Putin: His Downfall and Russia's Coming Crash

6 OIL: A WASTING ASSET

Amazingly, reassuringly, suspiciously, Russia had followed its new Constitution. Putin, as prime minister, had automatically replaced President Yeltsin when he stepped down. Putin was then elected president in the elections the Constitution mandated take place within three months.

And so, on May 7, 2000, in the gilded and blue-silk moiré splendor of the Kremlin’s St. Andrew Hall, once the throne room of the tsars, Vladimir Vladimirovich Putin, his hand on the Constitution, took the presidential oath of office, which in its entirety ran: “I vow, in the performance of my powers as the President of the Russian Federation, to respect and protect the rights and freedoms of man and citizen, to observe and protect the Constitution of the Russian Federation, to protect the sovereignty and independence, security and integrity of the state and to serve the people faithfully.”[216]

Putin was open about his statist views from the start. The “rights and freedoms of man and citizen” had less timbre for him than the “security and integrity of the state.”

In First Person, his 2000 autobiography—actually a mix of interviews with journalists and oral history reminiscences by his friends, teachers, and family—Putin was quite clear how he viewed the state: “From the very beginning, Russia was created as a super-centralized state. That’s practically laid down in its genetic code, its traditions, and the mentality of its people.”[217]

Though there were some liberal economists in Putin’s inner circle, like Alexei Kudrin, who served as minister of finance from 2000 to 2011, most, some estimates range as high as 40 percent, were security types, preferably ex–Leningrad KGB. One colleague from Dresden, Sergei Chemezov, would head up Russia’s weapons export. This was not only loyalty, but calculation—Putin knew these types, how to read them, how to use them.

Three moves he made in the summer of 2000 should have been enough to indicate his bent and dispel some of the hopeful haze around his election. In July he summoned the oligarchs to the Kremlin and laid down the law: You can keep your money, but pay your taxes and keep your nose out of politics. Subsequent events would reveal that not everyone got the message.

The second move was one he did not make—not quickly returning from vacation in Sochi to deal with the crisis of the Russian nuclear-powered attack submarine Kursk, which had gone down in Arctic waters. Putin was extremely reluctant to seek foreign aid to rescue the sailors, still alive but dying a slow, hideous, and unnecessary death. None of this played well on television.

Yeltsin’s election in 1996 and Putin’s own election in April 2000 had convinced him of the power of television, a lesson that was only negatively reinforced by the poor coverage he received during the Kursk disaster. The oligarch Boris Berezovsky’s TV Channel 1, sometimes called ORT, was especially unrelenting in its criticism of Putin. In his third move of clear significance, Putin summoned Berezovsky and said quite matter-of-factly: “ORT is the most important channel. It’s too important to be left outside government influence. We made a decision…”—meaning the state would be taking control of ORT and resistance would be not only futile, but criminal. It didn’t matter in the least that Berezovsky had been instrumental in Putin’s rise.

Soon enough the conversation grew emotional, ranging from self-pity to rage, with Putin asking: “Why are you attacking me? Have I done anything to hurt you?”

“Volodya, you made a mistake when you stayed in Sochi. Every station in the world…”

“I don’t give a fuck about every station in the world,” interrupted Putin. “Why did you do this? You are supposed to be my friend. It was you talked me into taking this job. And now you are stabbing me in the back.”[218]

By the end of the year, rightly fearing prison, Berezovsky left Russia, never to return. Living in England, he would expend considerable energy trying to prove that the three explosions of apartment buildings in late 1999 that were blamed on Chechens were in fact a secret police operation designed to create an atmosphere of alarm and help the tough-talking Putin get elected. That Putin’s reign began under the shadow of deceit and homicide has not yet been proved, nor will it likely ever be.

Like most of the other oligarchs, Berezovsky had no real business acumen. Though he lived high on the British hog for a decade, his fortunes took a severe turn for the worse in 2012 when he lost a costly court battle, and in the following year, faced with mere diminishment, all-or-nothing Berezovsky chose nothing, hanging himself in a bathroom locked from the inside, though doubts flicker even around this incident.

But it was not Putin’s seizure of the media, his suppression of dissent, or even his invasions and incursions that would matter most in his own fate and Russia’s but, as will become quite clear, his failure to diversify the economy away from its dependence on gas and oil. The roots of that problem go back a century. In Russia all stories are old stories.

For centuries Baku’s “fountain of oil,” as Marco Polo called it when passing through in the 1270s on his way to China, had been used for lighting and as “an unguent for the cure of cutaneous distempers in men and cattle.”[219] It wasn’t until the late nineteenth century that Baku’s first gusher came on. Things developed at a breakneck pace. Between 1898 and 1902 Imperial Russia’s oil fields were at the peak of their production, having surpassed those of the United States to lead the world.

The possibilities for fast and enormous wealth attracted people like John D. Rockefeller, the Rothschilds, and the Nobel brothers (they of dynamite and the Prize), who constructed the world’s first pipeline and oil tanker. But it was not only international capitalists who were drawn to the oil fields of Baku. Just as the Russians were overtaking the United States, a twenty-two-year-old Georgian who had been radicalized while studying to become a priest, arrived on the scene. Mixing metaphors from his seminary and political lives, Joseph Stalin said that the strikes he organized in Baku were his “revolutionary baptism in combat.”[220]

He and his fellow organizers succeeded all too well. By the end of the failed 1905 revolution two-thirds of the oil wells in Baku had been destroyed.

Though names like Standard Oil and Rockefeller were in Communist mythology synonymous with rapacious exploitation, it turned out that Soviet Russia’s oil fields could not be put back into operation without foreign help. In the early 1920s, Lenin had to come to terms with the severity of the havoc wrought by the First World War, the revolution, and the civil war. To bring back some of life’s daily necessities and pleasures, Lenin introduced NEP, the New Economic Policy, which allowed small business to reemerge and flourish. Foreign experts were allowed in.

Lenin’s moves, though ideologically distasteful, were successful. Goods reappeared on the shelves of stores and the oil began flowing again both in the older fields and in the new ones opened up with advanced Western technology. One of those helping out was Frederick Koch, grandfather of today’s notorious Koch brothers. As the story goes, an invention of his for refining gasoline from crude oil was effectively squashed by the major U.S. oil companies, which attacked him with patent-infringement lawsuits that took him more than a decade to win.

In 1928 Koch signed a $5 million contract to construct fifteen refineries in the USSR in Baku and other oil-producing regions like Chechnya. The young Mr. Koch left the USSR with two things: a small fortune of $500,000 (around $7 million in today’s dollars), which would serve as the basis for the future Koch empire, and a fierce hatred of Communism that led him to become one of the founding members of the John Birch Society. Whether he perceived the irony of his entrepreneurial efforts being crushed by naked capitalism at home and handsomely rewarded by Stalin’s Russia is doubtful to say the least.

By the end of the 1920s, however, Soviet farms and factories were producing enough for Soviet citizens, and NEP was done away with. The little stores were closed, and small business became a criminal activity overnight. The foreign oil specialists were paid off and sent packing. Lenin was dead and there was a new man in the Kremlin, the former oil-field strike organizer Joseph Stalin.

By 1929, with his archrival, Leon Trotsky, in exile and the capitalist world in a shambles, Stalin moved to reshape the Soviet economy into the centralized control-and-command model that persisted until the USSR collapsed under its own weight in 1991. Stalin forced the peasants onto collective farms. Those who displayed reluctance or resistance, and those who were considered well-off and therefore by definition exploiters, were shipped to Siberia and Kazakhstan by cattle car. Millions of Ukrainian peasants who were considered especially recalcitrant—conservative by their peasant nature, nationalistic because of being Ukrainians—were simply starved to death by artificially created famines. All food was confiscated; villages were cut off at the beginning of winter and the corpses were collected come spring. Many Ukrainians would later welcome Hitler’s armies simply because they could not imagine anything worse than Stalin.

Like all the rest of industry, the oil industry came under greater centralized control. The measures of performance were, inevitably, quantitative. For example, when it came to drilling, it was not the amount of oil that was discovered that would prove the standard of measure, because it might be years before that number could be calculated. In the here and now what could be precisely determined was the number and depth of holes drilled, which more often than not led to landscapes pocked like moons.

Nevertheless, oil was found, pumped, refined. In any case, the world market for oil was weak throughout most of the thirties because of the Depression. The USSR was exporting more timber than petroleum.

Germany became one of the USSR’s main customers for oil, especially after the surprise Molotov–Ribbentrop Pact of 1939, which pledged nonaggression and, secretly, agreed on the dismembering of Poland and the Baltic states. Time would reveal that Stalin had in effect been selling Hitler the gas for his tanks and trucks to invade the Soviet Union. When attacking in June 1941, Hitler knew his blitzkrieg had to succeed because he could never win a war of attrition against the USSR unless, that is, he had the grain of Ukraine and the oil of Baku.

September 25, 1942, was the date set for the capture of Baku’s oil fields. A few days before the attack Hitler’s generals presented him with a cake whose frosting depicted Baku and the Caspian Sea. (There are twenty seconds of black-and-white film of all this.) Greatly amused, Hitler took the “Baku” slice for himself though supposedly also saying: “Unless we get Baku’s oil, the war is lost.”

In July, aware that an attack on Baku was coming, Stalin summoned Nikolai Baibakov, who oversaw Soviet oil production. According to Baibakov’s obituary in The New York Times, “Stalin pointed two fingers at Mr. Baibakov’s head…. ‘If you fail to stop the Germans getting our oil, you will be shot,’ Stalin said. ‘And when we have thrown the invader out, if we cannot restart production, we will shoot you again.’” As the Times notes laconically: “Mr. Baibakov accomplished both missions.”[221] And so Baibakov not only was not executed once or even twice, but outlasted Stalin and all the other bastards great and small, only dying in 2008 at the age of ninety-seven.

