Strongman, The

crisis was over, but the Kremlin’s strong-arm tactics caused long-term damage to Russia’s efforts to woo foreign investors.
    For Putin, this was just part of a strategy, aimed at ensuring that Russia’s strategic energy resources remained, or were retaken, under state control. Foreign companies were welcome to participate in joint projects, but Russia would never again give away its resources as Yeltsin had so recklessly done. New legislation was drafted to limit non-Russian involvement in 42 industries, including arms and aircraft, fisheries, precious metals and hydrocarbons.
    Putin was less squeamish about other countries’ strategic assets. As oil prices rose and the Kremlin’s coffers filled up with petro-dollars, Russia started looking to invest abroad. Gazprom showed an interest in buying Centrica, Britain’s major gas supplier. Then it began talks on acquiring a 50 per cent stake in the Central European Gas Hub at Baumgarten in Austria – the main distribution centre for EU gas supplies. The European Commission blocked the move.
    In September 2006 it become known that the state-controlled bank VTB had quietly bought a 5 per cent stake in EADS, the world’s biggest aerospace company, producer of Airbus and a great deal of defence equipment. Putin’s diplomatic adviser Sergei Prikhodko then suggested they would like more – perhaps 25 per cent, enough to block major decisions. When Angela Merkel heard about it she told President Chirac of France in no uncertain terms that this could not be allowed to happen. Chirac and Merkel met Putin at Compiègne, outside Paris, towards the end of September and told him this was one investment that was not welcome.
    On a visit to Bavaria the following month, Putin mocked the West for its nervousness: ‘Why the hysteria? It’s not the Red Army coming, but Russian businesses with money to invest.’
    A Cold War encounter
    It was Saturday 21 October 2006. The last, yellowing leaves were falling from the birch trees outside Putin’s window at his country residence, Novo-Ogaryovo. It was cold and raining. He was already in a foul mood. The previous day he had attended a summit with 25 European Union leaders in Lahti, Finland. It was supposed to be an ‘informal’ meeting, a cosy gathering with no set agenda or agreements to be signed, but nonetheless he had had to listen to a litany of complaints – about the murder of Anna Politkovskaya, about his government’s attempts to squeeze Shell out of the multi-billion-dollar Sakhalin-2 project, about Russia’s unreliability as an energy provider, and about Georgia.
    The Europeans explained that they were keen to build a close partnership with Russia’s southern neighbour and deplored the sanctions recently introduced by the Kremlin. But Putin expounded at some length his view that President Saakashvili was hell-bent on regaining the breakaway regions of Abkhazia and South Ossetia, and warned them that this would lead to bloodshed. Only his friend Jacques Chirac supported him, telling the others that relations with Russia were more important than Georgia.
    It was the middle of the night before Putin got home. On Saturday afternoon he called his 11 most powerful colleagues – his Security Council – to his residence. He told them about his uncomfortable meeting with the EU leaders, and they considered their options in Georgia. Putin also had an appointment with the US secretary of state, Condoleezza Rice, who was waiting at her hotel in Moscow, but he was not looking forward to it. ‘He didn’t feel like meeting her,’ one of his close aides recalls, ‘but he knew he had to.’
    Rice was wondering why their meeting was so delayed. ‘Usually he saw me right away, unless he wanted to make a point,’ she said later. 7
    After their working session the members of the Security Council drove to a nearby government lodge – a baronial-style chateau at Barvikha – for a special dinner. Three members, including the security council secretary, Igor Ivanov, and the future president, Dmitry Medvedev, had recent birthdays to celebrate.
    Here, Putin decided to play a ‘joke’ on Rice. According to one of those present, he looked at his watch, and a mischievous smile appeared on his face. ‘Why do we have to wind things up in a rush? Let’s put on a little show for her. If she wants, tell her I will meet her here, but don’t tell her I’ve got the entire Security Council with me.’
    ‘It was five o’clock,