The Economist offers a brilliant two part review of how the KGB has taken Russia over even more pervasively than under communism:

Part I: The Fall and Rise of the KGB

ON THE evening of August 22nd 1991—16 years ago this week—Alexei Kondaurov, a KGB general, stood by the darkened window of his Moscow office and watched a jubilant crowd moving towards the KGB headquarters in Lubyanka Square. A coup against Mikhail Gorbachev had just been defeated. The head of the KGB who had helped to orchestrate it had been arrested, and Mr Kondaurov was now one of the most senior officers left in the fast-emptying building. For a moment the thronged masses seemed to be heading straight towards him.

Then their anger was diverted to the statue of Felix Dzerzhinsky, the KGB's founding father. A couple of men climbed up and slipped a rope round his neck. Then he was yanked up by a crane. Watching “Iron Felix” sway in mid-air, Mr Kondaurov, who had served in the KGB since 1972, felt betrayed “by Gorbachev, by Yeltsin, by the impotent coup leaders”. He remembers thinking, “I will prove to you that your victory will be short-lived.”

Those feelings of betrayal and humiliation were shared by 500,000 KGB operatives across Russia and beyond, including Vladimir Putin, whose resignation as a lieutenant-colonel in the service had been accepted only the day before. Eight years later, though, the KGB men seemed poised for revenge. Just before he became president, Mr Putin told his ex-colleagues at the Federal Security Service (FSB), the KGB's successor, “A group of FSB operatives, dispatched under cover to work in the government of the Russian federation, is successfully fulfilling its task.” He was only half joking.

Over the two terms of Mr Putin's presidency, that “group of FSB operatives” has consolidated its political power and built a new sort of corporate state in the process. Men from the FSB and its sister organisations control the Kremlin, the government, the media and large parts of the economy—as well as the military and security forces. According to research by Olga Kryshtanovskaya, a sociologist at the Russian Academy of Sciences, a quarter of the country's senior bureaucrats are siloviki—a Russian word meaning, roughly, “power guys”, which includes members of the armed forces and other security services, not just the FSB. The proportion rises to three-quarters if people simply affiliated to the security services are included. These people represent a psychologically homogeneous group, loyal to roots that go back to the Bolsheviks' first political police, the Cheka. As Mr Putin says repeatedly, “There is no such thing as a former Chekist.”

By many indicators, today's security bosses enjoy a combination of power and money without precedent in Russia's history. The Soviet KGB and its pre-revolutionary ancestors did not care much about money; power was what mattered. Influential though it was, the KGB was a “combat division” of the Communist Party, and subordinate to it. As an outfit that was part intelligence organisation, part security agency and part secret political police, it was often better informed, but it could not act on its own authority; it could only make “recommendations”. In the 1970s and 1980s it was not even allowed to spy on the party bosses and had to act within Soviet laws, however inhuman.

The KGB provided a crucial service of surveillance and suppression; it was a state within a state. Now, however, it has become the state itself. Apart from Mr Putin, “There is nobody today who can say no to the FSB,” says Mr Kondaurov.

All important decisions in Russia, says Ms Kryshtanovskaya, are now taken by a tiny group of men who served alongside Mr Putin in the KGB and who come from his home town of St Petersburg. In the next few months this coterie may well decide the outcome of next year's presidential election. But whoever succeeds Mr Putin, real power is likely to remain in the organisation. Of all the Soviet institutions, the KGB withstood Russia's transformation to capitalism best and emerged strongest. “Communist ideology has gone, but the methods and psychology of its secret police have remained,” says Mr Kondaurov, who is now a member of parliament.

Scotched, not killed

Mr Putin's ascent to the presidency of Russia was the result of a chain of events that started at least a quarter of a century earlier, when Yuri Andropov, a former head of the KGB, succeeded Leonid Brezhnev as general secretary of the Communist Party. Andropov's attempts to reform the stagnating Soviet economy in order to preserve the Soviet Union and its political system have served as a model for Mr Putin. Early in his presidency Mr Putin unveiled a plaque at the Lubyanka headquarters that paid tribute to Andropov as an “outstanding political figure”.