From the end of the war to the end of the USSR, a stretch of only forty-six years, the oil industry was much like the country itself—mighty, cumbersome, fatally flawed. The Baku oil fields, damaged during the war, never regained the production heights achieved before the war. But vast new fields were discovered in the Volga-Ural region and later in West Siberia by teams of intrepid geologists out “feeding the mosquitoes.” Paranoia about contact with foreigners was in part what drove the relentless hunt for new oil fields. Instead of acquiring the knowledge and technology that would have maximized output, but which would have required foreign technicians and specialists on site to demonstrate how the equipment worked, exploration was unceasing. There were always more fields, more oil over the next ridge. Rossiya bolshaya, Russia is big, as the Russians like to say.

The USSR’s main use for oil was for domestic purposes, Moscow always prizing independence from a hostile capitalist world. But Moscow needed that world too because Russia, which before the revolution had been the world’s greatest exporter of grain, had become by the late 1970s the world’s largest importer. In 1963 Khrushchev had spent a third of the country’s gold to buy grain. The collective agriculture forcibly imposed by Stalin was a failure. As the head of a collective farm once said to me: “…collective farming could have worked. It worked in Israel…. But it couldn’t be done by force and decree.”[222] Storage and distribution were also significant problems, up to a third of a year’s crop lost to spillage and spoilage.

Sales of oil on the world’s open market became increasingly important and paid for meat, grain, and machinery that the USSR imported. Gas and oil also had their political applications. The Kremlin’s aid to Cuba, to take one example, came largely in the form of oil. This was pretty much the situation until 1985, when Mikhail Gorbachev came to power. Perestroika, his plan to rebuild the system, assumed there was still something left worth rebuilding. One of Gorbachev’s first acts in office was to fire the long-term director of Gosplan, the agency that planned and regulated the entire Soviet economy, everything from nails to rocket ships. That director was none other than Stalin’s lucky and tenacious oil commissar Nikolai Baibakov, who had remained loyal to his old boss, saying of Khrushchev’s secret speech denouncing Stalin in 1956: “Maybe there were individual acts of repression but what Stalin was denounced for, that never happened.”[223] The “maybe” is a particularly nice touch.

And “maybe” Gorbachev could have rebuilt the Soviet economy or enough of it to form a new union composed of Russia, Belarus, Ukraine, and northern Kazakhstan, as Aleksandr Solzhenitsyn proposed in his 1991 book Rebuilding Russia. But there were too many forces opposed to that—the failed and costly war in Afghanistan; the nationalistic aspirations of the smaller states, whose efforts at withdrawal had a sort of avalanche effect; and the wisdom, or the weakness, not to use force against the opposition as the Chinese chose to do on Tiananmen Square in June 1989, those protesters in part inspired by Gorbachev’s presence in Beijing at the time.

But as much as anything it was oil that did Gorbachev in. It was $50.11 a barrel in 1985 when he took office, but fell more than 50 percent, to $24.71, during his first full year in power. And the price stayed in the twenties from 1986 to 1991 except for two years: 1987, when it was $31.68, and 1990—$35.62. There is some but insufficient evidence that William Casey and the CIA, working with OPEC, engaged in a clandestine campaign to bring down the price of oil and the Soviet Union with it. That there is insufficient evidence does not of course prevent many Russians from insisting that the conspiracy was all too real and, moreover, was the forerunner of today’s efforts to weaken and subvert Putin’s Russia through the use of NGOs and by funding movements like the Orange Revolution in Ukraine. Even a reform-minded high-ranking official like Egor Gaidar could write:

The Politburo was in a panic over those $20-billion-a-year losses from the fall in oil prices, and, contrary to what was generally thought, the USSR did not hold $36 billion in gold reserves but only $7.6 billion because of Khrushchev’s extravagances in buying grain. There really was no need for theories about cunning conspiracies. The Union of Soviet Socialist Republics was broken and broke.

A joke of the 1990s offers the following definition of Russian business: three guys steal a case of vodka, sell it all, and then go get drunk on the proceeds. And truly in that decade there was something drunken about all Russian life from the street to the Kremlin, where the first freely elected Russian president, Boris Yeltsin, a burly Siberian with a W. C. Fields nose, became more of an embarrassing boozer with each passing year. Still, President Bill Clinton did say: “Yeltsin drunk is better than most of the alternatives sober.”[225]

Clinton must have had a quite low opinion of those alternatives given Yeltsin’s behavior one night at Blair House, the vice president’s official residence. “Yeltsin was roaring drunk, lurching from room to room in his undershorts … demanding, ‘Pizza! Pizza!’”[226]

In the nineties crime lords arose out of nowhere, suddenly rich, powerful, and well armed with all the weapons the country was awash in. At one point Yeltsin declared they controlled 40 percent of the economy. Gangs shot it out on the streets. At one of their favorite hangouts, the still trendy Aist (Stork) restaurant in central Moscow, the diners looked on in horror as a gangster rolled a grenade like a bowling ball along the floor toward a rival’s table. (A dud, as it turned out.)

Though Russian gangsters were making small fortunes via extortion, protection, drugs, and casinos, the great fortunes would end up in the hands of educated men like Berezovsky, who held a Ph.D. in mathematics, and Mikhail Khodorkovsky, who, before he became Russia’s richest man and its most famous prisoner, earned a degree in engineering.

Khodorkovsky was born in 1963 in Moscow, the only child of a mixed marriage, his father Jewish, his mother Russian. In a sense that left him being neither fish nor fowl because Jews trace lineage through the mother and Russians through the father. People like Khodorkovsky had the choice of having their internal passports marked either “Russian” or “Jewish,” which was considered a nationality. There were any number of advantages in choosing “Russian,” though they only went so far, as a famous joke illustrates: A friend comes running into Moishe’s apartment all excited, saying: “Moishe, down on the square they’re beating up Jews!” Moishe replies grandly: “What do I care? My passport is marked ‘Russian.’” “Moishe, they’re not punching them in the passport, they’re punching them in the face!”

A little prince in a dingy apartment, Khodorkovsky grew up adored and protected by his parents, who chose never to air anti-Soviet sentiments when their child was around. Khodorkovsky, who as a little boy wanted only to be a factory manager when he grew up and was nicknamed “the Director” by his classmates in kindergarten, proved adept at working the first system he encountered—the Young Communist League, the Komsomol. Founded right after the revolution in 1918 for people between fourteen and twenty-eight, the Komsomol had two basic purposes—to harness the energy of the young into clubs and supervised events like dance and sports, and to help make good little Soviet citizens out of them. It was also an organizational structure for the politically ambitious to climb, a transition between the Pioneers (Communist boy scouts) and the Communist Party itself.

By the time Khodorkovsky joined the Komsomol in the late 1970s there were precious few true believers left. Membership was a purely practical matter, a cynical choice. Moved by ambition, cool calculation, and his own natural zeal, Khodorkovsky thrived in the Komsomol, building a good reputation and strong connections that would stand him in very good stead later on. He graduated from the Mendeleev Institute of Chemical Technology in 1986, the year after Gorbachev had come to power. Fate, in the guise of institutionalized Soviet anti-Semitism, did him a favor by denying him a job in the defense industry. He took advantage of the greater economic freedom under Gorbachev to try his hand at business; his first enterprise was a flop, but he caught on quick.

His first serious success came from working the Soviet financial system, in which there were three kinds of money—foreign or “hard” currency; regular cash (or “wooden rubles” as they were sometime derisively called), which was used to pay salaries; and noncash rubles, which existed on the books of various enterprises and institutions but were difficult to transform into usable, spendable money. Those with a small-time-hustler mentality went into the black market for hard currencies, paying much more than the absurdly low government-set rate. Those who thought bigger like Khodorkovsky saw that a handsome profit was to be made by turning noncash rubles into real cash rubles, then ultimately changing them into hard currency, i.e., dollars or, as they were affectionately known, bucksy and greeny.

Using the connections he had built up during his Komsomol years, Khodorkovsky convinced them to let him handle their noncash rubles to increase their organizations’ real wealth while of course cutting himself and his associates in for a healthy piece of the action. The money flowed, fueling Khodorkovsky’s various other enterprises, which included construction and importing computers that could be sold for a 600 percent profit. There was a great headiness to it all, an odd combination of cool, sober calculation and the elation of sudden wealth.

By the end of 1988, taking advantage of new laws on co-ops, including financial co-ops (i.e., banks), Khodorkovsky, at the age of twenty-five, had his own bank called Menatep. The old saying that a man with a gun can rob a bank but a man with a bank can rob a country definitely applies to the Russia of those days. Menatep, like the other new banks that had sprung up in profusion, routinely violated government restrictions on hard currency. But as David Hoffman puts it in The Oligarchs: “The gradually collapsing Soviet state had no way to keep track of the fleet-footed easy money boys.”[227]

The people holding positions of power in the slowly sinking Soviet state had a vital interest in maintaining good relations with the new class of young bankers. In the final years of the USSR fortunes in hard currency and gold belonging to the Communist Party simply vanished without trace. There is some suspicion that Khodorkovsky’s bank was involved in this diversion of wealth as part of a hand-washes-hand relationship. Khodorkovsky himself always vigorously denied any such relationship while at the same time maintaining: “A bank is like a waiter. Its business is to cater to its clients independently of their political beliefs or affiliation with this or that camp.”[228]

The last thing anybody cared about in the Russia of the late 1980s was moral or legal niceties. The state, the sole owner of everything, had always been seen as a fair target to be ripped off—some lumber, bricks, electric cable, whatever you could get away with. Now, however, whole enterprises and institutions could be ripped off from the state. It was a matter of degree, not kind.

