*How Yeltsin's Russia stumbled into a quasi-feudal order — and how Putin was able to dismantle it

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## The Feudal Parallel

When historians look back at Russia in the 1990s, the dominant narrative is one of chaotic democratisation and economic shock therapy gone wrong. But there is another, more unsettling way to read the same period: as the emergence of a genuine quasi-feudal political order, one in which central authority existed largely on paper while real power fragmented into the hands of regional strongmen.

The parallel is not merely rhetorical. Oblast governors in the Yeltsin era exercised powers that would have been recognisable to a medieval baron. They controlled local courts and prosecutors — nominally federal officials who were practically beholden to the governor's patronage. They built media empires. They extracted rents from local businesses in exchange for protection from regulatory harassment. They maintained their own security forces. And in one of the most striking parallels to medieval practice, several governors established checkpoints at their oblast's administrative borders, controlling the movement of goods, foodstuffs, and agricultural produce in and out of their territory — an internal customs system operating in open defiance of the federal constitution.

Some regions went further. Tatarstan and Bashkortostan negotiated formal bilateral treaties with Moscow that acknowledged a degree of sovereignty well beyond anything the constitution envisioned. Local laws contradicting federal statutes went unenforced for years. Tax revenues were withheld. The federal government's writ, in large parts of Russia's vast territory, was largely theoretical.

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## The Military Deterrent: What Chechnya Actually Proved

The conventional explanation for this state of affairs is Yeltsin's personal weakness — a declining, politically compromised president unable to impose his authority. This is partially true but misses the more important structural dynamic.

The First Chechen War changed the calculus of every governor in Russia. Dudayev's forces were modest by any conventional measure — perhaps 10,000 to 15,000 fighters, poorly equipped, with no industrial base and no air force. Yet they fought the Russian army to a standstill, inflicted casualties that shocked Russian society, and ultimately forced a humiliating negotiated withdrawal. The lesson was not lost on regional leaders watching from Kazan, Ufa, or Vladivostok.

But Chechnya's example cut both ways simultaneously. Yes, a sufficiently motivated region could resist Moscow militarily. But Grozny was rubble. The Chechen population suffered catastrophically. The cost of successful resistance was the destruction of everything being defended. A rational governor absorbed both halves of that lesson: Moscow could be resisted, but the price of resistance was annihilation.

This created a stable deterrence equilibrium without anyone needing to declare it. Governors could extract rents, ignore inconvenient federal laws, run internal checkpoints, fund their own political parties, and build patronage empires — and Moscow would not send in the army, because the army had just demonstrated in Chechnya that urban counterinsurgency was catastrophically costly. But governors would not declare independence or invade their neighbours, because Chechnya had also demonstrated what happened to those who pushed past certain limits.

The result was a set of unwritten rules. No formal declarations of independence. No organised military invasions of neighbouring regions. Everything short of those thresholds was, in practice, tolerated.

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## The Harder Limits: Why Governors Didn't Fight Each Other

The prohibition on interoblast conflict was probably even more self-enforcing than the prohibition on defying Moscow. Had governors begun fighting each other — seizing disputed territory, cutting off rivals' trade routes by force — the consequences would have been severe for everyone. Federal military intervention would have acquired genuine popular legitimacy. Foreign investment and trade relationships, already fragile, would have collapsed entirely. A cascade of unpredictable fragmentation would have threatened every governor's position simultaneously.

This doesn't mean the boundary between oblasts was entirely peaceful. Below the threshold of organised invasion, there were almost certainly violent incidents that official accounts attributed to organised crime or highway banditry — armed checkpoint disputes, clashes between security forces with implicit gubernatorial backing, proxy conflicts between oligarch-linked private armies operating in border areas. The reporting incentives all ran in the same direction: governors wanted to disguise political violence as criminal activity, and federal authorities had little interest in acknowledging quasi-military conflicts they couldn't control.

The parallel to medieval practice is again instructive. Feudal barons were technically prohibited from waging war on each other, but violent border incidents, raids, and proxy skirmishes were constant. The line between a governor's militia enforcing his checkpoint and a border skirmish is genuinely blurry. Russia in the late 1990s likely occupied similar territory.

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## The Oligarchs and the Missing Piece

The quasi-feudal analogy has one important additional layer: the oligarchs. By the late 1990s, figures like Potanin in Norilsk and Abramovich in Chukotka effectively controlled entire regional economies, maintaining private security forces numbering in the thousands — armies in everything but name. The relationship between oligarchs and governors varied: sometimes symbiotic, sometimes competitive, always complex.

What the oligarchs added to the feudal picture was a second tier of power that neither answered to Moscow nor to the governors, but which had its own implicit rules about the limits of permissible conflict. Khodorkovsky's eventual confrontation with Putin was in part a consequence of his attempt to break those rules — funding multiple political parties simultaneously, seeking Western partners for Yukos in ways that would have partially placed Russian strategic assets beyond Kremlin reach. He was testing whether the oligarchic tier could develop genuine political independence from both Moscow and the regional barons.

The answer, as it turned out, was no.

