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The Russian president
says a military operation

is now underway in eastern Ukraine.

I was in Moscow
when the war broke out,

or when Russia invaded,
on a reporting trip.

I told myself,
"Okay, this is fascism playing out."

I think there was a sense of total shock,

which not just I had.

The city, Moscow, felt.

Then in the evening
was the first protest.

People were just walking on the streets.

The police was grabbing them,
dealing with them very harshly.

Putin is cracking down at home

as he's facing
more pushback internationally.

These were Moscow liberals.
This was the opposition.

They were incredibly brave,

and people continued to protest
until they really couldn't.

There were calls
from two different sources

that special forces
were coming to the newsroom.

"No to war."

Those were the final words of the final
broadcast of Russia's TV Rain.

On Thursday, the news outlet shut down

due to the government's attack
on free press in the country.

It was clear for me that that was the end.

We lost the future.

The future was over.

For us, for the Russian people
I belong to,

we lived for decades

dreaming of some better life.

And it was all over that day.

No to war! No to war!

The Soviet red flag
with its hammer and sickle

was lowered for the last time
over the Kremlin tonight.

In its place went up the white, blue,
and red flag of the Russian Republic.

I think it's very hard
for us to remember now

what an immense task Russia was faced with

after the fall of the Soviet Union.

You don't just become
a democracy like that.

Yeltsin's trying to make
the laws of supply and demand work,

but there's almost unlimited demand,
and virtually no supply.

The predictable result is economic chaos.

All kinds of processes were carried out
that were a disaster.

Most notoriously,
the auctioning off of state enterprises.

So here you have a country that,
yes, it's badly disorganized,

but there's immense resources.

Timber, oil, gas,

all kinds of minerals, et cetera.

So they organized these auctions
for these giant state enterprises.

The auctions were carried out
in a sleazy way,

and people that were close to power

were able to get,
to put it mildly, insider prices.

So something worth a billion dollars
was bought for $50 million.

And the next thing you know,
there was a class of people

that we now know as the oligarchs.

Many of them
had backgrounds among the elite

of the Soviet system.

They were people who had access,
perhaps, to some initial capital.

They were traders who then bought banks
or, you know, created new institutions

out of the opportunities
left behind by the old Soviet system.

What ended up happening
was that a bunch of oligarchs

who were pretty much predetermined
and chosen by Yeltsin,

ended up with more than 40%
of the GDP of Russia.

Mikhail Khodorkovsky
was one of the oligarchs.

Probably in my mind, at the time,
one of the most rapacious oligarchs.

I think he was smarter
than the other ones.

He really accumulated
anything and everything he could.

The Soviet economy
was extremely monopolized.

That is, every industry effectively
had one overarching corporation

called the ministry of so-and-so,

but they did not have
their own supply system.

Nor did they have
their own distribution systems.

Add to that
difficulties of working

with outdated equipment

and the other legacies
of seven decades of communism.

So one day,
when they were told, "You're on your own,"

the entire management system fell apart.

And of course, there were plenty
of young and enterprising people like me

who could earn money on this

and take part in the purchase
of industrial enterprises.

BANK MENATEP

And we made a lot of money.

Mikhail Khodorkovsky was able to parlay

an initial amount of backing
from institutions

into, uh, one of the first new banks
of the post-Soviet era,

and from there, to ultimately become
the richest man in the new Russia.

In the mid to late 1990s,

Khodorkovsky probably
was worth $15 billion.

Seven or eight of these big bankers,
we call them oligarchs.

Maybe that's too nice a word.
Robber barons.

They're buying up newspapers,
airlines, oil companies.

It's everybody for themselves.

It's a winner-take-all economy,

and the rules don't exist
except the rule of the gun

and the rule of the use of force.

These people lived
in the most lavish villas and mansions,

and floated around on the biggest yachts,
and flew around on private jets.

Well, someone had to become rich.

We rebuilt this living network
of the country's economy.

In six to seven years,
we did manage to rebuild it.

And yet those six years had to be lived.

The people had to live through
those six years.

You can't feed them in six years.

And that was a disaster, a real disaster.

Because the system
was set up without a rule of law,

without proper institutions,

you ended up in a place where capitalism
was actually much worse than communism.

Bread prices shot up 400%,

from 60 kopeks
to more than two-and-a-half rubles a kilo.

Gasoline prices also quadrupled.

The government didn't have
any money. There was no tax revenue.

And since most people worked
for different government organizations,

most people weren't paid their salaries.