Though akin geologically, gas and oil are quite different economically and politically. Oil is much more valuable than gas and easier to transport—it can be shipped by tanker, train, or pipeline. Gas can be sent only by pipelines unless there are in place the complex and costly systems for liquefying it at one end and deliquefying it at the other. Russia had little capacity for that in the nineties. Though worth less than oil and more difficult to transport, gas would nevertheless prove a formidable instrument in the political arena, since Europe was hooked on Russian natural gas to heat homes and run industries.

Oil is the big moneymaker. In time it along with gas would account for some 50 percent of Russian federal government revenue. Balancing the budget was entirely dependent on the price of oil. It was a dangerous situation and everyone knew it, but in the chaos of the nineties you used what you had at hand, and getting through the month was more critical than planning for any future.

A second fundamental difference between gas and oil in Russia was that the Ministry of the Gas Industry had transformed itself into a corporation called Gazprom. Shares in Gazprom could be sold, but the state would remain the majority owner. The more complex oil industry quickly subdivided into ten or so separate entities, which meant that they, unlike Gazprom, could easily be privatized.

In 1995 the Russian government was hurting for money. Nobody was paying their taxes, especially those who had become suddenly and exorbitantly rich. The government’s principal source of revenue, oil, had sold for an average of $21.07 in 1994 and wasn’t doing much better in 1995 at $22.03. This all set the stage for what Marshall Goldman in his book Petrostate describes as “the biggest and most controversial transfer of wealth ever seen in history,”[229] which elsewhere in the book he terms more succinctly “a massive scam.”[230] That transfer, blandly known as Loans for Shares, was brilliantly simple and worked like this: the banks would loan the state money with state enterprises as collateral. Fine, except for one thing: “Everyone knew from the beginning that there was little likelihood that the state would be able to collect the taxes it needed to repay the bank loans. How could it when the oligarchs themselves and their companies, as well as their banks, were among the largest tax delinquents?”[231] And so the state would have to auction off its holdings to pay off its loans.

Scammed though it was, the state was not entirely a fool either. Yeltsin and his team had good reason to go along with Loans for Shares aside from the revenue stream it produced. Privatizing the oil industry would break up the “red directorship,” the party bosses who controlled the industry and were not about to go gently into history’s good night. The support of the oligarchs was essential to Yeltsin in the 1996 elections, in which it was feared that an already weary, cynical electorate would veer hard left to the Communist Party.

Khodorkovsky was a man with a tendency to get religion. Beneath his placid, “corporate” exterior, he had a deep need to find something to which he could dedicate himself utterly. He became an apostle of the gospel of wealth. Suddenly it was obvious—the most glorious thing in the world was to be gloriously rich. Khodorkovsky even went so far as to say that there had to be something wrong with a person who did not aspire to be an oligarch. Yet he was not oblivious to the transformations that had occurred within himself, which he could regard with distance and irony: “If the old me met the new me, he’d shoot him.”[232]

But Khodorkovsky was undergoing other changes as well, some exactly those hoped for and predicted by the young team around Yeltsin busily dismantling the old command-and-control Soviet economy. Because of its own internal logic, ownership engenders a desire for law and order to protect property. Pride of ownership can in turn engender a desire to maintain and improve what is owned. This is, of course, far from automatic—many in Russia were content to rip off and resell and the devil take the hindmost. Most were not like the American robber barons whose extravagant wealth was at least based on the building of something—steel mills, banks, railroads. But Chubais and Yeltsin really believed in the market, in its power, over time, to shape mentality and behavior.

Khodorkovsky was someone who reacted in the very way the reformers hoped. He saw his newly acquired oil company, Yukos, as a challenge to his powers to envision and enact. A maximalist in the best Russian tradition, he strove to build the biggest, most efficient, most Western and transparent oil company in the country. He was loyal and generous to those around him, but woe to anyone who got in his way. At Yukos headquarters he had closed-circuit TV secretly installed to monitor the workers and abruptly fired a third who had been found not up to snuff. Later, there would be rumors and innuendos about Yukos-sponsored violence, but no evidence was ever brought forward, nothing ever proved.

Khodorkovsky faced many obstacles, not least of which was himself. The veteran Siberian oilmen could only snort with contempt at a city slicker with aviator glasses and a lounge-lizard mustache. He changed his look to something more modern and corporate, losing the mustache and switching to transparent-framed glasses. He fired some of those old-timers and won some over. He had come into the oil business just as it was hitting bottom. Production in 1996 was just about half what it had been in the peak Soviet year of 1987. Urals crude hit a low of $8.23 a barrel on June 15. This, however, also had its good side—the price for exports was now quite competitive, and since little oil was consumed at home, most of production could be exported in return for hard currency.

After the financial crisis of 1998 oil prices began an almost linear upward surge. Though Khodorkovsky’s fortunes as the head of Yukos were of course bound up with the price of oil, he still charted his own course. He broke cleanly with the Soviet past, refusing to have his company play the paternalistic role of providing social services like housing, hospitals, and schools. He brought in Western technology and specialists. He used computers to control the flow of oil and revenue, which had been haphazard, to say the least, under the Soviets.

During the financial crash of 1998, which essentially bankrupted the country, Yukos survived for two reasons—the improving cash flow it had from its newly streamlined computer-monitored production system, and Khodorkovsky’s creative reneging on his own financial obligations. Like many other banks in the country, Khodorkovsky’s Menatep went belly-up during the crisis, but not before he had switched its few remaining assets to a financial entity he owned in St. Petersburg. The Western banks that had loaned Khodorkovsky tens of millions of dollars were left holding the bag. A bewildering labyrinth of offshore shell companies guaranteed that he would always be several steps ahead of his creditors. Other, less subtle tricks were also used: in May 1999 a truck containing 607 boxes of Menatep documents somehow ended up in the Dubna River.

But Yukos was the end that justified the means. A year and a half after the financial crisis of 1998 its income had doubled and it costs fallen sharply. By the end of 2000 Yukos was holding $2.8 billion in cash.

But other things had also changed by the year 2000. Vladimir Putin had completed his unlikely rise to power, “a suave cop who had lucked into a big job” as Strobe Talbott, deputy secretary of state under Clinton, had described him.[233] Russian society was sick of the turmoil and larceny of the Yeltsin years. There was a palpable yearning for law and order. The bloom was definitely off the idea of democracy and privatization, foreign-enough-sounding words to a Russian ear anyway.

Not only was there a sentiment against the 1990s and its disappointments, but a doctrine had emerged in the late nineties that would in time put Khodorkovsky and Putin on a collision course. In those years there was an odd confluence in the thinking of Putin and the security types for whom order and control were paramount, and of liberal economists, who wanted a free market. At that point no contradiction was seen between a strong state and a free market. On the contrary, only a strong state could guarantee the regularity and tranquillity needed for markets to function. And there could be no state power if the state did not control the country’s natural resources.

As Putin said: “Russia will not soon become, if ever, a second edition of the USA or England…. In our country the state, its institutions and structures have always played an exceptionally important role in the country’s life and people. For the Russian people a strong state is not an anomaly, not something to be struggled against, but on the contrary a guarantor of order, the initiator and chief moving force of all changes.”[234]

In late July of 2000 the newly elected president of Russia, Vladimir Vladimirovich Putin, invited twenty-one oligarchs to the Kremlin to deliver his message: Keep your money, pay your taxes, stay out of politics. Khodorkovsky, one of those present, was probably not much impressed by Putin. He was short and had some of officialdom’s grayness about him, and his ascent seemed more a matter of dumb luck than of smart moves. Putin would soon prove perilous to “misunderestimate.”

By 2000 oil prices had doubled since hitting bottom in the years 1996–98. The government was deriving increased income from taxing sales rather than profits, which the Russians were masters at concealing. And then again the Kremlin had to ask itself: why tax oil companies when you could own them?

Yukos was growing richer all the time and its CEO, Mikhail Khodorkovsky, was increasingly an irritant for Putin on every level, from the personal to the political. He did not show the respect due a president. He took the wrong tone. Something haughty and dismissive entered his demeanor, especially when China and its voracious appetite for energy were concerned. Khodorkovsky wanted to build a pipeline to China, and to Putin’s objections he replied, in front of others: “Vladimir Vladimirovich, you do not understand the importance of developing relations with China.”[235]

Khodorkovsky was by then the richest man in all Russia; he met with heads of state and other prominent figures like Dick Cheney and Bill Gates; he could say what he thought when he wished. Foreign advisers then and later would be astounded and appalled by his overweening pride. Writing of the pipeline-to-China project, Marshall Goldman, usually one preferring graphs to exclamations, said: “What arrogance. Khodorkovsky and Yukos were acting as if they were sovereign powers.”[236] If that is what an American professor thought, what could the heavyweights in the Russian government and oil industry have been thinking? We know the answer. Sergei Bogdanchikov, the head of the state-owned oil company Rosneft, said of Khodorkovsky and those around him: “Three days in Butyrki Prison and they’ll understand who’s the king of the forest.”[237]

Khodorkovsky himself was not oblivious to the dangers he faced, saying: “There are worse things than going to jail.”[238]

It took a little more than three years for the showdown with Putin to play out—from that initial meeting in the Kremlin to Khodorkovsky’s arrest in October 2003. In that time Khodorkovsky had made two moves which caused his supreme self-confidence to morph into reckless hubris. Without so much as informing Putin, he began negotiating with Chevron to merge and form the world’s largest oil company. If Khodorkovsky’s deal with Chevron went through, it could provide him with a moat of defense and security—the Kremlin might go after a Russian company, but it would think twice before going after the Chevron-Yukos merger. There was one outstanding and time-consuming detail in the negotiations—Yukos’s share in the merger. Chevron’s CEO, Dave O’Reilly, offered 37.6 percent. Khodorkovsky would not budge from his demand of 43.5 percent. That difference of 5.9 percent would cost Khodorkovsky ten years in prison.