Staffed by highly educated, pragmatic men recruited in the 1960s and 1970s, the KGB was well aware of the dire state of the Soviet economy and the antique state of the party bosses. It was therefore one of the main forces behind perestroika, the loose policy of restructuring started by Mr Gorbachev in the 1980s. Perestroika's reforms were meant to give the Soviet Union a new lease of life. When they threatened its existence, the KGB mounted a coup against Mr Gorbachev. Ironically, this precipitated the Soviet collapse.

The defeat of the coup gave Russia an historic chance to liquidate the organisation. “If either Gorbachev or Yeltsin had been bold enough to dismantle the KGB during the autumn of 1991, he would have met little resistance,” wrote Yevgenia Albats, a journalist who has courageously covered the grimmest chapters in the KGB's history. Instead, both Mr Gorbachev and Yeltsin tried to reform it.

The “blue blood” of the KGB—the First Chief Directorate, in charge of espionage—was spun off into a separate intelligence service. The rest of the agency was broken into several parts. Then, after a few short months of talk about openness, the doors of the agency slammed shut again and the man charged with trying to reform it, Vadim Bakatin, was ejected. His glum conclusion, delivered at a conference in 1993, was that although the myth about the KGB's invincibility had collapsed, the agency itself was very much alive.

Indeed it was. The newly named Ministry of Security continued to “delegate” the officers of the “active reserve” into state institutions and commercial firms. Soon KGB officers were staffing the tax police and customs services. As Boris Yeltsin himself admitted by the end of 1993, all attempts to reorganise the KGB were “superficial and cosmetic”; in fact, it could not be reformed. “The system of political police has been preserved,” he said, “and could be resurrected.”

Yet Mr Yeltsin, though he let the agency survive, did not use it as his power base. In fact, the KGB was cut off from the post-Soviet redistribution of assets. Worse still, it was upstaged and outwitted by a tiny group of opportunists, many of them Jews (not a people beloved by the KGB), who became known as the oligarchs. Between them, they grabbed most of the country's natural resources and other privatised assets. KGB officers watched the oligarchs get super-rich while they stayed cash-strapped and sometimes even unpaid.

Some officers did well enough, but only by offering their services to the oligarchs. To protect themselves from rampant crime and racketeering, the oligarchs tried to privatise parts of the KGB. Their large and costly security departments were staffed and run by ex-KGB officers. They also hired senior agency men as “consultants”. Fillip Bobkov, the head of the Fifth Directorate (which dealt with dissidents), worked for a media magnate, Vladimir Gusinsky. Mr Kondaurov, a former spokesman for the KGB, worked for Mikhail Khodorkovsky, who ran and largely owned Yukos. “People who stayed in the FSB were B-list,” says Mark Galeotti, a British analyst of the Russian special services.

Lower-ranking staff worked as bodyguards to Russia's rich. (Andrei Lugovoi, the chief suspect in the murder in London last year of Alexander Litvinenko, once guarded Boris Berezovsky, an oligarch who, facing arrest in Russia, now lives in Britain.) Hundreds of private security firms staffed by KGB veterans sprang up around the country and most of them, though not all, kept their ties to their alma mater. According to Igor Goloshchapov, a former KGB special-forces commando who is now a spokesman for almost 800,000 private security men,

That moment came on New Year's Eve 1999, when Mr Yeltsin resigned and, despite his views about the KGB, handed over the reins of power to Mr Putin, the man he had put in charge of the FSB in 1998 and made prime minister a year later.

The inner circle

As the new president saw things, his first task was to restore the management of the country, consolidate political power and neutralise alternative sources of influence: oligarchs, regional governors, the media, parliament, opposition parties and non-governmental organisations. His KGB buddies helped him with the task.

The most politically active oligarchs, Mr Berezovsky, who had helped Mr Putin come to power, and Mr Gusinsky, were pushed out of the country, and their television channels were taken back into state hands. Mr Khodorkovsky, Russia's richest man, was more stubborn. Despite several warnings, he continued to support opposition parties and NGOs and refused to leave Russia. In 2003 the FSB arrested him and, after a show trial, helped put him in jail.