"I simply can't survive
on a pension," declared one man.

"It's daylight robbery, stealing from
the honest," complained another.

"A kilo of cheese now costs me
twice my monthly pension."

The average Russian
was dying at the age of 57

because they didn't have
any medicine in the hospitals.

There was no teachers in the schools.

Professors had to become taxi drivers,

and the art museums
were selling the art right off the walls

just to survive.

From Hollywood,
where dreams do come true,

it's the return of the one and only
Supermarket Sweep!

And you're watching on TV,
not the old Soviet programs,

but huge amounts of Western television.

This new inequality was a disaster.

And that infuriated a lot of people,
and it undermined the status of democracy,

so that democracy which was,
in Russian is demokratiya,

was now known as der'mokratiya.

"Shit-ocracy."

We should have invested heavily

in what was a very difficult
economic transformation.

Going from communism to capitalism
is costly and hard,

and we took our eye off the ball.

So in 1992,
we had an election and the incumbent,

President George H.W. Bush,

was criticized by the Democratic Party
as being too internationalist,

too engaged in foreign affairs.

I think it is important
that the United States stay in Europe,

and continue to guarantee the peace.

We simply cannot pull back.

And there was this rather
obscure governor from Arkansas,

who ran on the slogan,
"It's the economy, stupid."

We have to face that, in this world,

economic security
is a whole lot of national security.

Our dollar's at an all-time low
against some foreign currencies.

We're weak in the world. We must rebuild
America's strength at home.

Democrats really
skillfully used in that 1992 campaign

the promise and possibility
of this post-Cold War era

as a way to reset American politics,

and Bill Clinton
was going to be the first president

of the post-Cold War era.

As a result of 1992,
this pivotal year in Russia,

we were disengaged,

and I think that was
a real lost opportunity.

We should have gone all in.

A lot of government officials
in Europe and in the United States

hugely underestimated the magnitude
of the humiliation of the Russian people

after the collapse of the Soviet Union.

This is a country
that went from being

one of the world's two superpowers,

to really not knowing what its status
and place in the world were.

There was a moment
in the Yeltsin years

that always stuck with me,

when they couldn't even
come to a consensus

on what the lyrics should be
for a new Russian national anthem

to take the place
of the old Soviet national anthem.

And so when their athletes
won medals at the Olympics,

they just played the music.

There was no song yet to sing.

Starting in 1994,

Yeltsin's engaged in a war in Chechnya,
which was a horror show.

Moscow has battled for centuries

to suppress Chechen independence

and exert ultimate control.

Russia is a multiethnic country

that includes bits that were joined in
or annexed or conquered

in the late 19th century.

The republics of the North Caucasus,
Chechnya, Dagestan, et cetera.

The vicious Russian efforts
over the past 14 months

to crush the Chechen nation

merely continue a deep,
ingrained tradition of mutual hatred.

And it was a huge crisis for Russia.
The Russian army was failing.

People were not really, uh,
enthusiastic about the war.

1996, there was just
a real sense of things falling apart.

You got corruption,
you got a depressed economy,

you got crime on your streets,
you got a war in Chechnya.

And of course,
that became exploited

by those who were resentful

and who believed
that this was a direct result

of the collapse of the old system.

Yeltsin's poll ratings
were within spitting distance of zero.

And he was faced
with having to run against, wait for it,

a communist.

Gennady Zyuganov.

There was
a very real possibility

that Boris Yeltsin would be defeated

and that the communists
would return to power.

This was viewed
with great alarm in Moscow,

as well as in Western capitals

and, in a way, there was
a sort of a corrupt bargain struck

between Yeltsin and the oligarchs.

We go in to see Yeltsin,

and Chubais starts persuading him,

that there's no need to declare
a state of emergency,

that there's no need
to call off the elections,

and that he can win these elections.

Yeltsin said to these oligarchs,

"If you use all of your resources,
your television stations, your money,

everything else to help me get reelected,

then I will make sure that you get
the largest and most coveted

and valuable oil companies
and metals companies in the country."

These companies hadn't yet
been privatized.

These oligarchs
funded the hell out of him...

and pushed Yeltsin
like a recalcitrant elephant

up and over the hill.

You, young people,
are the future of Russia!

Yeltsin's campaign managed to scare people
with the threat of communists returning.

People still remembered
how it was back then.

No way. I had enough
of all that communist history at school.

Boris Yeltsin!

He ended up getting reelected, barely.