In the meantime Khodorkovsky had also been doing precisely what Putin had expressly warned the oligarchs against—meddling in politics. Khodorkovsky backed opposition leaders, bought the votes of members of the parliament, and even hinted to the German magazine Der Spiegel in April 2003 that he himself might have ambitions to be president or prime minister. As his own mother would reportedly say later: “He forgot what country he lived in.”

Typically, the KGB gives warnings, and Putin was old-school KGB. In the best Russian tradition he quoted from the national poet Alexander Pushkin at a Kremlin press conference while discussing Khodorkovsky and the oil companies’ attempts to buy influence in the Duma. “Some are gone and some are far away,”[239] quoted Putin, hinting that arrest, exile, even execution, could await those who defied the Kremlin.

The hints weren’t taken, the allusions went uncaught. On October 25, 2003, Khodorkovsky’s private plane, on which he was the sole passenger, made a refueling stop in Novosibirsk. Masked men armed with automatic weapons, a unit of the elite antiterrorist Alpha Brigade, stormed the plane, handcuffed Khodorkovsky, and placed a hood over his head. Two hours later he was flown to Moscow to begin his odyssey of Russian prisons. Putin had reminded Khodorkovsky what country he was living in and who was the king of the forest.

“Give us the man and we’ll make the case” was an old KGB saying. Khodorkovsky was charged with tax evasion, fraud, embezzlement. Since the verdict was a foregone conclusion, no great care went into finessing the details of the case. Certain of them were simply absurd—in some years the taxes Khodorkovsky was accused of evading exceeded the total revenue earned. Khodorkovsky was sentenced to eight years in Prison Colony YaG-14/10, near the Chinese border, founded in 1967 to mine uranium.

The meaning of the Khodorkovsky affair was clear to all—anyone who challenged Putin’s authority in word or deed was subject to severe penalty. The era of privatization was definitively over. The state would now be the major player in oil as it already was in gas. In an auction worthy of the oligarchs themselves, Yukos ended up the property of the state oil company Rosneft.

There was no general sympathy for Khodorkovsky among his fellow businessmen, some of whom now quickly prepared to leave the country before their turn came. And of course the masses greeted the news with a sardonic grin. A few members of the dissident intelligentsia like Andrei Sakharov’s widow, Elena Bonner, spoke out in defense of Khodorkovsky, considering him a political prisoner because the law had been selectively used as an instrument of repression against him and sharply condemning Amnesty International for not coming to his aid. Others, like Boris Kagarlitsky in his book Back in the USSR, took a more jaundiced view: “It was exactly because the directors of Yukos did not differ from the tenants of the Kremlin that the ruling clique considered them to be really dangerous. And therefore took stringent measures. Khodorkovsky is a political prisoner only in the medieval sense, as when great lords and princes were jailed in the Bastille or the Tower of London after failed plots.”[240]

A rising tide of oil prices had lifted all boats, Khodorkovsky’s, Putin’s, Russia’s. Putin of course deserves no credit for the price rise, though before a battle Napoleon would say, “I know all my generals are good, but tell me which are the lucky ones.” And by arresting Khodorkovsky and incorporating most of Yukos into state-controlled Rosneft, Putin did assure a torrent of revenue for the state, some portion of which was well used and wisely saved, though billions of course were “reprivatized.”

The figures are impressive. Thirty percent of the country lived in poverty in 1999, only 13 percent by 2008, the end of Putin’s second term. Real incomes rose 140 percent and GDP per capita went from $5,951 in 1999 to $20,276 in 2008. The dollar value of the Russian stock market in 2000 was $74 billion and by 2006 it was $1 trillion. For the first time in its history Russia had a middle class.

At this point Putin was still taking the sound advice of his economics minister, Alexei Kudrin, who had pushed hard for a sovereign wealth fund as protection from any future calamity. Even Khodorkovsky writing from prison had said: “Putin is probably not a liberal or a democrat, but he is more liberal and more democratic than seventy percent of the population.”[241]

Showing a surplus, Russia was paying its bills and its debts. In fact, the five years between Khodorkovsky’s arrest in 2003 and 2008 were very good years indeed for Putin, buoyed as they were by the rising price of oil, which on July 11, 2008, peaked at an all-time high of $147.27. Putin had control of gas, oil, and television, which for him meant control of Russia. Pipsqueak dissident intellectuals would be allowed a few newspapers, a radio station, the Internet, none of which was widespread or powerful enough to make much of a difference. Putin had been reelected in 2004 with some 71 percent of the vote, a figure that reflected his control of the airwaves and his genuine popularity, not to mention the self-interest of those prospering under his rule.

At the time of Putin’s reelection, the state depended on the sale of gas and oil for 30 percent of its revenues. By 2013 that percentage would rise to 41 percent. It was clear to all that Russia was too beholden to oil. There had been no choice but to use what you had at hand when the task was to stabilize the country and revitalize the economy. Essentially that had been achieved in Putin’s first term, ending in 2004. With his domestic rivals safely disposed of, that would have been the ideal moment for Putin to take stock and make changes, to begin the only solution for Russia’s long-term viability—a diversification of the economy.

In 1999, before he was president, Putin published an article, “Russia on the Threshold,” in which he criticized the Soviet system’s “excessive emphasis on the development of the commodities sector and defense industry.”[242] Writing some ten years later, future president Dmitri Medvedev took a more emotional tone when speaking of Russia’s “humiliating dependence on raw materials.” Medvedev, whatever his weakness, was adept at stating the questions of the day in plain, clear Russian, unlike Putin, who went from abstract bureaucratese to vulgar street lingo without skipping a beat. “Should a primitive economy based on raw materials and endemic corruption accompany us into the future?” asked Medvedev.[243] The answer to that question was obviously no, and the answer to the eternal Russian question of What is to be done? was also simple—diversify. But how, into what? Use Russia’s highly educated population to make the high-value-added smart products that are the great wealth creators of the early twenty-first century.

And in fact Putin saw just such a solution—nanotechnology. First theorized in 1959 in “Plenty of Room at the Bottom,” an article by the madcap Nobel laureate Richard Feynman, nanotechnology has been defined as the “ability to see, manipulate and manufacture things on a scale of 1 to 100 nanometers. A nanometer is one-billionth of a meter; a sheet of paper is about 100,000 nanometers thick.”[244] This is the level of molecules and atoms. In 2007 the Russian government allocated $7.7 billion for the development of nanotechnology over the next eight years. Often called Russia’s most hated man, the survivor of four assassination attempts, former privatization chief Anatoly Chubais, his signature red hair less vivid with age, was chosen to head up the nano project, with the actual work done by the prestigious Kurchatov Institute, which had played a critical role in the development of the Soviet atomic bomb. “Nanotechnology is an activity for which this government will not grudge funding,” said Putin. “The only question is that this work should be well organized and effective, yielding practical results.”[245] There were many possible practical applications, with, as Putin stressed, “super-effective weapons systems”[246] not least among them.

Hopes ran high. “Nanotechnology will be the [foundation] for all institutes in a science-driven economy,”[247] proclaimed Mikhail Kovalchuk, director of the Kurchatov Institute and described by Wired magazine as “expansive to the point of dreaminess.”[248] “Nanotechnology will be the driving force of the Russian economy,” he added, “if it can overcome the legacy of the recent past.”[249] An enormous if.

Like a third-world country leapfrogging from pay phones to cell phones, Russia would, to use a Soviet expression, “overtake and surpass the West.”

The Soviet educational system was a formidable machine that mass-produced engineers and scientists. The hard sciences like physics and mathematics—unlike, say, history and economics—had posed no challenge to Marxist ideology. This is not entirely true either, for some sciences, like cybernetics, were for a time viewed as inherently bourgeois, and under Stalin genetics was effectively hijacked by a charlatan named Lysenko, who preached that acquired characteristics could be inherited, leading the great nuclear physicist Igor Tamm to publicly challenge him by saying, “If that is so, why are women still born virgins?”

The hard sciences also of course had their very practical applications—Sputniks, Kalashnikovs, H-bombs—and were always well supported, the luminaries numbering among the elite. That changed with the fall of the Soviet Union. Science was barely funded by a government that could itself barely make payroll. The brain drain was so severe that it even became a national security issue for the United States, which began paying Russian nuclear scientists to stay at their jobs in their own country and not sell their expertise to rogue nations like Iran and North Korea.

In the new dispensation defined by mere survival at one end and get-rich-quick at the other, science wasn’t sexy and didn’t pay. Wanting to change that, nanotech head Chubais declared at a video conference with eight technical institutes: “As the industry expands to annual sales volumes of 900 billion rubles [$28 billion], which is our target, we will need 150,000 positions to be filled.”[250] One hundred people had graduated with degrees in nanotechnology in the previous year, 2008. Chubais did not mention where the other 149,900 specialists were going to come from. Like Kovalchuk, he too seemed to be suffering from a certain “dreaminess.” Questioned about his progress by Putin in April 2009, he replied:”The prospects make one dizzy!” He did go on to list some areas in which some initial work had been done, satisfying Putin, who agreed that these “technologies have brilliant prospects…. Now, I see you are really making progress.”[251]

Fast-forward to 2013 and a grand scandal à la russe. Of the original $5 billion to $7 billion of state money, $40 million had vanished into shell companies, and another $450 million was spent on a silicon chip factory that proved inoperational. All told, something like $1.5 billion had gone down the rabbit hole. The joke about nanotech was, the more money you invest in it, the smaller the result. Russians who still hated Chubais from the shock-therapy privatization campaign of the early nineties were now calling for his head. Putin defended him, though tepidly, saying ineptitude was not theft, while also hinting darkly that some of Chubais’s aides and employees had been CIA operatives seeking to disrupt scientific progress in Russia.

