St. Petersburg's Revenge

"The Russian Ark" may just be one of the craziest movies ever made. It was set entirely in the famed Hermitage art museum, with hundreds of period-costumed actors romping through three centuries of Russian history. But the real madness in its method is that its director, Aleksandr Sokurov, filmed the whole one-hour-and-28-minute extravaganza in a single take on an HDTV digital camera. No cuts, no edits. It's the first time anyone has shot a feature movie in one breath, says Sokurov. "We just kept on going."

It's scarcely an accident that he did it in St. Petersburg. Not so long ago, no one in Russia would have tried such a stunt, with or without the Kremlin's permission. But suddenly the former tsarist capital is bursting with unaccustomed pride and confidence. Next year will mark the 300th anniversary of its founding by Peter the Great, and Russia's most beautiful city is already preening for the occasion. The economy is finally showing signs of recovery after decades of decay and communist-era neglect. And for the first time since the tsars fell, a St. Petersburg native is running the country. Not that Vladimir Putin is doing it alone. Since coming to power he has boosted hometown friends into key positions. It's a sign of the times, says Yakov Gordin, editor in chief of Zvezda, St. Petersburg's most respected literary journal: "We're back. After years in the provinces, we're finally regaining our self-awareness."

Reversals of fortune are getting to be a habit in St. Petersburg. A century ago it was the nerve center of one of the biggest empires the world has ever seen. Then came 1917 and the Bolsheviks. Lenin chose Moscow for his capital, and Stalin and his successors, mindful of St. Petersburg's history as an incubator of revolts, made sure that Leningrad (as they renamed it) became a picturesque little backwater, safely removed from the levers of power. Even today 80 percent of Russia's banks, and most of its biggest companies, are headquartered in Moscow. Citizens of the "northern capital," as Petersburg styles itself these days, mutter darkly about Muscovite arrogance.

Now it's payback time. Russians make wisecracks about the "Northern Alliance," a.k.a. the Petersburg Group, a tight-knit coterie of Putin confidants who share not only his hometown but his ideas on economic and social policy. They include all the president's key economic advisers, from free-market reform guru Andrei Illarionov to Trade and Economics Minister German Gref and Finance Minister Aleksei Kudrin. Two of the country's biggest business empires, the natural-gas monopoly Gazprom and the national electricity company, are now held by Petersburgers, as are the top post at the Defense Ministry and the governorship of the Northwest Federal Region.

Many come from the KGB, like Putin himself. "Some of these guys interrogated me back in the '70s and '80s," says Petersburg journalist Lev Lurie, appreciating the ironies of events. "They were always more sophisticated than the people in the Communist Party. They wanted private restaurants, clean toilets. Above all, they didn't want to be ashamed in front of the West."

So far, the Petersburgers have refrained from settling scores--though there have been moments. In 2000, for example, Putin scotched a proposal from one Petersburg deputy to move the lower house of the National Legislature, the Duma, to their hometown. Still, whenever the president and his colleagues find a chance to do the city a favor, they try. A region that once languished is suddenly attracting big infrastructure projects like the Baltic Pipeline System. After the Soviet collapse, much of Russia's oil was exported through the old pipeline terminal at Ventspils, Latvia--a nice source of income for the newly independent Latvians, but not for the Russians. Then Putin got involved, asking at a meeting one day: "Why hasn't this project happened? Perhaps some Moscow bureaucrats haven't been doing their jobs." Eighteen months later, it was done.

He invites foreign heads of state to St. Petersburg at every opportunity. Jacques Chirac and Gerhard Schroder have toured the city; Tony Blair has come twice. George W. Bush is scheduled to visit in May. Putin has invited European leaders to combine business with pleasure by staging one of their summits in the city during next year's tercentenary. The government expects to spend $387 million on the festivities this year, with much of the money going into basic improvements like new roads and building renovation.

Cultural leaders are also looking abroad. Valery Gergiev, director of the Mariinsky Theater (the local opera and ballet powerhouse formerly known as the Kirov), has upstaged his competitors at the Bolshoi with stunningly internationalist fare. Mikhail Piotrovsky, the director of the Hermitage, has broken similar ground, seeking sponsorship from private companies, foreign and domestic, and forging arts partnerships overseas--among them a collaboration in Las Vegas with New York's Guggenheim Museum.

Foreigners have always played a major role in St. Petersburg, from the Italians who designed its magnificent buildings to the French who brought fashions and ideas. Just so, Putin has made closeness to Europe a cornerstone of his foreign policy. No less significant is his talk, with Chancellor Schroder, of building a "Baltic Bridge," a transport corridor connecting Hamburg's huge container-ship port with smaller-capacity ports to the east. St. Petersburg would be its eastern terminus, with rail links spanning the Eurasian interior.

Meanwhile the city is developing industries to feed the network. Regional GDP rose by 6.8 percent in 1999, and 10 percent in 2000. Once at the center of the Soviet defense industry, Petersburg's old industrial giants finally seem to be adjusting to a changed market. One shipyard recently clinched a big order from the Greek Navy--the first time a Russian company has signed a defense contract to meet NATO specs. And the city is becoming a back office for Western high-tech companies like Elcoteq, a Finnish electronic-components maker employing 170 workers locally. Breweries like Baltika and Bravo, which dominate the thirsty Russian beer market, have also attracted foreign investors. The province around the city is doing even better. Production has grown 50 percent over the past three years. Ford, Caterpillar, IKEA--all do business there and give officials high marks for making life easier.

But Petersburg is still Russia--and that means problems. "The criminal capital," Russians call it. (By all accounts, the city's powerful Mafia clans have fused so seamlessly with the local government that it's almost impossible to separate the two.) The city's demographics aren't too sunny, either; a third of the city's 4.7 million people are of retirement age. And for all St. Petersburg's potential, the most capable and ambitious young natives still move to Moscow. Yet somehow the city's transformation is so dramatic, you could almost make a movie of it. Just ask Aleksandr Sokurov.