But after he was reelected,
things got worse and worse

because these oligarchs
controlled everything.

And then he was in a very bad place
because he was an alcoholic,

his health was failing,
he had heart disease.

He was not able
to perform his duties, uh,

for the last three and a half years
of his presidency, and that was obvious.

Most Russians, uh, felt huge shame
for Russian president Boris Yeltsin.

He was obviously a disgrace.

In Washington, he has, you know,
a day of summits with Bill Clinton,

and then he goes back to Blair House,
the guesthouse in Washington, D.C.

And no one quite knows what happens,

but he's found on the side of the street
in his underwear,

yelling in Russian
that he needs a taxi and a pizza.

By 1999,

Yeltsin begins a search for a successor.

He went through
a series of successors,

basically prime ministers
that he appointed to test them out.

And the first three completely failed
one way or another.

And they were kind of running out of time
because his health was so bad,

and he was really struggling.

And so they just randomly picked
this strange unknown man

that nobody had really
had much experience with.

This is the man
Boris Yeltsin says should lead Russia

in the 21st century.

Vladimir Putin.

In the year of 1952,

about five months before Stalin's death,

was born Vladimir Putin.

The legend
of Vladimir Vladimirovich Putin

that has come down to us

in a campaign-style book
called First Person

portrays his hardscrabble childhood
in the mean courtyards of Leningrad.

Putin describes himself
as almost a hooligan,

running around with tough boys
in the corridors, chasing rats.

He describes essentially being bullied
and beaten up...

until he used his fists
and he fought back against the aggressors.

And that, in Putin's telling,
is a sort of a core principle.

Only the weak get beaten.

THE SWORD AND THE SHIELD

The story, as told by Vladimir Putin,

is that he grew up watching

the kind of World War II movies
and television shows

that glorified the role
of the secret services.

One in particular
that captured his attention,

called The Sword and the Shield.

And he has said that it made him
essentially want to grow up

and to become an agent himself in the KGB.

And he ultimately did join the KGB.

Vladimir Putin was not
some daring secret agent

as much as he was
a counterintelligence officer,

and that means that he was looking
for betrayal from within.

He was looking inside the ranks of the KGB

and trying to make sure
that everyone was loyal.

The KGB
was never a law-abiding organization.

It was always an organization
that lived according to Mafia principles.

The KGB used tricks
against American diplomats in Moscow,

including, uh, very nasty things.

You know, even some sort of,
uh, poisoning.

Not to kill, but to put
in an awkward position.

Putin had what
would be a relatively lackluster career

in the Soviet-era KGB.

He didn't rise
to be a top general in the KGB.

He didn't rise to have one of its premier
foreign postings in the West

somewhere, uh, undercover.

He ends up instead in a relative backwater
in Dresden, in East Germany.

He's working with the Stasi,
the East German secret police.

And the country around him,

which has been the leading part
of the Soviet Bloc, is unraveling.

Your government
seems to be changing every day.

Where do you think it's going?

That's the government's problem, not mine.

For Putin,
this was a terrible catastrophe.

It was the end of the Soviet Empire
that he had served and believed in.

So Putin at this point is
in his 30s. He's a mid-level KGB officer.

And he's horrified that Moscow
is not responding violently

to the collapse of East Germany.

In particular,
when the crisis comes to his door.

Peaceful protesters occupy
the headquarters of the Stasi,

which is the East German secret police.

Putin is in the KGB outpost in Dresden,

which is around the corner
from Dresden Stasi headquarters,

since they work together.

Some of these protesters
who are occupying the Stasi headquarters

say, "Let's go over to the KGB outpost.
Let's go take that over."

So they go over to the KGB outpost
where Putin is the senior officer on duty.

And Putin is not amused.

And in the book First Person,

he remembers colleagues
calling Moscow for directions.

"What should we do?"

And the phrase was, "Moscow was silent."

In other words,
Moscow had written off East Germany.

And this enraged Putin.

Central power had collapsed.

And greatness, in his view,
had been relinquished.

All these events
have inspired intense bitterness in him.

Humiliation.

This is the great country
that defeated the Nazis.

It's hard to overestimate
how important that is.

What a foundation to Russian
self-identity the defeat of the Nazis is.

And so to have to retreat in such a way
from Germany was just, for Putin, awful.

He was shocked, I think,
by his years in Germany.

He saw that even in East Germany,
there was a much higher standard of living

than there was inside Russia itself.