Rusnano, as the state-controlled organization is officially known, was also hit hard by the sanctions imposed after the annexation of Crimea and the incursion into Ukraine. Alcoa withdrew from a project to produce wear-resistant nano coating for drill pipe to be used in harsh environments like the Arctic’s. That was a double loss for Russia because it hurt not only the nano but also the petro sector, which needs foreign expertise and investment because Russia’s fields are now “browning,” meaning all the easy oil has been taken.

The failure of nanotech, thus far at least, finds its explanation in a saying by former prime minister Viktor Chernomyrdin, known for his savvy malapropisms: “We were hoping for better but got same as always.”[252]

The real fault, however, is Putin’s. In 2004–8, with oil prices at their highest and no real enemy on the horizon, he had a unique opportunity to transform Russia from a petrostate into a sleeker, smarter twenty-first-century economy, one that was knowledge-based. Such an economy would have required more highly educated people and would have created greater wealth among a greater number. And that dynamic combination of conditions—education, wealth, a sense of being a stakeholder—could have been the matrix out of which, by its own mysterious laws of development, a new sense of national identity could have emerged, delivering Russia from the zombie-like state it has been in since the fall of the USSR. Helping to craft a transformation of that magnitude would have meant crafting himself a major place in history, possibly even one alongside the other two great Vladimirs—Grand Prince Vladimir of Kiev, who brought Christianity to the country, and Vladimir Lenin, who brought it Communism. But he didn’t.

For Putin to have risked transforming Russia from a petrostate into a twenty-first-century diversified economy would have created a hazardous transition in which his own grip on power could have been lost. Power would have had to be delegated and decentralized, endangering Putin’s position at the apex of the “power vertical.” His various constituencies from pensioners to power elite must feel secure and must receive their accustomed share of the wealth. Such a system runs on loyalty and corruption. It has been said of Russia that the system is not corrupt but rather corruption is the system. And that is because no one feels a stake in the system, which inspires no sense of solidity, dependability, longevity—it can all be gone in the blink of history’s eye. And Putin’s chance to truly reform his country was also gone in the blink of that same eye.

Oil is termed a wasting asset because, once used, it can never be replaced. Still, some substitutes can be found. It is time that is the ultimate wasting asset. And the one Putin so wrongfully squandered.

7 THE HEART OF THE MATTER: UKRAINE

“You have to understand, George,” said Putin to Bush at the 2008 NATO summit in Bucharest, “Ukraine isn’t even a real country.”[254]

It is not only Putin but millions of other Russians, from workers to intellectuals, who share that sentiment. Discussing Russians and Ukrainians, even former president Mikhail Gorbachev said: “It might not be a scientific fact but we are one people.”[255]

That attitude has two very different aspects—one is a mélange of history, mythology, and emotion, while the other is cool, practical, pure geopolitik.

For generations it was drummed into every Russia schoolchild’s head that Kiev is the mother of Russian cities. In fact, Russia’s two great foundation myths are centered on Kiev and Ukraine. The ancient Chronicles report that around 860 the forever-warring Russian princes sent an envoy to the Vikings with the following plea: “Our land is vast and rich, but there is no order in it. Come and rule over us.”[256] The second sentence—“Come and rule over us”—is disingenuous. In all probability, the Vikings had already conquered the country, and the chronicler was using verbal sleight of hand to turn invasion into invitation.

The other foundation myth concerns the conversion of Grand Prince Vladimir of Kiev to Eastern Orthodox Christianity in 988. Vladimir himself was baptized in Crimea, and more than a thousand years later Putin would use that fact as one of his justifications for the annexation of that territory, calling that land “sacred.”[257] When word went out for the mass baptism of his subjects in Kiev, Vladimir made himself quite clear on the point: “If anyone does not come, let him consider himself my enemy.”[258]

Had it not been for Genghis Khan’s Mongol Horde that overran the lands of the Eastern and Southern Slavs in the early 1200s, it might well have been a Ukrainian leader confiding to President Bush: “You know, George, Russia is not even a real country.”

The some 250 years between Vladimir’s baptism and the violent arrival of the Mongols is claimed by both Ukrainians and Russians as their happy childhood. Subsequent miseries may have cast too bright a light on the whitewashed walls and golden cupolas of ancient Kiev, yet contemporaries describe the city as architecturally splendid. The art of icon painting swiftly reached a high level. Bards with stringed instruments sang epics that still read well on the page. An enlightened system of laws was in effect, with fines playing a greater role than corporal punishment or incarceration. A Kievan princess married King Henry I of France and, proving the only literate one in the family, began signing her name to official documents to which the king would append his royal, analphabetic mark.

The main problems were discord among the princes—no order in the land—and the still only intermittent raids from the horsemen of the Central Asian steppe.

Speaking of Bukhara’s rulers, “they must be very sinful,” said Genghis Khan, “otherwise God would not have sent a punishment like me down upon” them.[259] The Mongols’ usual MO was to offer a city the chance to surrender, and in return for 10 percent of their wealth and their sworn obedience, the people’s lives and their city would be spared. But sometimes the Mongols would simply destroy a city without even first making any such offer so that the terror of that example would spread like prairie fire. That appears to be what happened to Kiev, which was torched and sacked. A victory feast was arranged—still alive, the captured Kievan princes were laid out on the ground, then covered with planks and rugs on top of which banquet tables and benches were placed. The Mongols then held their victory feast to the music of screams and breaking bones.

Much of the surviving population fled north to other cities or into the forests, where the Mongols lost their advantages of horsemanship and marksmanship with their long and excellently engineered bows (even their arrows were notched in such a way as to make it impossible for the enemy to reuse them.)

The Mongols disliked forests and cities. Genghis Khan, who said that he “hated luxury,” thought a Mongol best off either in the saddle, using his stirrups, a Mongol invention, to fire more accurately, or in an encampment of yurts on the open steppe. That is how Crimea was originally settled by Tatars, a tribe allied with the Mongols. The Russians preferred the term Tatar, so the years of Mongol domination are called the “Tatar yoke.” Under Stalin the entire Tatar population of the Crimea was exiled en masse to Siberia for supposed treason, and it took the Crimean Tatars the better part of twenty years to get back home. They are now suffering under Russian rule in annexed Crimea and have been involved in partisan-like tactics, e.g., the destruction of four electricity pylons in late November 2015 that put the entire Crimea in the dark. In Russia all stories are old stories, the problem is they won’t stay old.

A mystic who worshipped the Eternal Blue Sky, Genghis Khan was quite tolerant when it came to local religions, having none of the iconoclasm of the Kievans themselves. He was known as much for his tolerance as for his savagery. Gibbon, in his The History of the Decline and Fall of the Roman Empire, said of Genghis Khan’s tolerance: “The Catholic inquisitors of Europe who defended nonsense by cruelty, might have been confounded by the example of a barbarian, who anticipated the lessons of philosophy and established by his laws a system of pure theism and perfect toleration.”[260]

That “perfect toleration” meant that the Orthodox Church now began to play a role as the keeper of historical memory, especially in the Chronicles compiled by monks, and as a haven of uplifting beauty amid the scorched earth. In Soviet times the Russian Orthodox Church would again offer a sanctuary of beauty amid the brutalist gray-cement architecture of advanced socialism. And it is now one of the pillars that supports the House of Putin.

The Mongols dominated Russia for something like two and a half centuries (1240–1500) but continued to pose a serious danger well after that. St. Basil’s Cathedral in Red Square, the very symbol of Russia, was built in the 1550s by Tsar Ivan the Terrible to commemorate his victory over the Tatar stronghold of Kazan in 1552.

Apart from the words for money and customs control, the Mongols left little trace in Russia’s culture or language, but they changed its history and mentality. The force of the Mongol invasion shifted the center of Slav civilization from south to north. Eventually Moscow, until those times a tiny settlement of no importance whatsoever on the bend of a muddy river, emerged as the new power center under the various Ivans of the sixteenth century, the fourth of whom, known as the Terrible, was also the first to assume the title of tsar. The south languished over the centuries to such an extent that when Catherine the Great entered on her grand tour of her newly acquired lands in Ukraine and Crimea in the late eighteenth century she was simply shocked by Kiev, calling it “abominable.”[261]

Moscow and Muscovite Russia were the historical success stories, of that there can be no doubt. The southern lands were called ukrainia, meaning “borderlands.” The Mongol domination taught Russia the lesson that Putin summed up laconically as “the weak get beaten.” The state must be strong and centralized; top-down one-man rule was the most effective model. The state alone could provide security and order. The state was a fortress, a kremlin, to which people fled in time of attack. And if attack came once, it could come again. From any direction, any nation—humanistic France, scientific Germany. A case could be made that after the Mongol invasion and rule all Russian politics were post-traumatic.

The Mongols left the Russians with a culture of invasion. The driving force of Russian civilization became the avoidance of and preparation for the next invasion. This has induced suspicion and conservatism, xenophobia, paranoia, and an imperialism that seeks to buffer the heartland with as much territory as possible.

In an invasion-minded culture special attention is paid to the enemy within, the traitors who would open the gates to the enemy. The free city-states like Novgorod that resisted Moscow’s centralizing will were subjected to intense, focused cruelty. Ivan the Terrible created the oprichniki: black-clad horsemen answerable only to the tsar, their symbols the dog’s head that sniffs out treason and the broom that sweeps it away. They were the world’s first secret police, the archetype and granddaddy of them all, including the KGB that Vladimir Putin so longed to join in his youth.

