenko saw his chance and formed an alliance with then-Prime Minister Yevgeniy Primakov, loudly defending him at every opportunity and adopting nearly all of his political and economic positions as his own. In a few months, Kondratov’s power was first curtailed, and then Kondratov himself was transferred to Moldova in March 1999. The new Presidential Representative in Primorye was none other than Vice-Governor Valentin Kuzov, Nazdratenko’s personnel chief and yes-man. Yeltsin’s feeble attack on Nazdratenko’s power was effectively rebuffed. Thus secured, Nazdratenko continued the attack against his remaining political opponents.

Nazdratenko Hobbles Cherepkov.
Nazdratenko’s most prominent foe was Vladivostok’s mayor, Viktor Cherepkov, who, in contrast to most politicians in Primorye, was honest. Nazdratenko and Cherepkov had been at odds almost since the beginning of the 1990’s, but Nazdratenko held the upper hand due to his superior financial resources and his connections with organized crime. In February of 1994, Cherepkov was accused of accepting bribes and removed from office. The charges were fabricated, but it took Cherepkov over two years to reclaim the mayoralty. When he did return, he found that the city coffers were bare, and that there were threats on his life. Accordingly, Cherepkov showed up at the “Gray House” (City Hall) with a phalanx of security men provided by Chubais.

Matters again came to a head in December of 1998, when Nazdratenko prevailed upon President Yeltsin to fire Cherepkov and to schedule new Mayoral elections for early 1999. The election itself was marked by heated rhetoric on both sides. In addition to allegations of corruption, Nazdratenko accused Cherepkov of blocking 14 attempts to form a City Duma, thus making Vladivostok the only major city in the Russian Federation without a local legislature. In actuality, of course, Nazdratenko used the local courts, which he controlled, to annul City Duma election results, since Cherepkov supporters would have been able to form a majority. Nazdratenko also blamed Cherepkov for the frequent outages of heating and power, neglecting to mention that he had been hamstringing efforts to fund city utilities. Nazdratenko concluded with commendable understatement: “what has happened is genocide against the residents of Vladivostok.” Nazdratenko also accused Cherepkov, an ESP enthusiast, of being a UFO loony, noting that: “I don’t understand how it is possible to govern the city from under a table while talking about links with outer space.” Finally, he accused Cherepkov, a former naval officer, of being gay.

The January 17, 1999 elections for Mayor were invalidated when, once again, more than 50 percent of the electorate stayed away from the polls. Cherepkov had been excluded from the ballot at the last minute, leading to a boycott and a large vote “against all.” However, Yuriy Kopylov, Nazdratenko’s picked man, was appointed Mayor in December, and continued in that post until finally being elected on June 19, 2000. Cherepkov bounced back politically, winning a Duma seat as one of three deputies representing Primorye in Moscow.

In early 1999, Nazdratenko also moved against his other major political opponents in Primorye, including Kray Duma Chairman Sergey Dudnik. Dudnik was accused of mismanaging the Nakhodka Free Zone, and of causing the collapse of Bank Nakhodka, among other things. A year later, on January 23, 2000, Dudnik was replaced as Chairman by Sergey Zhekov, an apparatchik loyal to Nazdratenko.

Nazdratenko Cleans out Western Investors.
Nazdratenko and his allies were fundamentally hostile to the idea of Western investment, and took every opportunity to move in on the most profitable foreign-owned companies in the Vladivostok area in order to gain a “piece of the action.” A case in point was FESCO – the Far East Shipping Company – one of the few major enterprises in Vladivostok that turned a legitimate profit and benefitted from the involvement of foreign investors. Nazdratenko first reportedly threatened Andrew Fox, the honorary British Consul and a board member representing foreign interests, with a long term in jail unless the foreigners handed over FESCO to the Primorye Administration. Fox left the country instead. Then, after a year-long battle, Nazdratenko and his allies effectively took over the management of FESCO in May of 2000, gaining seven seats on the 11-member board of Directors. FESCO did not flourish under the Nazdratenko management team. Its assets, once valued at over a billion U.S. dollars, by the end of 2000 were valued at less than 400 million.

