Few outside the KGB knew about the newcomer, who in short order was named to run the security services and then designated as the president's heir. If they thought he was a caretaker, they were in for a shock.
Soon after taking over from Mr. Yeltsin, Mr. Putin nationalized key sectors, dismissed regional governors who had sold off vital, locally owned assets (usually for kickbacks) and told the oligarchs to stay out of his way.
When oil baron Mikhail Khodorkovsky decided to stand up to the new president, he was smacked down. Although one of the world's richest men, he was arrested and the assets of his company, Yukos, were nationalized.
During those years, Oleg Orlov, chairman of the human-rights group Memorial, sat on one of Mr. Putin's “public councils,” and says he was taken aback at what could make the former spy lose his cool.
“There were three topics that could explode him – freedom of speech, the North Caucasus and Khodorkovsky.”
Mr. Putin is often described as suffering an inferiority complex, which if true, he shares with the nationalists who are always on the hunt for power.
In his two terms as president, he developed a formidable network of allies – largely through the spy service and the Orthodox Church. The KGB's successor agency, the Federal Security Bureau, grew to employ as many as 200,000 Russians who have been placed in every office of influence, from state-controlled boardrooms to newspapers to regional governors.
If the so-called siloviki – “men of the security services” – control Russia's brain, the priests control its soul, and seem only too happy to project Mr. Putin as a God-fearing nationalist while also enjoying a surge of government funding.
Mr. Putin's advisers call it “vertical power.”
How deep that vertical power runs is illustrated by Gazprom, the energy giant that has become the world's most politically powerful company and Mr. Putin's state within a state.
From its drab headquarters on the Moscow River, next to the Russian White House, Gazprom controls the world's largest gas fields, heats much of Europe, accounts for up to 8 per cent of the gross domestic product, produces 25 per cent of the government's revenue and employs 300,000 people. It also has sketched out ambitious plans that would see it expand Arctic gas exploration, open liquefied natural-gas ports to fuel the United States, and become China's main source of energy – in short, to ensure Russia is the Saudi Arabia of the 21st century.
A decade ago, one of Mr. Putin's early acts as president was to increase the government's control of Gazprom, and then use its impressive balance sheet to gain influence over other sectors of the economy. For example, in an early show of force, he forced one out-of-favour oligarch to sell his media assets, thus creating a curiously named information conglomerate, Gazprom Media.
To see the impact, I spent an afternoon this week with two of the country's top journalists – one a Putin loyalist, the other a critic, both on the Gazprom payroll.
Sergei Buntman is the acting editor-in-chief of Echo Moscow, the country's most influential radio station and 66-per-cent owned by Gazprom. It was among the first to report on war atrocities in Georgia a few years ago, and was quick to broadcast the street demonstrations last fall.
Mr. Buntman feels he can speak critically of the Prime Minister because of Echo Moscow's own bylaws, which include a stipulation that staff – who own 33 per cent of the shares – elect the editor. He also points to a post-Soviet law that prohibits censorship.
Even with that protection, his predecessor stepped down recently under pressure for the station's coverage of opposition rallies. Two independent directors also were removed from the board.
“It's a very old Soviet and Putin way to disseminate reality, good old ways of propaganda and artificial reality,” Mr. Buntman says.
In other words, independent voices are given a leash, and the occasional sharp tug. Some Russian journalists have met a far worse fate.
The contrast: Vladimir Kulistikov is director-general of NTV, the biggest private broadcaster, which is also controlled by Gazprom and therefore the Kremlin.Report Typo/Error