He describes returning, in fact,
to Russia with, I think,

a washing machine,
you know, strapped to his car.

Then he basically decides to throw
his lot in with his old law professor

at the University of Leningrad,
Anatoly Sobchak,

who was the first
democratically-elected mayor

of what was then
going to be St. Petersburg

and no longer Leningrad.

And back then, St. Petersburg
was like Chicago in the 1930s.

There is even a set phrase.

"Gangster's Petersburg."

He immediately went into contact

with people with a very shady background.

With criminal groups.

And he was the mayor's man
to fix these kinds of problems

and to talk to these people,

and to make sure that the mayor was safe,
and some shady deals were done.

Sobchak loses his reelection
as mayor for a second term.

Putin is then again
looking for another job.

And Putin is brought to Moscow

for now a succession of jobs
in the late '90s.

He becomes the head
of the Kremlin's properties division,

which is a fantastic place to be
if you want to have access to corruption.

All the perks of the old system
that are run by the Kremlin,

he's in charge of them.

The disposition of everything
from dachas, vacation homes,

to places in Kremlin
hospitals and schools,

leases on cars that are run
by the Kremlin and boats.

And that gave him some powers.

And that was his start
of his national career.

After that, it was a very quick way
to become, uh, the new head

of the Russian Security Service, FSB.

Which is the successor agency to the KGB.

Suddenly this not very distinguished
KGB guy's the head of the whole thing.

And all this is happening fairly rapidly.

In 1999, Boris Yeltsin
is not seen as being fully in control

of his own government.

And there are enormous concerns
that Yeltsin and those close to him

might actually face corruption charges
from a future president of Russia.

So they are desperately looking
not just for a successor for Russia,

but they're looking to protect themselves.

The people around Yeltsin,
especially his daughter,

say, "You need someone like Putin."

And now,
I have decided to name a man,

who, in my opinion,

is capable of uniting society.

The decision has been made.

Vladimir Vladimirovich,

we congratulate you
on your appointment as prime minister.

Yeltsin tells
a senior American diplomat

when he appoints Vladimir Putin
as prime minister, "This one's different."

"I can even envision him
as a future successor to me."

And so he rises
in this incredibly short period of time

from FSB director
to prime minister of Russia.

And what's made clear
at a certain point,

is that after Yeltsin leaves,

Putin would not act on the Yeltsin family.

There'd be no arrests.

They would be allowed to live out
their lives in wealth, and untouched.

He was appointed
prime minister in August,

and in September, there was a series
of terror attacks, uh, in Moscow.

My mom was
a very well-educated, beautiful woman.

She wanted to give us better future.

That's why we've moved to Moscow.

In 1999, she had started a new job,
a new life, at Russian television,

as an editor at a morning show.

One day, I was in Tbilisi, Georgia,

visiting my grandfather
and my grandmother,

and she was home alone.

September 9th,
first explosion in Moscow.

Guryanov Street.

A nine-story
apartment building has been blown up.

The middle part, two entrances, collapsed.

Ninety-three corpses and many
so-called fragments of human bodies

were recovered from the rubble.

My uncle,
who was in Moscow,

he went to the building.

He saw terrible things.

Parts of people's bodies
were all over the place.

Our apartment was in the epicenter
of the explosion.

So that's why they didn't find
even DNA of my mom.

How do I find out...
Where is my family?

And who lived there?

My nephew and his mother lived there.

There were others
after that Guryanov explosion.

These bombings occur in Moscow
and several other cities.

The Russian government
blames them on Chechen separatists,

Chechen terror groups.

The North Caucasus region is

not exclusively, but primarily, Muslim.

And it was very easy
for the Kremlin and for Putin

to other the people of the North Caucasus

as Muslims who have terrorized
the Russian population.

It's an attempt by international
terrorists to frighten the people,

stir up panic,

paralyze the political leadership
of the country.

But as these bombings unfold,
there's this series of odd events.

At one point,
the speaker of the Russian Duma

announces the fourth bombing.

The fourth bombing actually
doesn't take place for three more days.

Can't you see
what is happening in the country?

Remember, Mr. Chairman,

on Monday you told us
a house in Volgodonsk was blown up.

Three days before the explosion!

Then residents
report to local police

that they see these men carrying sacks

into the basement
of this apartment building.

The local police discover a bomb

identical to those
that had gone off in other cities.

The cops were running
all over the building,

banging on doors and shouting,
"Everybody out! There's a bomb!"