Russia became imperialistic as a defense against invasion, not that any nation worried overmuch about justifying its land grabs back then. Harried by Swedes, Lithuanians, and Poles from the north and west, steppe tribes and Turks from the south and east, Russians considered every acre of land won not only possession but protection. Russia became a nation-state and an empire at the same time; imperialism was thus fused with its very sense of identity.

Inevitably, there would be some people who saw no place for themselves in the new Russia forming around Moscow. Some of the more adventurous sorts joined the expeditions to the east, Siberia, where the natives were few and far between and easy to subdue. But most of the freebooters and free spirits who rejected Kremlin rule and, later, the imposition of serfdom headed south to the wide-open spaces of the steppe, the grasslands they called the “wild fields.” The weather was better, the black earth richer, and Moscow’s arm could not yet reach that far. People lived a life something like that of the early Romans, every man a farmer and a soldier. They won the respect of the fierce Turkic-speaking nomadic tribes they encountered in battle, who called these transplanted northerners “free warriors,” Kazaks (Cossacks), a name they took on for themselves. A heterogeneous bunch, their numbers included “escaped serfs, indebted nobles, defrocked priests, pioneers, fortune-hunters, fugitives of various sorts.”[262]

By the mid-1500s, the time of Ivan the Terrible, Mongols were no longer the problem. Poland was the problem. Having combined with the then good-sized Lithuania to form a commonwealth that stretched from the Baltic to the Black Sea, Poland routinely trounced Russia and put Moscow to the torch on more than one occasion.

Poland was part of the Catholic West, even calling itself antemurale Christianitatis, the outer wall of Christendom, protecting Europe from savages like Mongols and Russians. Poland went through the developmental stages of European civilization, participating vigorously in the Renaissance, the Reformation, the Counter-Reformation, and the Enlightenment. The Mongol invasion not only had cut Russia in two, north and south, but had cut it off from Europe and its great fugue of development. Leonardo da Vinci had lived and died before Ivan the Terrible was even born.

Polish domination over much of Ukraine had deleterious effects. The Ukrainian elite adopted “the faith, language and manners of the ruling Poles,”[263] Ukrainian becoming the “language of serfs and servants.”[264]

But the Cossacks rebelled against Polish rule, rising up periodically against the Poles and the Jewish middlemen who were used by the ruling classes to collect rents and debts, thereby deflecting anger onto them. The greatest Cossack rebellion of all, the 1648 uprising, was led by Hetman (Chieftain) Bohdan Khmelnitsky, who slaughtered Jews and Poles in great numbers, making him a heroic freedom fighter to this day in Ukraine, while for Jews he remains a figure of biblical evil like Haman.

A few years into the uprising Khmelnitsky was deserted by his Tatar allies (steppe politics also made for strange bedfellows) and faced a stark choice: defeat by the Poles or alliance with Muscovite Russia.

In January 1654, in a small town near Kiev called Pereyaslav, Hetman Bohdan Khmelnitsky formally swore Ukraine’s allegiance and union with Moscow. For many years the Ukrainian national anthem asked:

Except for the briefest of intervals in the twentieth century during times of war and upheaval, Ukraine was not so much ruled by Russia as it had become an integral part of it. It was “to Russians what Ireland and Scotland were to the English—not an imperial possession, like Canada or India, but part of the irreducible centre, home.”[266]

Ukraine was a county, not a country. The Ukrainian language almost died out like Gaelic. In any case, the Russians considered it only an amusing dialect spoken only by yokels. A classic quip has it that a language is a dialect with an army and a navy. But for the eastern Slavs, for whom language and literature assumed an especial importance, that quip might be amended to read: A language is a dialect with an army, a navy, and a great poet. Russia, Poland, and Ukraine all got their great national poet at roughly the same time: Russia’s Alexander Pushkin (1799–1837), Poland’s Adam Mickiewicz (1798–1855), and Ukraine’s Taras Shevchenko (1814–61).

Shevchenko, who would turn the patois of servant and serf into poetry, was himself born a serf and soon orphaned. He seemed fated to a life of dreary and anonymous labor. But he had a passion for drawing and would exercise it with whatever was at hand, a lump of coal, a stick of chalk. Taken to St. Petersburg, he drew copies of the statues in the Summer Garden. His talents were noticed and encouraged by other artists and writers, Ukrainian and Russian alike. They took up a collection, and in 1838, when he was twenty-four, they bought his freedom for the sum of 2,500 rubles. Shevchenko was delighted, even giddy, with his new freedom, cutting a chic swath in St. Petersburg nightlife in his new coat, for which he had paid 100 rubles, and thus we know that the exact worth of the freedom of a human being in the Russia of that time was twenty-five coats.

Now he devoted more time to his poetry, “an odd mixture of pastoralism, xenophobia and self-hatred. His themes are the beauty of Ukraine’s landscape, her lost Cossack greatness and her shame in laboring under the Russian and Polish yokes. Though Russians, Poles (and, embarrassingly, Jews) all get short shrift, most of his bile is directed at the treachery and complacency of the Ukrainians themselves.”[267]

Success and excitement were immediate. The Ukrainians had their poet.

Shevchenko now moved between St. Petersburg and Kiev, where in 1846 he joined an underground discussion group that espoused the abolition of serfdom and a democratic confederation of Slavs headed by Ukraine. As was nearly always the case in both Tsarist and Soviet times, such groups were infiltrated and betrayed by an informer. Shevchenko was arrested in 1847 and dispatched to St. Petersburg. There, in a rare honor, he was interrogated by the head of the secret police, Count Alexei Orlov, who concluded: “Shevchenko has acquired among his friends the reputation of a brilliant Ukrainian writer, and so his poems are doubly harmful and dangerous. His favorite poems could be disseminated in Ukraine, inducing thought about the alleged happy times of the Hetman era, the exigency of a return to those times, and the possibility of Ukraine’s existence as a separate state.”[268]

Socially, creatively, amorously, Shevchenko had enjoyed life to the fullest in his nine years of freedom between his liberation and his arrest. He would spend the next ten years in exile near the border with Kazakhstan. In his own hand Tsar Nicholas I, so absolute a monarch that he considered criticism sedition and praise impertinence, added a note to the paperwork on the poet’s exile: “Under the strictest surveillance, prohibited from writing or painting.”[269]

But as Tsar Nicholas himself had once exclaimed: “I don’t rule Russia, ten thousand clerks do!”[270] And the local clerks and officials in Shevchenko’s place of exile on the Ural River were only too glad to have their provincial boredom alleviated by welcoming a celebrity into their midst. Shevchenko painted and wrote without much intrusion at all, and was able to live in private quarters and wear civilian clothes.

After ten years of exile, Shevchenko was freed by the new, more liberal Tsar Alexander II on condition that he register with the police and “not misuse his talent.”[271] With his typically Ukrainian walrus mustache and Astrakhan hat, Shevchenko once again became a fixture on the St. Petersburg literary scene, appearing at readings with luminaries like Dostoevsky and Turgenev.

In his most famous poem, “Testament,” he asks to be buried on the steppe but declares that he will not leave his grave for heaven and will “know nothing of God” until Ukraine has risen up against the tyrants, watered its rivers with their blood, and finally joined “the family of the free.”[272]

On March 10, 1861, he died after a night of caroling and carousing at the age of forty-seven.

Shevchenko’s life was a drama of freedom gained and freedom lost, then freedom gained again, that would become every bit as iconic to his fellow countrymen as his work itself. In his youth he had felt that both he and Ukraine were doubly unfree, as serfs and as subjects of a foreign master, the Moskali, as the Russians were called with hatred and disdain. All the serfs of the Russian empire were freed around the time of Shevchenko’s death in 1861 (two years before the slaves in America), but that did not change Ukraine’s subject status one whit. The dream would remain national liberation. Freedom, however, proved as elusive for Ukraine as it had for Shevchenko.

In the four years between the fall of tsarism and the establishment of Communist rule in 1921, Ukraine made three failed attempts at securing its independence. After the last tsar, Nicholas II, abdicated in February 1917, Ukrainians by the tens of thousands took to the streets holding banners of blue and yellow, the national colors, and pictures of Shevchenko. An independent government was formed and lasted a year until internal squabbling and Red artillery put an end to it. A second attempt was made in the western city of Lviv, whose fortunes had changed so often that it had four names—Lviv (Ukrainian), Lvov (Russian), Lwow (Polish), and Lemberg (German)—causing the locals to say: “We don’t travel to Europe. Europe travels to us!” The attempt at forming an independent government in Lviv failed in much less time, falling victim to a shortage of cohesion and an excess of enemies. Guerrillas would, however, fight on for years.

Out of their diplomatic depth, the Ukrainians got very short shrift at the peace talks in Versailles, unlike Poland, which was better equipped diplomatically, more European, and viewed as a better buffer against any new dangers from the east. So newly independent Poland got a part of western Ukraine, and the rest of the country would in time fall under Moscow’s control and become a Soviet republic. It all left a very bitter taste.

But no doubt Ukraine would have been more than content with the defeats and indignities it suffered in those years if it had even a moment’s foretaste of the nightmares soon to come.