To Live and Die in Primorye: the End of the Free Press.
Not the least of Nazdratenko’s objectives over the decade of the 1990’s was the taming of Primorye’s free press. He succeeded for the most part, driving many small newspapers out of business, and muzzling many of those that remained. Nazdratenko exerted similar control over the electronic media. In 1999, for example, the director of the independent Radio Lemma was called in by a local official and told to watch his step as he crossed the street, lest he “have an accident.” The director got the message, and toned down Lemma’s broadcasts. In late 1999, the Far East Edition of Moskosvskiy Komsomolets ran a headline satirizing Nazdratenko’s election campaign slogan “To Live and Work in Primorye.” Displaying the picture of a murdered Mafiosi on its front page, it led with the headline “To Live and Die in Primorye.” The piece enraged Nazdratenko, who obtained the resignation of the editor responsible. In early December 2000, two reporters from ORT television’s Far East Bureau were fired and replaced by reporters who openly supported Nazdratenko. Finally, “Zavtra Rossii,” which published the Kondratov report was driven out of business.

A climate of fear took over in the Primorye press corps, and not just because of the threat of being put out of business or thrown out of a job. On December 6, 1999, Maya Shchokina, the director of Vladivostok’s Dalpress, was shot and critically wounded by two unidentified gunmen. Dalpress was the major state-run publishing firm in Primorye, publishing 87 newspapers, or 90 percent of the region’s total. It was the second attack on Shchokina since she had fired one of Nazdratenko’s supporters, and refused a request by Nazdratenko representatives to cancel the print run of Moskosvskiy Komsomolets, which ran a number of scathing articles about the Governor during the 1999 election campaign.

The Empire Strikes Back: Putin Stops the Music.
By the end of 1999, Nazdratenko and his group had achieved virtually all of their objectives in Primorye, but they did not have long to savor their victory. The retirement of Yeltsin and the arrival of Vladimir Putin on the Russian political scene in early 2000 put an end to Nazdratenko’s dream of ruling his fiefdom by the sea with majestic impunity. Nazdratenko and his colleagues continued with their strategy of supporting the Center in exchange for non-interference. They joined the Yedinstvo Party, and turned it into the preeminent political party in Primorye. Nazdratenko also attempted to enhance his clout by regular trips to Moscow and liberal dispensations from his "Zelyoniye Chemodanchiki" (suitcases full of money), but it became increasingly apparent that in Putin, Nazdratenko was dealing with an entirely different breed of leader. Early in his term, Putin began reasserting control over the regions. On May 18, 2000, Putin replaced Valentin Kuzov with General Konstantin Pulikovskiy ushering in a new era in Center-Primorye relations, and subjecting Nazdratenko and his allies to much more critical scrutiny. Unfortunately for Nazdratenko, this coincided with the onset of a severe energy crisis, and proof positive, if any were needed, that Nazdratenko was not taking care of the needs of the people.

Dark Summers, Frozen Winters.
During the summer of 2000, several areas of Primorye were hit by serious electrical power blackouts, which lasted up to 16 hours per day. Dalenergo, the primary energy supplier to the region, was forced to cut off power to consumers who did not pay their bills when it was unable to find sufficient fuel to power the grid. Nazdratenko, pointing the finger of blame everywhere but at himself, at first persuaded Moscow to allow the removal of the previous head of Dalenergo -- a Chubais man -- and his replacement by Yuriy Likhoyda, Nazdratenko’s deputy in charge of energy questions. Unfortunately, the power shortages continued into the fall and winter, and soon the major problem for many outlying municipalities was not light, but heat.

As the fuel crisis began to build that October, Pulikovskiy gave a press conference in Magadan in which he mentioned that he considered Primorye to be the “region with the most irrational management…,” and remarked that “the economic situation in Primorye has been worsening for the past four years, which demonstrates the economic incompetence of the regional administration…” Pulikovskiy also noted that “People did not complain about bad housing or low salary. They complained about the governor’s, mayor’s, and federal government’s actions. This means that the local government is far from the people and is not performing its functions.” On October 26, Pulikovskiy gave a TV interview in which he said that the Primorye Governor and Dalenergo managers would “have to resign,” if they failed to provide stable heat and energy supplies to Primorye. The writing was on the wall.