And they arrest three FSB agents,

agents of the
Russian intelligence service,

who had been carrying those sacks
into the basement.

Positive measures
are already being taken.

One example is the prevention
of an explosion

in an apartment building in Ryazan.

The day after those arrests,

the Russian government announces

that it was actually an FSB
training operation all along.

It was an exercise.
There were no explosives, just sugar.

But the sacks test as real explosives.

And so what many people believe

is that the Russian intelligence service

actually carried out
as a false flag operation

to gin up the pretext for war.

There is only
one independent investigation of this

that ever takes place,

and of those independent investigators,

two of the commission
are actually assassinated,

and the third, the lawyer,

is actually arrested
and imprisoned for four years.

We don't have solid evidence
of Vladimir Putin being involved in this.

The only thing that we know
is that after these explosions,

Russia started the second Chechen war.

And Vladimir Putin,
as Yeltsin's hand-picked prime minister,

he becomes the public face of this war.

For seven straight days now,

Russian warplanes have pounded Chechnya.

Russia stepped up its air strikes

against Chechen villages today.

At that period of time in 1999,
Vladimir Putin didn't have any popularity.

No one knew what he was.

And after that,
he became a strong bogatyr.

A hero for Russians.

A person who says,
"We don't negotiate with terrorists."

"We kill the terrorists."

We'll be chasing
the terrorists everywhere.

At the airports or in the toilet.

We'll waste them in an outhouse.
End of story.

Putin was willing
to do the most brutal thing imaginable,

which is to bring the Chechen War
to an end by obliterating,

obliterating the better part
of the Chechen capital Grozny.

And he goes from basically
an unknown, in the course of months,

to the most popular politician in Russia.

And it's really on the backs
of this very popular military campaign.

And then,
as the millennium's changing,

Yeltsin gets up on television
on New Year's Eve and says...

"I am leaving."

Today, on the last day
of the outgoing century,

I am retiring.

I want to ask your forgiveness,

because many of our hopes
did not come true.

He makes it
very clear that he is, if anything,

apologizing to the Russian people
in his diminished state

for the failures
that have taken place in the '90s.

I have signed
a decree entrusting

duties of the President of Russia

to Prime Minister
Vladimir Vladimirovich Putin.

For the next three months,
he will be head of state.

Again, in accordance
with the constitution,

presidential elections
will be held in three months' time.

And then Yeltsin abdicates,

and Putin becomes the acting president.

On March 26th,

we will be electing,
not just a head of government,

but also a supreme commander,

in the sense that the president
is also the head of the armed forces.

Russia is one of the largest governments
in the world

with a powerful nuclear arsenal.

And this is something
not only our friends remember.

One of Vladimir Putin's ideas

was if he explains to people
that he is the one

who can bring stability
and safety to Russians,

then he would have
a very high level of, uh, support.

He was elected as a president in 2000.

So it... it really worked.

Putin took over a nation demoralized

and traumatized by defeat in the Cold War.

And this was very hard on Russians.
There's no doubt.

And President Putin was able to say
to the Russian people,

"Look, I will restore Russian pride."

And he didn't say this exactly,

but the implication was,
the implied deal was,

"I will make your lives better,
but it's not gonna be a democracy."

He is still a... a Soviet type of a man.

I think that he even dreams
about the Soviet Empire.

One of the first things
that Vladimir Putin did

was he restored the old
Stalin-era Soviet national anthem.

♪ Be glorified ♪

♪ Our free Fatherland... ♪

Russians had
this very negative experience

during the later years of Boris Yeltsin,

and there was a sense
that it was a good thing for Russia.

Putin immediately
reached out to the West.

Putin's first significant act
in foreign policy

was to send a message
to the Secretary General of NATO,

and he said, "We'll start again."

And so, NATO reopened an office in Moscow,

and Putin started building up
the relationship with NATO.

From that point, his second
significant act in foreign policy

was to get on to Tony Blair.

Tony Blair, at the time,
was the preeminent leader in Europe.

Enormously popular figure.

So rather cunningly, Putin said,

"Why don't you and your wife
come to a premiere

of a new production of Prokofiev's opera
War and Peace in St. Petersburg,

in my home city?"

So a totally informal,
kind of family visit.

I was the first leader to go
and see him from the West.

He was wanting the meeting
in St. Petersburg.

He wanted it to be Western-oriented.

He was talking about
the reform of his economy,

a new era for Western-Eastern relations.

This informal weekend
wasn't at all informal.