The Soviet twenties were relatively tranquil. Lenin allowed the return of small enterprise, which brought goods back to the shops and added some color and variety to daily life. The arts flourished, there being too many other immediate problems for the authorities to deal with. Meanwhile, practically unnoticed, described by some later as a “gray blur,”[273] Joseph Stalin, the former strike organizer of the Baku oil fields, was gradually rising through the party’s ranks, taking on the tedious tasks that the other, more romantic revolutionaries felt were beneath them but which allowed him to grant favors and build constituencies. Lenin died in 1924, possibly nudged along by Stalin, who was in charge of his medical care. By 1929 Stalin’s archrival for power, Leon Trotsky, had been exiled from the country. The shops were closed, the artists silenced, or worse, instructed.

Officially, the Soviet Union was the land of the workers and the peasants as symbolized by the hammer and sickle. The truth, however, was that while the workers tended to be progressive, “politically conscious,” to use a term of the time, the peasants tended to be recalcitrant and reactionary, especially the wealthier ones known as “kulaks,” meaning “fists.” The Russian peasants were bad enough, but the Ukrainians were even worse. Not only were they greedy, benighted, and obstinate, they were nationalistic as well, preferring an independent Ukraine to one still dominated after centuries by Moscow and the Moskali.

Stalin and the Stalinists saw themselves as social engineers. A class that obstructed progress was ultimately no different from an outcropping that impeded the flow of a river needed for hydroelectric power. The solution was the same in both cases: remove the obstacle.

The Russian peasants were forced to collectivize in the early thirties, moving from small family plots to large collective or state-run agricultural enterprises. A special solution was created for the peasants of Ukraine—artificial famine, known in Ukrainian as the Holodomor, “murder by hunger.” The peasants’ food stocks were confiscated, roads were blocked at the beginning of winter, and in the spring the bodies were simply collected, with no damage done to property.

Because of the dishonesty of Soviet statistics and the execution of many statisticians in Stalin’s time, we don’t have a very exact number of how many Ukrainians perished during the Holodomor. As an example of shifting Soviet statistics, until the time of Gorbachev the figure for Soviet war dead was twenty million, a number that had acquired the tragic charisma of the six million Jews. Suddenly, and without even much fanfare, the official number was changed to twenty-six million. Where had that New York’s worth of the dead been all those years?

Some of the same holds true for the Holodomor as well. Making use of census data and the statistics that weren’t prohibited, like the production of various shoe sizes, scholars have constructed a general numerical picture of five million victims in Ukraine. Whatever the exact number, there is no doubt that the Holodomor qualifies as one of the great crimes of the twentieth century, that is to say of all history. The fact that this crime is largely unknown in the West and the wider world makes the pain of its memory all the keener.

In June 1941, some ten years after the millions of Ukrainians were starved to death, Hitler’s armies attacked the USSR with a three-pronged blitzkrieg strategy of taking Leningrad, Moscow, and Kiev. But Leningrad held off the invaders in what would become a nine-hundred-day siege; Moscow, reinforced by an early winter and Siberian troops, halted the onslaught on the outskirts of the city; Kiev fell. Many Ukrainians went over to the German side on the assumption, reasonable but wrong, that nothing could be worse than Stalin.

The Germans, however, failed to capitalize on Ukrainian sympathy. Erich Koch, head of the Reichskommissariat Ukraine, considered Ukrainians untermenschen, “niggers” fit only for “vodka and the whip.”[274]

For all the bad blood between Moscow and Kiev, less than ten years after the end of the war, to mark the three hundredth anniversary of the union of Ukraine and Russia, Nikita Khrushchev made Ukraine the magnificent and meaningless present of Crimea. The gift had no more significance than taking money from one pant pocket and putting it in another. Ukraine’s “ownership” was largely nominal. It was all one Soviet Union ruled by Moscow, and that Soviet Union would last forever, or at least until the attainment of the ultimate goal of Marxism—the withering away of the state. Still, just to be on the safe side, the city of Sevastopol, where the Black Sea Fleet was stationed, would remain under control of the city of Moscow. The only problem, of course, was that the state did in fact wither away, not in some unimaginably distant future in which people had evolved enough to live without laws and police, but a mere thirty-seven years later, and it didn’t so much wither away as suddenly collapse like a building stripped from within by thieves.

On December 1, 1991, more than 90 percent of Ukraine voted for independence from what one legislator called “probably the worst empire in the history of the world,”[275] though one might ask how bad an empire could be if you could vote your way out of it.

Impoverished, corrupt, ill-prepared for the real rigors of statehood, Ukraine was now, whether Putin or any of his ilk liked it or not, a real country, a state. Not only that, with its some 4,500 nuclear missiles, Ukraine had suddenly become the world’s third-largest nuclear power, in a league with Russia and the United States, far ahead of China, England, and France. Ukraine, however, did not possess operational control over the missiles—the launch codes remained in Moscow. Still, the nuclear warheads or nuclear material could be reconfigured into other sorts of weapons, and if nuclear material fell into the wrong hands there could be serious trouble, as would become all too apparent in November 1995, when Chechen rebels planted cesium-137 in a large Moscow park, then alerted the media.

According to the 1994 Budapest Memorandum, Ukraine would surrender its nuclear weapons to Russia for dismantlement. In turn, Russia, the United States, and the United Kingdom pledged to “respect Ukrainian independence and sovereignty within its existing borders” and to “refrain from the threat or use of force against Ukraine.” The memorandum was, however, not binding like a treaty, as subsequent events would amply demonstrate.

At first Ukraine seemed to have a good chance. It had coal, iron, and the fabled “black earth.” The people had the positive, life-affirming energy of the sunny south, as John Steinbeck noted when traveling through back in 1948: “The people in Kiev did not seem to have the dead weariness of the Moscow people. They did not slouch when they walked, their shoulders were back, and they laughed in the street.”[276]

But things went bad soon enough. Though the economy righted itself after a long, nasty bout of inflation and a 60 percent drop in GDP in the nineties, Ukraine was still failing at its two principal tasks—state-building and nation-building. The east and west of the country, which had been in agreement about seceding from the USSR, soon found themselves increasingly at odds, splitting along the fault lines of cultural allegiance either to Moscow or toward Kiev, meaning Europe and the West. With a little luck Ukraine might have developed into something like Bulgaria, a largely invisible European country, a destination for adventurous vacationers. There were, however, forces afoot that would make Ukraine the most important country in Europe.

Chief among them was what might be called “Gorby and the angry inch.” Though its implications are blurred with denial and duplicity, there is a generally agreed upon version of the event itself. In a 1990 conversation between Soviet leader Gorbachev and American secretary of state James Baker, Baker promised Gorbachev that if he pulled Soviet troops out of East Germany and permitted the peaceful reunion of the two Germanys, NATO, in return, would not move “one inch east.”[277]

NATO, of course, moved not inches but hundreds of miles east. This was effectuated by granting membership to three former Soviet republics—Estonia, Latvia, and Lithuania—and seven former Eastern Bloc countries—Poland, Hungary, the Czech Republic, Romania, Bulgaria, Slovakia, and Slovenia between 1999 and 2004. George Kennan, U.S. ambassador to the USSR and author of the containment doctrine that guided U.S. policy throughout the Cold War, called NATO expansion “the most fateful error of American policy in the post-Cold-War era” and foresaw its leading to a resurgence of “nationalistic, anti-Western and militaristic tendencies in Russian opinion.”[278]

But of course there were other factors and forces here besides NATO expansionism. The former Soviet Bloc countries were only too happy to take cover behind NATO’s shield. Having suffered centuries of Moscow’s domination, their desire for freedom and security was only natural. And among those nations there was also a strong sense that the democratic Russia of the nineties was a passing illusion, or as Estonia’s president Lennart Meri, saw it, Russia was a malignancy in remission: the Yeltsin era was at best a fleeting opportunity to be seized before Russia relapsed into authoritarianism at home and expansionism abroad.

What gave those formerly Warsaw Pact nations their sense of security was Article 5 of the NATO charter, which states: “The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.”

This meant that the United States and Europe were in the rather odd position of having to risk nuclear armageddon to defend Slovenia.

And of course none of this went over well in Moscow, where Baker’s promise had been taken seriously. The obvious rejoinder here is: Next time, get it in writing, pal, or perhaps Samuel Goldwyn’s immortal line that a “verbal agreement isn’t worth the paper it’s written on.”[279]

But the obvious rejoinder from Gorbachev and company could be: We were dismantling a nuclear empire and facing one crisis after the other, and did not have the time for all the niceties. Not only that—one’s word counts for a great deal in any dealings with Russians, and true partners don’t need everything on paper. As Gorbachev himself put it in a recent interview: “The Americans promised that NATO wouldn’t move beyond the boundaries of Germany after the Cold War but now half of central and eastern Europe are members, so what happened to their promises. It shows they cannot be trusted.”[280]

In the view from the Kremlin, Russia had essentially been outflanked from the Baltic to the Black Sea by March 2004, when seven former Soviet Bloc nations were admitted into NATO. To lock that ring tight only one more country was needed: Ukraine. So when the Orange Revolution broke out in November 2004 in protest against the rigged presidential elections, Putin could not fail to notice that it came on the heels of the latest round of NATO recruitment in March. Apart from the geopolitical dangers Ukraine’s Orange Revolution would subject Russia to, there was also the danger of its spreading across the border, a bad example being infectious, as the Russian saying goes.

Ukraine’s elections were reheld and a liberal president was elected. His administration, would, however, prove both so corrupt and inept, so riddled with factious infighting, that by the time the next elections were held in 2010, Viktor Yanukovich, who had won the rigged elections and lost the fair, would now, in an irony of democracy, be fairly elected to the presidency in what would prove a disastrous choice.