To deal with unruly regional governors, Mr Putin appointed special envoys with powers of supervision and control. Most of them were KGB veterans. The governors lost their budgets and their seats in the upper house of the Russian parliament. Later the voters lost their right to elect them.

All the strategic decisions, according to Ms Kryshtanovskaya, were and still are made by the small group of people who have formed Mr Putin's informal politburo. They include two deputy heads of the presidential administration: Igor Sechin, who officially controls the flow of documents but also oversees economic matters, and Viktor Ivanov, responsible for personnel in the Kremlin and beyond. Then come Nikolai Patrushev, the head of the FSB, and Sergei Ivanov, a former defence minister and now the first deputy prime minister. All are from St Petersburg, and all served in intelligence or counter-intelligence. Mr Sechin is the only one who does not advertise his background.

That two of the most influential men, Mr Sechin and Viktor Ivanov, hold only fairly modest posts (each is a deputy head) and seldom appear in public is misleading. It was, after all, common Soviet practice to have a deputy, often linked to the KGB, who carried more weight than his notional boss. “These people feel more comfortable when they are in the shadows,” explains Ms Kryshtanovskaya.

In any event, each of these KGB veterans has a plethora of followers in other state institutions. One of Mr Patrushev's former deputies, also from the KGB, is the minister of the interior, in charge of the police. Sergei Ivanov still commands authority within the army's headquarters. Mr Sechin has close family ties to the minister of justice. The prosecution service, which in Soviet times at least nominally controlled the KGB's work, has now become its instrument, along with the tax police.

The political clout of these siloviki is backed by (or has resulted in) state companies with enormous financial resources. Mr Sechin, for example, is the chairman of Rosneft, Russia's largest state-run oil company. Viktor Ivanov heads the board of directors of Almaz-Antei, the country's main producer of air-defence rockets, and of Aeroflot, the national airline. Sergei Ivanov oversees the military-industrial complex and is in charge of the newly created aircraft-industry monopoly.

But the siloviki reach farther, into all areas of Russian life. They can be found not just in the law-enforcement agencies but in the ministries of economy, transport, natural resources, telecoms and culture. Several KGB veterans occupy senior management posts in Gazprom, Russia's biggest company, and its pocket bank, Gazprombank (whose vice-president is the 26-year-old son of Sergei Ivanov).

Alexei Gromov, Mr Putin's trusted press secretary, sits on the board of Channel One, Russia's main television channel. The railway monopoly is headed by Vladimir Yakunin, a former diplomat who served his country at the United Nations in New York and is believed to have held a high rank in the KGB. Sergei Chemezov, Mr Putin's old KGB friend from his days in Dresden (where the president worked from 1985 to 1990), is in charge of Rosoboronexport, a state arms agency that has grown on his watch into a vast conglomerate. The list goes on.

Many officers of the active reserve have been seconded to Russia's big companies, both private and state-controlled, where they draw a salary while also remaining on the FSB payroll. “We must make sure that companies don't make decisions that are not in the interest of the state,” one current FSB colonel explains. Being an active-reserve officer in a firm is, says another KGB veteran, a dream job: “You get a huge salary and you get to keep your FSB card.” One such active-reserve officer is the 26-year-old son of Mr Patrushev who was last year seconded from the FSB to Rosneft, where he is now advising Mr Sechin. (After seven months at Rosneft, Mr Putin awarded Andrei Patrushev the Order of Honour, citing his professional successes and “many years of conscientious work”.) Rosneft was the main recipient of Yukos's assets after the firm was destroyed.

The attack on Yukos, which entered its decisive stage just as Mr Sechin was appointed to Rosneft, was the first and most blatant example of property redistribution towards the siloviki, but not the only one. Mikhail Gutseriev, the owner of Russneft, a fast-growing oil company, was this month forced to give up his business after being accused of illegal activities. For a time, he had refused; but, as he explained, “they tightened the screws” and one state agency after another—the general prosecutor's office, the tax police, the interior ministry—began conducting checks on him.