The very first meeting took place
in a grand room of a grand palace,

with all the world's press covering it
because it was the first time

a Western leader
had been seen meeting Putin.

And then they spent
several hours together.

It's very important to emphasize

we're desperate to have
a good relationship with Russia,

to bring Russia closer towards us.

Some people in the European Union
even talked about Russia

becoming a member of the European Union.

I believed that he was someone
who was potentially going to be a partner

we could work with.

And with whom we could resolve
some of the world's problems

rather than aggravate them.

I remember meeting
Putin in Slovenia for the first time

as the President of Russia.

And he walked toward us,
and, uh, he had a kind of athlete's gait.

Any breakthroughs?

But I remember thinking that he was
a little bit lacking in confidence, oddly.

And when he met President George W. Bush,
he so wanted to be treated as an equal.

And President Bush didn't want
to do anything to embarrass him,

and thus that famous moment
at the press conference

when he was asked if he trusted Putin.

I'll answer the question.
I looked the man in the eye.

I found him to be very
straightforward and trustworthy.

We had a very good dialogue.

I was able to, uh,
get a sense of his soul.

He's a man deeply committed
to his country,

and has the best interests of his country.

I thought, "Oh my God,
what did he just say?"

But he was just trying to develop
a relationship with, uh, with Putin.

Also,
would you make everyone aware

that we're gonna be seeing some tape?

Holy shit. Jesus!

Early in his time in power in Russia,

September 11th happened
here in the United States,

and he saw terrorism as a common enemy
between Russia and the United States.

Everybody go straight.
There's an ambulance...

I think Putin felt
that he had found, actually,

a new strategic rationale

for the relationship
with the United States.

I want to tell the American people
on behalf of Russia, we are with you.

We share and feel your pain.
We support you.

Putin thought, "Finally,

finally the United States
and the West will understand

this war on terrorism
that I am carrying out

inside of Russia against Chechnya."

But of course,
quickly, I think, Putin realized

that his definition
of the global war on terror

was very different
than the United States's.

And that came to a head pretty quickly

by the time that it became clear
US was moving toward war in Iraq.

Iraq had been one of the major
Soviet proxy states and military partners

in the Middle East throughout
the long years of confrontation

of the Cold War.

And this was not the kind
of military adventurism

that Putin thought he was signing up for
with the war on terror.

I will do everything in my power

so that this time as well
Russia is not pulled

into the Iraqi crisis in any form.

Because of Iraq
and other factors, Putin gets lucky.

The price of oil goes up.

Russia's an oil and gas country,

and if the oil price goes up,
that can really help.

The money starts to pour in.

It made it possible
for Putin to pay off the Soviet debt.

It made it possible for him
to increase the pensions for Russians.

It made it possible to increase other
social service payments for Russians.

You start to see,
more vividly than ever before,

the creation of an urban middle class.

And people just say,
"Look, if he can provide us

with these new living standards,
we're okay with it."

"Why we should care about your democracy?"

Putin, he started
collecting taxes from the oligarchs.

And because of that,
the state then started to function again.

And then Putin basically
makes this very concerted effort

to bring the oligarchs to heel.

Putin decided to take control

of the two main
television channels in Russia,

which had been in private hands.

Gusinsky and Berezovsky
had owned these two channels,

and they were taken off them.

I am in the studio
of NTV, and it is strange,

but today is a very important event
for all NTV staff.

Today our TV station
was taken over by force.

They are put into hands
effectively controlled by Putin.

Because Putin understood as a KGB officer
that 85% of the Russian population

got pretty well all of their information

through these two
main television channels.

And then there was a signature
early confrontation

between Putin and a possible
rival power center, Mikhail Khodorkovsky...

...who, by that time,
was not only the richest man in Russia,

but also one of the very
wealthiest men in the whole world.

Khodorkovsky, he seemed to think
that the rules no longer applied to him.

You know,
I don't remember when I met Putin.

Here, I'm looking at a young guy
much like us.

He's ready to listen,
understand, communicate.

It turned out that this guy
was just a very talented recruiter.

He showed each of us,
each of his partners,

precisely what each one of us
wanted to see.

Khodorkovsky
owned an oil company called Yukos,

which was the largest
oil company in the country.

Khodorkovsky wanted
to venture beyond Russia.

He wanted to become
an international businessman.

He felt as if it would help him
if Russia wasn't so corrupt anymore.

If Russia became normal,

he could become
the richest man in the world.