Ukraine was a calamity waiting to happen. It had had the same number of post-Soviet years as, say, its neighbor Poland, which was thriving, whereas Ukraine was almost a failed state. The country’s east and west abraded against each other like tectonic plates. As usual, there was plenty of wisdom after the fact, with Gorbachev, for example, declaring: “Ukraine is in many ways due to the mistakes of the breakup of the Soviet Union. Once they decided to dissolve the union, they should have agreed on territories and boundaries.”[281] He was referring to what Solzhenitsyn had termed the “false Leninist borders of Ukraine,”[282] although they could in addition be termed “false Khrushchevian borders,” for it was he who so cavalierly made Ukraine a present of Crimea.

Russia’s street politicians saw the split coming in Ukraine. Asked in 2008, “If Ukraine were to move into NATO, what do you think the Russian reaction would be?”[283] Aleksandr Dugin, the founder of the International Eurasian Movement, replied: “I think that the Russian reaction would be to support an uprising in the Eastern parts and Crimea and I could not exclude the entrance of armed forces there.” A Moscow Times article of April 8, 2008, “Putin Hints at Splitting Up Ukraine,” reported that at the same NATO conference where Putin remarked to Bush that Ukraine was not a real country, Putin also “threatened to encourage the secession of the Black Sea peninsula of Crimea and eastern Ukraine, where anti-NATO and pro-Moscow sentiment is strong.”[284]

Even the National Geographic magazine, whose prose is usually as anodyne as its pictures are vivid, entitled an April 2011 article on Crimea “A Jewel in Two Crowns: Russia’s Paradise Lost Belongs to Ukraine—and That’s Where the Trouble Begins.”[285]

All the same, Putin himself was surprised by events in 2014. When the fissures began splitting the surface of Ukraine, he was busy with the concluding ceremonies of the Winter Olympic Games in Sochi, which had been a resounding success, though some opposition figures like Boris Nemtsov would take Putin to task for the corruption involved in, at $50 billion, the most expensive Games in history. Still, there had been no problems with Chechen terrorists or gay demonstrations as feared, and the Games had accomplished what they had been designed to do—remind the world that Russia was resurgent, a major player again.

What really surprised Putin was how rapidly and radically events developed in Ukraine. One moment he is offering the lordly sum of $15 billion as a loan to prop up President Yanukovich and to keep the country from sliding into the Western camp; the next moment Putin is offering that same president refuge in Russia as Yanukovich flees his country, leaving behind a trail of carnage and vulgar luxury. Of course, Putin had designs on Crimea and eastern Ukraine, and no doubt his planners had worked out various scenarios to cover the foreseeable possibilities, but it is also clear that the events of late February were neither at the time nor in the manner of his choosing.

There is a point where geopolitics becomes existential, Darwinian, and, for Putin, the situation in Ukraine was one. Forget all the icons and cupolas and Cossacks—this was a matter of life and death. No Russian leader could allow his country to be outflanked from the Baltic to the Black Sea. He would be seen as weak. And Putin knows what happens to the weak.

The sage of Cambridge Tip O’Neill’s remark that all politics is local even applies to Moscow, where Putin’s principal role is Lion Tamer of the Kremlin. Though he has to a large extent defanged and declawed the oligarchs, who make public and servile protestations of their loyalty, that does not mean that they cannot harbor grievances or hatch intrigues. He must also balance the needs and ambitions of the security and military leaders, not to mention those of the gas and oil industry on which the country’s economy depends.

Putin, a paranoid if not by nature then by profession, found himself being outflanked by a hostile military alliance that also manifestly seeks to drastically reduce his economic lifeline of gas and oil, all of which puts him in supreme jeopardy in the infighting of the Kremlin. To have failed to understand this was a cardinal sin on the part of the West. A February 2, 2015, New York Times article entitled “Britain and Europe Sleepwalked into Ukraine Crisis Report Says” states: “Britain and the European Union made a ‘catastrophic misreading’ of President Vladimir V. Putin and ‘sleepwalked’ into the Ukraine crisis, treating it as a trade issue rather than as a delicate foreign-policy challenge, British lawmakers said … in a scathing report…. The European Union had failed to appreciate the ‘exceptional nature’ of Ukraine.”[286]

The West was surprised not only by the importance of Ukraine to Russia, but by the violence of the Russian response. So intent on building a new world order based on the rule of law, the West somehow missed the obvious fact that Russia was still a country where the rule of law counted for very little, another way of saying that the law of the jungle prevailed.

When discussing their country’s behavior, Russians will often say with a wistful, self-mocking irony: “Whereas in civilized countries…,” meaning as opposed to in Russia. Murder is an instrument of politics by other means in Putin’s Russia. The KGB renegade Alexander Litvinenko is murdered with radioactive polonium in London, the harshly critical journalist Anna Politkovskaya is gunned down on Putin’s birthday while returning home with her groceries, the lawyer Sergei Magnitsky is put to death by abuse and neglect in prison after purportedly committing the very crimes he attempted to expose, and the opposition leader Boris Nemtsov is shot dead in sight of the Kremlin while walking home from a date. Putin’s critics are frequently killed, his supporters never.

Until the Ukrainian crisis the civilized West and Darwinian Russia were able to coexist in an uneasy equilibrium of interests. Russia’s authoritarianism lite kept any of the various assassinations and injustices from tipping the balance to the breaking point. Business was done. Russian gas and oil were bought, the French contracted to build Mistral assault carriers for Russia. There were independent newspapers, a radio station, Ekho Moskvy (Moscow Echo), and a web TV station, Dozhd (Rain). And Russians had the right that human-rights champion Andrei Sakharov considered the most important of them all—the right to leave the country. Some suggested that Putin’s new, modern, twenty-first-century authoritarianism would, unlike the Soviet Union, much prefer to be rid of anyone who was at odds with the system. All the same, it remained possible to believe that Russia just might be zigzagging its own way to its own version of a free society, as George Kennan had predicted.

Still, Putin had long been suspicious of the West’s intentions toward Ukraine. He knew full well that if he were in charge of Western intelligence he would use all those pleasant and neutral-sounding NGOs to gradually draw Ukraine into the Western camp, and the EU. Membership in NATO could come later. And even without any such malign intent it is still all part of one process. As Fiona Hill, former national intelligence officer for Russia and Eurasia, put it: “The E.U. operates in a completely different framework, when you pool sovereignty and have the same temperature gauges, the same railway gauges and do lots of other boring things that have a profound impact. Once you do this you don’t come back. Russia looked at places like Estonia and Poland and said we can’t let this happen to Ukraine.”[287]

The fog of war has been particularly thick in Ukraine, and truth as always was the first casualty—it was in fact assassinated. Putin has maintained deniability from the start, employing tricks and tactics that have been called “hybrid warfare,” meaning a newfangled combination of proxies, volunteers, propaganda, and lies. But it’s nothing so new either. In 1921 the British foreign secretary and “arch-Russophobe”[288] Lord Curzon wrote to Georgy Chicherin, the Soviet commissar for foreign affairs: “When the Russian government desire to take some action more than usually repugnant to normal international law and comity, they ordinarily erect some ostensibly independent authority to take action on their behalf…. The process is familiar, and has ceased to beguile.”[289]

Except for its command of English, that letter could have been written today.

Murky as the situation remains, a few things are clear. First, the Crimea will remain part of Russia. The leading opposition figure, the valiant anticorruption muckraker and often-jailed Alexei Navalny, who took 27 percent in his 2013 run for mayor of Moscow, has said he wouldn’t return Crimea if he became president: “Despite the fact that Crimea was seized with egregious violations of all international regulations, the reality is that Crimea is part of Russia” and “will remain part of Russia and will never again in the foreseeable future become part of Ukraine.”[290] Like Putin and Gorbachev, Navalny doesn’t “see any kind of difference at all between Russians and Ukrainians,” a sentiment, that, tellingly, is almost never voiced by Ukrainians.

If the leader of the government and the leader of the opposition are agreed on the status of Crimea, we can be sure that any negotiations contesting Crimea’s status will be a nonstarter. The West will ultimately make a sharper distinction between Crimea and east Ukraine, continuing not to recognize Crimea’s annexation and to apply sanctions to companies in Crimea or doing business with it. If, however, Russia complies sufficiently with the Minsk agreements, and proves a compellingly necessary partner in international affairs like the fight against ISIS, the sanctions imposed in connection with Ukraine will gradually be lifted. Though like China no fan of “splittism,” Russia was glad to see cracks appear in Western unity with the exit of Britain from the European Union. The Russians can ask why the UK’s referendum was legitimate and Crimea’s was not.

Meanwhile the sanctions are still in force. Those sanctions have caused Russia genuine pain, hurting Russian businesses big and small, delaying exploration for oil in the Arctic, pushing millions into poverty, depriving the better-off of their European vacations and French cheeses. Though they offer no immediate emotional satisfaction, sanctions do work, as shown by Iran coming to the negotiating table in 2015. Still, it shouldn’t be forgotten that the sanctions cut both ways. The French had to return the 1.2 billion euros to the Russians for the Mistral assault carriers and also had to pay out some 2.5 million euros a month for their maintenance. By 2016 the Italians had lost upward of $10 billion because of the sanctions.

Russia will be satisfied with some low level of continued turmoil in eastern Ukraine because NATO will not offer membership to countries with frozen conflicts and border disputes. Ideally for Putin the rebels will bite off a bit more territory to create a land bridge to Crimea, which can now only be supplied by sea or air without risk of obstruction. A bridge to link the Russian mainland and Crimea is under discussion with China as the probable contractor, but it will take years and cost billions, a cost that may be offset by the gas and oil deposits off the Crimean shore.

The lasting consequence of the Ukrainian adventure was the revelation that Russia is a Darwinian society that will not play by the West’s rules, because, by its very nature, it cannot.

Breaking with the West over Ukraine, Russia veered in two directions—north to the Arctic and east to China.