TULA, Russia—Back in the waning days of the USSR in what used to be called the Eastern Bloc, from 1983 to 1988 two thirty-something officers of the Soviet KGB espionage and security service lived in the same East German apartment complex. One was Vladimir Putin, now the powerful president of the Russian Federation. The other was Sergey Chemezov, who commanded a top secret KGB unit called “Luch” focused on industrial research.
In a documentary film released last month on the eve of the Russian presidential elections, which Putin won as massively as expected, there's a tale Putin’s heroism in Germany. When the Berlin Wall fell and angry protesters surrounded the KGB residents, Putin came out with a pistol that had 12 bullets in the clip. He told the Germans he would have no choice but to shoot if they did not back off. They did, but according to Putin, if he had fired 11 of the bullets, he was ready to use the last one on himself.
Chemezov was interviewed extensively in that movie, recalled his early friendship with Putin in their Dresden flats. They and their families saw each other almost every day in the apartment block full of spies at Radeberger Strasse 101. “In a small collective it is important that people have no conflicts," Chemezov said in the documentary. "It is like living on a submarine a spaceship.”
Now, 30 years later, the two old friends—65-year-old Chemezov and 65-year-old Putin—are once again together facing hostility from the West, but this time, it would seem, there are no illusions that a political thaw is coming. “The U.S. sanctions are never going to go away, at least I am not going to see that in my lifetime,” Chemezov told The Daily Beast correspondent.
We met earlier this week at an event meant to show, in fact, that there is life after sanctions in Russia. Or more realistically, in spite of them.
The Kremlin is thinking of new projects and strategies, looking for ways to rescue a collapsing economy, shore up crumbling investments, reduce the increasing unemployment and stanch the catastrophic brain drain in provincial regions.
On Monday the state corporation Rostec, which exports weapons and aviation equipment, opened a hip-looking campus for high-tech manufacturing, art and entertainment at a formerly secret military factory, Oktava, here in the depressing little region of Tula near Moscow. It had long been abandoned, and before Rostec came the city was famous mostly for its grim memories and ghosts of long-past Soviet industrial ambitions.
Now that is changing thanks to Rostec, and the guest of honor was Chemezov, its executive director. But the future of Tula won’t be helped by the recent U.S. Treasury Department list of people and entities sanctioned for “malign activity” around the world. Both Chemezov and Rostec are included.
Tall and silver-haired and wearing what looked like a very expensive suit, Chemezov inspected the newly created art installations, book stores, workshops and the Museum of Machines, which tells the history of machine tools and technical equipment in Russia and around the globe.
Walking slowly around the renovated factory, he listened to presenters and quietly, almost in a whisper, asked questions about the industrial process, about events at Leo Tolstoy’s house in the Tula region, or about local cuisine.
Then, in an exclusive interview with The Daily Beast, Chemezov explained what he understands to be the Kremlin strategy to overcome the pressure of sanctions.
The aim is to convert up to 70 percent of all military factories to non-military production by 2025, creating products that can compete on world markets: “Our school here at Oktava should teach specialists to produce modern consumer products. Ideally, those should not have any analogues—or at least it should be a good copy, a better copy than produced elsewhere, so this way we’ll make the factories independent from their defense contracts.”
The original military factory in Oktava was built in 1927 to produce electronic and audio equipment for the Soviet military. During the post-Perestroika crises, a large part of the factory, thousands of square meters, was abandoned. For decades it stayed empty, covered in tons of trash.
At first, private companies tried to resurrect the factory, but then the state corporation Rostec moved in and managed to promote the production of non-military microphones, earphones and hearing devices. In recent years Russian and international musicians, including U2, Sting and Iron Maiden, use high quality Oktava mics. Radiohead recorded its “OK Computer” album with Oktava MK-012s.
A little over a year ago Rostec brought an investor to Tula, the billionaire Mikhail Shelkov who owns VSMPO-AVISMA, the world’s largest producer of titanium. Shelkov has invested about $16 million in the new complex at the Oktava factory.
VSMPO-AVISMA Avisma provides landing gear parts for about one third of all Boeing jets, according to Shelkov, whose company has not been sanctioned. “Our relations with our American partners are much better than before sanctions, we feel closer than ever,” Mikhail Voyevodin, the general director of Avisma, told The Daily Beast.
This tour of Tula clearly was a high-profile event the Kremlin wanted covered, but another of the anticipated guests of honor simply never showed up.
Many journalists coming to Tula looked forward to seeing the governor, Alexey Dyumin. But to everybody’s surprise he was a no-show.
Myths and rumors have long circulated plowed about Duma: some said that Putin could any day appoint the governor his new prime minister, others believe Dyumin was is Russia’s next Defense Minister. Over the past six years 45-year-old Dyumin has jumped from one high-profile position to another at a mind-blowing speed: in 2012 he was promoted from the position of President Putin’s deputy chief of security service to deputy chief of the GRU, Russian military intelligence, in charge of the Russian special operations forces that played a major role in annexation of Crimea.
The Russian press reported that Dyumin also was in charge for the evacuation of fleeing Ukrainian President Victor Yanukovich in February 2014. A year later Putin moved Dyumin up to another important job, the deputy chief of staff of Russian ground forces, and shortly after that even higher, as deputy minister of defense. Then Putin appointed Dyumin to govern Tula, a region of 1.5 million people only about 100 miles outside of Moscow
On Monday, Dyumin’s colleagues suggested that the governor felt too sick to attend the Oktava ceremonies. But Sergei Dorenko, chief editor of the “Moscow Says” (Govorit Moskva) radio station, did not believe that the 45-year-old officer was ill. “On the day of Chemezov’s visit there could be only one explanation for Dyumin’s absence: a meeting with Putin.”
As Dorenko analyzed Dyumin’s career, “I always thought that Putin was bringing Dyumin up, as his own son, that he always wanted to have. But recently a high rank official told me that Putin would not trust the presidency of Russia to a military officer.”
Today the West sees Russia, as a power hungry country capable of fighting “hybrid wars” and poisoning its former agents on foreign land. But the Kremlin, while not averse to an image of military strength, clearly wants to present an alternative picture as a potential economic force able to produce things the world wants besides Russian oil.
The brain behind the new complex at Tula, which is something of a flagship for this new initiative, is Rostec’s slick director for special commissions, Vasily Brovko. He says he has no illusions about Octava turning into a competitor of Apple, which has been edging up toward a valuation of $1 trillion. But the manager is optimistic about modernizing Russian military production.
Brovko’s job is to find experienced professionals for newly created complexes, maybe even try and bring some talented Russians back from the U.S. But he knows that won’t be easy: “Experts in IT technologies say they prefer working in California: there are more sunny days and many big challenges for creativity,” Brovko told The Daily Beast, but he says he thinks that “in Russia today we can find a big number of ambitious challenging projects for intellectuals.”