So he went from poacher to gamekeeper.

He went on a campaign
of transparency in his company.

He stopped all the dirty practices
that were going on in the 1990s.

Here is an example of corruption.

There was this company
called Severnaya Neft,

and its owners wanted to sell it.

The price they wanted was $200 million.

We crunched the numbers
and decided it wasn't worth that much.

And then we find out later
that Rosneft, a state company,

is buying this company for $600 million.

Well, for us, this was blatant corruption.

Simply blatant.

And most importantly, that $400 million,

it went into Putin's pocket.

Turns out, he had no interest

in getting rid of the oligarchs.

He just wanted to become
the biggest oligarch himself.

Putin gathers
these oligarchs in a roundtable,

and Mikhail Khodorkovsky starts talking
about corruption at the meeting,

which infuriated Putin.

I said corrupt
practices are highly developed in Russia,

they have begun to interfere
in the economy's development,

and they are interfering
with our companies' business.

The scale of corruption in Russia

is estimated
by four different organizations

at $30 billion a year.

And here we noticed that Putin's face
had simply turned to stone.

Putin glared at him
and said, you know,

"You've done your own crimes.
Don't tell me what to do."

Some other oil companies,
such as Yukos, have extra reserves.

How did it get them?

This is the question in terms
of the topic we are discussing today.

Including, therefore,
such issues as the payment

or non-payment of taxes.

And then all sorts of trouble
began for Khodorkovsky.

Mikhail Khodorkovsky was
arrested in October 2003 for tax evasion.

The best-known,
most successful Russian businessman,

really in the vanguard of the business

of bringing Western investment
into Russia, had been arrested.

This was a fantastically negative signal
to the markets,

because Putin's personal agenda
had trumped, as it always does,

the national interest.

The reason why Putin arrested...

And I want to say Putin
arrested Khodorkovsky,

not the other one,
is just politically motivated.

This is now a war
between the oligarchs and Putin?

No doubt.

The indictment I was charged with,

there were an insane number of counts.

When you're on trial in Russia,

there's a 99.7% conviction rate.

And so they put you in a cage,
because that's where you're gonna be.

And they allow the television cameras
to come into the courtroom

and film the richest,
the most powerful man in Russia

sitting in a cage.

I think Russians were pretty happy
that the biggest oligarch was arrested.

Everyone must be equal
in the eyes of the law.

A modest clerk, a civil servant,

even one of the highest rank.

And a big businessman,

no matter how many billions of dollars

he has on his private
or corporate accounts.

I was in prison for ten years.

That was very painful. Well...

I survived.

The other oligarchs
then go to Putin and say,

"What do we have to do
so we don't go to jail ourselves?"

and the right answer would have been,
"You're all going to jail."

But instead, he said,
"Something like 50%."

Not 50% for the Russian government,

or 50% for the presidential
administration of Russia.

Fifty percent
for Vladimir Putin personally.

And that was the moment that Putin
became the richest man in the world.

The oligarchs that remain,
he makes them a deal.

"I will let you keep your wealth

if you turn your wealth and power
towards helping me, Vladimir Putin."

"If you don't, I will crush you.
I will imprison you. I will kill you."

And very quickly,
the old oligarchic gang cracks up.

Berezovsky is in London,

and years later he "commits suicide."

Who the hell knows what happened there?

Gusinsky ends up
in Israel and Connecticut.

Roman Abramovich is a different thing.
He shows his loyalty by Putin.

So the old gang is gone,
and a new oligarchy begins to accumulate.

Who are they?

They are people, lo and behold,

from the Leningrad,
St. Petersburg secret services.

They are people
from Putin's old dacha community.

His old pals.

And he begins to enrich
and put in positions

people that he knows and he trusts.

And that's the new power structure.

It never occurred to us
that the president of Russia

could be about money.

It was, of course, our dramatic mistake.

My personal mistake.

Putin has been,
I think, consistently underestimated

by American and Western leaders.

So one consequence of that, is that Putin
repeatedly took escalatory measures

that his partners in the West
did not think he would undertake.

Arresting Russia's richest man
was one example.

There was also his actions in Ukraine.

In 2004, there was about to be
an election in Ukraine.

2004 was only 13 years
after the collapse of the Soviet Union.

Yes, Ukraine was an independent country,

but for Putin, nothing changed.

In early 2000s,
was the clash of two men

who competed for the position
of Ukrainian president.

One pro-Russian, one pro-Western.