From oligarchy to spookocracy

The transfer of financial wealth from the oligarchs to the siloviki was perhaps inevitable. It certainly met with no objection from most Russians, who have little sympathy for “robber barons”. It even earned the siloviki a certain popularity. But whether they will make a success of managing their newly acquired assets is doubtful. “They know how to break up a company or to confiscate something. But they don't know how to manage a business. They use force simply because they don't know any other method,” says an ex-KGB spook who now works in business.

Curiously, the concentration of such power and economic resources in the hands of a small group of siloviki, who identify themselves with the state, has not alienated people in the lower ranks of the security services. There is trickle-down of a sort: the salary of an average FSB operative has gone up several times over the past decade, and a bit of freelancing is tolerated. Besides, many Russians inside and outside the ranks believe that the transfer of assets from private hands to the siloviki is in the interests of the state. “They are getting their own back and they have the right to do so,” says Mr Goloshchapov.

The rights of the siloviki, however, have nothing to do with the formal kind that are spelled out in laws or in the constitution. What they are claiming is a special mission to restore the power of the state, save Russia from disintegration and frustrate the enemies that might weaken it. Such idealistic sentiments, says Mr Kondaurov, coexist with an opportunistic and cynical eagerness to seize the situation for personal or institutional gain.

The security servicemen present themselves as a tight brotherhood entitled to break any laws for the sake of their mission. Their high language is laced with profanity, and their nationalism is often combined with contempt for ordinary people. They are, however, loyal to each other.

Competition to enter the service is intense. The KGB picked its recruits carefully. Drawn from various institutes and universities, they then went to special KGB schools. Today the FSB Academy in Moscow attracts the children of senior siloviki; a vast new building will double its size. The point, says Mr Galeotti, the British analyst, “is not just what you learn, but who you meet there”.

Graduates of the FSB Academy may well agree. “A Chekist is a breed,” says a former FSB general. A good KGB heritage—a father or grandfather, say, who worked for the service—is highly valued by today's siloviki. Marriages between siloviki clans are also encouraged.

Viktor Cherkesov, the head of Russia's drug-control agency, who was still hunting dissidents in the late 1980s, has summed up the FSB psychology in an article that has become the manifesto of the siloviki and a call for consolidation.

As well as invoking secular patriotism, Russia's security bosses can readily find allies among the priesthood. Next to the FSB building in Lubyanka Square stands the 17th-century church of the Holy Wisdom, “restored in August 2001with zealous help from the FSB,” says a plaque. Inside, freshly painted icons gleam with gold. “Thank God there is the FSB. All power is from God and so is theirs,” says Father Alexander, who leads the service. A former KGB general agrees: “They really believe that they were chosen and are guided by God and that even the high oil prices they have benefited from are God's will.”

Sergei Grigoryants, who has often been interrogated and twice imprisoned (for anti-Soviet propaganda) by the KGB, says the security chiefs believe “that they are the only ones who have the real picture and understanding of the world.” At the centre of this picture is an exaggerated sense of the enemy, which justifies their very existence: without enemies, what are they for? “They believe they can see enemies where ordinary people can't,” says Ms Kryshtanovskaya.

“A few years ago, we succumbed to the illusion that we don't have enemies and we have paid dearly for that,” Mr Putin told the FSB in 1999. It is a view shared by most KGB veterans and their successors. The greatest danger comes from the West, whose aim is supposedly to weaken Russia and create disorder. “They want to make Russia dependent on their technologies,” says a current FSB staffer. “They have flooded our market with their goods. Thank God we still have nuclear arms.” The siege mentality of the siloviki and their anti-Westernism have played well with the Russian public. Mr Goloshchapov, the private agents' spokesman, expresses the mood this way: “In Gorbachev's time Russia was liked by the West and what did we get for it? We have surrendered everything: eastern Europe, Ukraine, Georgia. NATO has moved to our borders.”