Despite this clear warning of what was to come, Nazdratenko was unable to solve the energy crisis. Over 90,000 people were left totally without heat for extended periods in sub-zero temperatures. Putin called the situation “a crying shame,” while United Energy Systems head Anatoliy Chubais blamed Nazdratenko’s incompetent management for the problem. He noted, in particular, that “we can deliver the heat, but we cannot channel it through the destroyed municipal infrastructure.”

In late November, Nazdratenko left for Moscow. While there, he met with Putin, Prime Minister Kasyanov and numerous Duma deputies. Significantly, while many Deputies were critical of Nazdratenko, he received strong support from Zyuganov’s Communists and Zhirinovskiy’s Liberal Democrats, both of whose parties had received liberal “campaign contributions” from the embattled Primorye governor. Nazdratenko returned to Primorye with promises of Federal infusions of cash, but few people thought that Nazdratenko could last.

Meeting Nazdratenko.
As I arrived in Vladivostok in mid-November, 2000, word on the street was that Putin had given Nazdratenko until June to straighten things out before taking decisive action. I was not so sure, however, that Nazdratenko had that long.  The more I learned of the political and economic situation in Primorye, the more I found it to be fascinating, and the more I wanted to meet with chief malefactor himself, Governor Yevgeniy Nazdratenko. Naturally, my efforts failed. Nazdratenko remained very suspicious of Westerners, particularly Americans, and was not about to meet with someone who was only the Acting U.S. Consul General (perhaps he also thought I would demand the coat rack he had promised).

Nevertheless, I persisted, and eventually I did find a way to talk with him. December 23 was the Emperor’s birthday, and Japanese Consul General Yosihisa Kuroda held a reception in honor of the occasion. Nazdratenko felt it would be impolitic to pass up the invitation, and decided to attend. I did as well. Nazdratenko and his crew sauntered into the reception at the Japanese Consul General’s residence very late, achieving the desired rock star effect, and proceeded to talk among themselves in the center of the room while the other guests circled them warily.


Drinking Vodka with Nazdratenko
 During the toasts that followed Nazdratenko’s arrival, I found myself standing next to Vice Governor Vladimir Stegniy. I had gotten to know Stegniy pretty well, as he was the official responsible for diplomatic contacts, and he and I had established a good relationship. He introduced me to Nazdratenko's wife, Galina, one thing led to another and before I knew it, I was in a lengthy and mostly non-substantive conversation with Governor Nazdratenko, and the local head of the Primorye FSB, Aleksandr Gromov. The Nazdratenkos told me that they had very fond memories of former Ambassador Matlock, whom they had first met during one of his early visits to Primorye. Nazdratenko quizzed me about my background, and Stegniy, who had evidently been studying the "kratkaya biografiya" MFA Protocol had sent him, mentioned that in addition to four years in Moscow and two in Leningrad, I had spent some time in Kabul just as the Soviet Army withdrew in 1988-89. Nazdratenko smiled broadly and then said, "Well, in that case let me congratulate you on your holiday today. “My holiday?” I asked. “Yes,” he replied, “Den Chekistov!” (Monday, December 20 is the official holiday of the intelligence services). He and his entourage laughed uproariously at this witticism, and then he insisted that the Japanese photographer take our picture a few times.

I had been prepared for a hostile reception, and so was surprised that Nazdratenko was so engaging and open. It just goes to show that the old adage is true: sometimes the devil does take on a pleasing appearance. Nazdratenko mentioned that he was going to Moscow at the end of the week to talk more about the Primorye fuel situation. He noted that “now that we've had our protocol discussion, I'll invite you over for a substantive talk when I return.” It was not to be, however.  My term as Acting Consul General came to an end and I left Vladivostok on January 9.  By the time I had returned in April, 2001, Nazdratenko was no longer governor. He had been "persuaded" by Putin to transfer to Moscow.  I never saw him again.

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