Viktor Yushchenko
was running against another Viktor,

Viktor Yanukovych, in 2004.

I remember going to Putin's dacha.

I was about to become Secretary of State.

And Putin had this man
come out from behind a door.

Kind of like "door number one."
And it's Yanukovych.

And he says, "This is Yanukovych,

and he is going to run
for president of Ukraine."

And he might as well have said,
"This is my man Yanukovych,

and he's going to run
for president of Ukraine."

I think he believed in 2004, 2005,
that he could still control Ukraine.

An independent Ukrainian democracy
on Russia's border

is a danger to what he wants
to achieve at home.

And in his own mind,
Ukraine is a made-up country.

It's a part of the Russian Empire.

President Putin
supported Yanukovych.

Somehow during that campaign,

Viktor Yushchenko was poisoned.

When Yushchenko
began his campaign a year ago,

he looked like this.

For the last few months,

his face has been marked
by boils and cysts.

He suffers from severe back pain.

My face was twice its size.

It was all inflammation.

And after having received
the result of blood tests,

there is no doubt in our minds

that Mr. Yushchenko's disease

has been caused
by a case of dioxin poisoning.

Tests at a Vienna hospital confirmed

Yushchenko has 6,000 times
the normal level of dioxin in his body.

I was at a hospital.

At the time I couldn't spend
more than ten minutes

without painkillers.

But to tell Ukrainian voters,

"Sorry, I won't take part
in the elections."

"Let's go into Moscow's hands
voluntarily."

I couldn't do that.

He was lucky
that he was brought to Vienna

because doctors said if he would stay
another 24 hours in Ukraine,

there could be
a "final solution," so-called.

My older daughter...

she hadn't seen me, probably...

maybe for a month.

She was shocked.

She couldn't imagine
her father would look like that.

Yanukovych
won the election due to voter fraud,

perpetrated by Viktor Yanukovych,
supported by President Putin,

stuffed ballot boxes,
and otherwise stole the election in 2004

away from Viktor Yushchenko,

which brought the Ukrainian people
to the streets around the nation.

With thousands of supporters
standing in the snow,

Ukraine's opposition leader
dug in his heels.

Our action is only beginning.

Our action is only beginning.

Yushchenko! Yushchenko!

Hundreds
of thousands, even millions of Ukrainians,

came to protest the stolen election.

The orange banners,
the songs that they had created,

the willingness of people
to sit through freezing cold temperatures

in order to fight
for what they believed was right,

was like nothing I had ever seen

on the territory
of the former Soviet Union before.

- Yushchenko!
- Yushchenko!

That was a total shock for the Kremlin.

We shouldn't introduce the practice

and means of an international society

of addressing similar disputes through

mayhem on the streets.

Yushchenko!

Yushchenko!

Yushchenko! Yushchenko!

Yushchenko!

In a clear sign
that the old order is wobbling,

a hundred young police cadets
joined the demonstrators

and announced that they will not
follow orders to crush the protests.

So October-November of the year 2004

was for the Ukrainian nation, like,
either we go into yesterday,

where we spent 370 years,

or we have a chance

to choose the democratic way.

If you're a citizen, you know
your duty is to make a change,

as no one will do it for you.

We thereby oblige
the Central Election Commission

to appoint a second round
of presidential elections in Ukraine.

Excellent! Very good!

According to this count,
the results of the votes

for the two candidates are as follows.

53.22% for Viktor Yushchenko.

Dear friends, the first piece of news,
it has happened!

The pro-Western forces in Ukraine

ended up winning.

This made Vladimir Putin very angry.

I think it's the first day
of independence of Ukraine.

That was
the beginning of the confrontation

that we're seeing today
between Ukraine and Russia.

Putin became more and more
suspicious of the West's designs

where Ukraine was concerned.

He was always suspicious of the West,

and he always experienced
the end of the Cold War

not as a moment
of awakening and possibility,

but as a horrendous defeat,

and famously he said
the collapse of the Soviet Union

was the worst geopolitical tragedy
of the 20th century.

He starts to worry,
especially after the Orange Revolution,

that Ukraine is getting away.

And if he doesn't act, then Russia,

just as he saw the Soviet Union losing
its place in Europe without an answer,

will have lost its dominance
of the former Soviet republics as well

without an answer.

So he sees playing out in the 2000s

the same thing that he saw playing out
in the 1980s.

And this time,
he wants to have an answer.

Moscow, in his view, will not be silent.