From this perspective, anyone who plays into the West's hands at home is the internal enemy. In this category are the last free-thinking journalists, the last NGOs sponsored by the West and the few liberal politicians who still share Western values.

To sense the depth of these feelings, consider the response of one FSB officer to the killing of Anna Politkovskaya, a journalist whose books criticising Mr Putin and his brutal war in Chechnya are better known outside than inside Russia. “I don't know who killed her, but her articles were beneficial to the Western press. She deserved what she got.” And so, by this token, did Litvinenko, the ex-KGB officer poisoned by polonium in London last year.

In such a climate, the idea that Russia's security services are entitled to deal ruthlessly with enemies of the state, wherever they may be, has gained wide acceptance and is supported by a new set of laws. One, aimed at “extremism”, gives the FSB and other agencies ample scope to pursue anyone who acts or speaks against the Kremlin. It has already been invoked against independent analysts and journalists. A lawyer who complained to the Constitutional Court about the FSB's illegal tapping of his client's telephone has been accused of disclosing state secrets. Several scientists who collaborated with foreign firms are in jail for treason.

Despite their loyalty to old Soviet roots, today's security bosses differ from their predecessors. They do not want a return to communist ideology or an end to capitalism, whose fruits they enjoy. They have none of the asceticism of their forebears. Nor do they relish mass repression: in a country where fear runs deep, attacking selected individuals does the job. But the concentration of such power and money in the hands of the security services does not bode well for Russia.

And not very good at their job

The creation of enemies may smooth over clan disagreements and fuel nationalism, but it does not make the country more secure or prosperous. While the FSB reports on the ever-rising numbers of foreign spies, accuses scientists of treason and hails its “brotherhood”, Russia remains one of the most criminalised, corrupt and bureaucratic countries in the world.

During the crisis at a school in Beslan in 2004, the FSB was good at harassing journalists trying to find out the truth. But it could not even cordon off the school in which the hostages were held. Under the governorship of an ex-FSB colleague of Mr Putin, Ingushetia, the republic that borders Chechnya, has descended into a new theatre of war. The army is plagued by crime and bullying. Private businessmen are regularly hassled by law-enforcement agencies. Russia's foreign policy has turned out to be self-fulfilling: by perpetually denouncing enemies on every front, it has helped to turn many countries from potential friends into nervous adversaries.

The rise to power of the KGB veterans should not have been surprising. In many ways, argues Inna Solovyova, a Russian cultural historian, it had to do with the qualities that Russians find appealing in their rulers: firmness, reserve, authority and a degree of mystery. “The KGB fitted this description, or at least knew how to seem to fit it.”

But are they doing the country any good? “People who come from the KGB are tacticians. We have never been taught to solve strategic tasks,” says Mr Kondaurov. The biggest problem of all, he and a few others say, is the agency's loss of professionalism. He blushes when he talks about the polonium capers in London. “We never sank to this level,” he sighs. “What a blow to the country's reputation!”

Part II: Putin's People

“OUR pilots have been grounded for too long. They are happy to start a new life.” So said Vladimir Putin as he sent Russia's nuclear bombers back aloft on the world-spanning patrols they had suspended after the collapse of the Soviet Union. This comes hard on the heels of talk of reopening a Russian naval base in the Mediterranean, joint war games with China and the planting of the Russian flag in the polar seabed. The Soviet Union is dead and communism long buried. But Mr Putin wants you to know that the Russian bear is back—wearing a snarl with its designer sunglasses.

How has this situation come about? It is tempting to search for mistakes by Western governments, to look for the culprits who “lost Russia”. Yet as our briefing this week explains, the role of outsiders has been secondary. The best way to understand both Mr Putin's ascent into the Kremlin and his rule since is to see them as the remarkable recovery of the culture, mentality and view of the world of the old KGB.

When Mr Putin was plucked from obscurity to become first Boris Yeltsin's prime minister and later his successor as Russia's president, few in the West had heard of this former KGB officer, who had briefly been head of the FSB, the KGB's post-Soviet successor. Just before he became president, Mr Putin told his colleagues that a group of FSB operatives, “dispatched under cover to work in the government of the Russian federation”, was successfully fulfilling its task. It was probably a joke. Yet during his two terms since then, men from the FSB and its sister outfits have indeed grabbed control of the government, economy and security forces. Three out of four senior Russian officials today were once affiliated to the KGB and other security and military organisations.

Why they do it

What motivates these so-called siloviki? In part, the wish for revenge on those who challenged them in the early 1990s, especially after the abortive KGB coup of August 1991. Greed may be the most powerful motive: some Kremlin insiders have hugely enriched themselves in the past decade, and corruption may be worse even than in the later Yeltsin years. But the new elite also has an ideology of sorts. They see the break-up of the Soviet Union as, in Mr Putin's words, the “greatest geopolitical catastrophe” of the 20th century. Capitalising on a widespread sense that Russia has been humiliated, they want to create as mighty a state as the Soviet Union once was. They see the West as a foe bent on stopping them.

In this, Russia's rulers have strong domestic support. It is hard to gauge Mr Putin's popularity in a country with such tightly controlled media, but his opinion-poll ratings are impressively high. That nobody doubts his ability to choose his own successor owes a lot to his suppression of all dissent, but it reflects also the fact that voters have little love for the tiny liberal opposition remaining. Thanks to GDP growth that has averaged almost 7% a year under Mr Putin, many Russians feel better off, even if a lot are still poor. And many share the desire to reassert Russia's greatness—and a deep-rooted belief that the West is Russia's natural enemy.

It is foolish for people in the West to deny that Russia is a great power and that, in some ways, its influence has increased. When Mr Putin became president, its GDP was the world's tenth-biggest and foreign reserves stood at $8.5 billion. Today Russia's economy is the world's eighth-largest, and the reserves are $407.5 billion. The Kremlin has played adeptly on Europe's dependence on Russian gas to enhance its influence. On issues such as Kosovo or Iran, Russia has used its seat on the UN Security Council to force the West to pay it attention.

To achieve true greatness, unclench that fist

Yet the siloviki's ambitions remain misguided. That is not because there is anything illegitimate about wanting a strong Russia. What is wrong is how they define that strength—in the Soviet terms of awe and anxiety—and how they pursue it. The economy, for a start, is heavily dependent on high prices for oil, gas and other commodities that may not last. Russia is weak in manufacturing, services and high-tech industries. Putting spies in charge of big firms is a recipe for failure: they know how to grab assets and jail foes, but not how to run real businesses. Foreign investors may still covet Russia's natural-resource sector, but a climate in which assets can be arbitrarily taken back by state officials and then redistributed to cronies is not welcoming. Both foreign and, more strikingly, domestic investment are very low compared with China.

Nor is it sensible to revive Russia's old anti-Western, zero-sum strategic thinking. The West tried to be a friend in the Yeltsin years, but has since been put off by Russian belligerence. A resurgent Russia can throw its weight around the neighbourhood and intimidate ex-Soviet republics such as Georgia, Ukraine and the Baltics; but by alienating its neighbours Moscow harms its own interests too. By dint of size and military strength, Russia is a power in the world. Yet today even the “soft power” that the Soviet Union once wielded through communism has mostly gone. In its place is only fear.

The biggest misreading of all is over Russia's own political future. The siloviki have shown they can squash opposition, suborn the courts and stay in charge. But, as in all autocracies, they are acutely nervous about the future. Mr Putin's popularity will not easily transfer even to a hand-picked successor. More generally, as ordinary Russians get richer, they may grow dissatisfied with their present masters, especially when they see them stealing and mismanaging the economy. Russia has huge problems: crime, poor infrastructure, secessionism and chaos in the north Caucasus, appalling human-rights abuses and a looming demographic catastrophe. To counterbalance these woes, the new elite may resort to even wilder forms of nationalism; and that nationalism could turn into a monster that even its creators cannot control.

In truth, the biggest threats to Russia's future stem not from its “enemies” but from internal weaknesses, some of them self-inflicted. For a Russian ruler, or ruling class, to accept that truth would take real courage—and real patriotism.