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## What Held It Together: The Western Decision

One of the most consequential and least discussed aspects of Russia's 1990s stability is the role of Western financial architecture. The conventional story frames Western engagement — IMF loans, World Bank projects, bilateral aid — as an attempt to support democratisation and market reform. This is not wrong, but it misses a structural political choice embedded in every financial arrangement made during this period.

Western governments and international financial institutions consistently chose to route capital through Moscow. IMF negotiations were conducted with the federal government. Sovereign debt obligations were federal. Correspondent banking relationships that connected Russian institutions to dollar clearing systems ran through federal channels. Foreign companies seeking to invest in Russia engaged federal ministries, giving Moscow a veto — formal or informal — over major economic relationships.

The effect was to make the federal government the indispensable node in Russia's connection to global capital. A governor who defied Moscow too openly risked being cut off from the financial flows that kept his regional economy functioning. Full secession would have meant economic isolation at a moment when every region was dependent on external capital.

There were people within Western governments and international institutions who understood perfectly well that this was a political choice with political consequences. The alternative — engaging regions directly, accepting or even encouraging a degree of fragmentation — was genuinely contemplated in some quarters. The argument for it was that smaller, more manageable successor states might be more reliably democratic than one vast, unstable, nuclear-armed federation.

The decision to bet on Moscow's survival, to keep financial infrastructure centralised, was arguably one of the most consequential geopolitical choices of the decade. It deserves far more analytical attention than it receives.

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## The Yeltsin Coalition Logic

Yeltsin's relationship with the governors was not simply a product of his weakness. It was, at least in part, a deliberate transaction. The governors controlled regional political machines that could deliver votes. In the 1996 presidential election, with the Communist Party's Zyuganov posing a genuine challenge, Yeltsin needed those machines. Regional autonomy was the currency in which he paid for political support.

This reframes the 1990s equilibrium not as a system held together by one man's incapacity but as a genuine, if unstable, political contract. Governors got autonomy. Yeltsin got re-election and protection from the communist opposition. Both sides had leverage. Neither could afford to destroy the arrangement.

What made the equilibrium stable was precisely that it served the interests of the key players — not that anyone lacked the power to disrupt it. That is a meaningfully different kind of fragility.

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## Putin's Systematic Demolition

Understanding the equilibrium makes Putin's achievement more legible — and more impressive. He did not simply reimpose central authority by force of personality. He systematically dismantled each pillar of the arrangement.

The Second Chechen War addressed the military deterrent directly. Fought with far greater ruthlessness than the first — more artillery, less concern for casualties, Grozny levelled — it reestablished the credibility of federal military force. The message was deliberate: the first war's outcome had been about political will, not military capability.

The death of Alexander Lebed in a 2002 helicopter crash removed the one regional figure who combined personal military credibility, popular legitimacy, and demonstrated willingness to act as an independent political force. Lebed had negotiated the Khasavyurt Accords essentially as an autonomous actor, functioning almost as a warlord-diplomat. His earlier role as security secretary had shown what an ambitious regional figure with military backing might attempt. Whether or not his death was arranged, its effect was to eliminate the individual most capable of credibly threatening federal authority from within the system.

The arrest of Khodorkovsky in 2003 was the masterstroke. It was not primarily about money, or even about suppressing political opposition, though it served both purposes. It was a demonstration addressed to every oligarch and governor simultaneously: property rights in Russia are conditional on loyalty to the Kremlin. The speed with which potential defenders of Khodorkovsky fell silent revealed how completely the balance of power had already shifted. Nobody came to his defence because nobody calculated it was worth the risk.

The cumulative signal was unambiguous: military force would be used; dangerous individuals would be removed; economic destruction awaited those who defied Moscow openly. What is remarkable is how few people Putin actually had to destroy. The demonstration effect was sufficient. Feudalism requires barons willing to fight. Putin methodically eliminated the credibility of that option before most governors thought to test it.

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## A Close Call Misremembered as Inevitable

The deeper implication of this analysis is uncomfortable for triumphalist narratives of Russian state-building. Russia's territorial integrity in the 1990s was more contingent than official histories acknowledge. The military and political conditions for fragmentation were genuinely present. Tatarstan had a larger population than Chechnya, real industrial infrastructure including oil and defence manufacturing, its own security services, and a formal bilateral treaty already acknowledging quasi-sovereignty. Bashkortostan was comparable. Had either Shaimiev or Rakhimov decided that the gains from full independence outweighed the risks, the calculus would have been different from Dudayev's — and potentially more favourable.

That they did not is attributable less to the strength of Russian statehood than to a series of contingent calculations: that FDI dependency made economic isolation suicidal, that no one wanted to be first to pull the trigger, and that Chechnya had made the cost of pulling the trigger viscerally clear.

Russia in the 1990s was not a state that survived a crisis through institutional resilience. It was a near-miss, retrospectively narrated as inevitable stability. The quasi-feudal equilibrium that characterised the decade was not a transitional disorder on the path to normal statehood. It was a functioning, if fragile, political order with its own internal logic — one that happened to be dissolved by a combination of rising oil revenues and foreign investment, a ruthless new president, and the compounding demonstration effects of a few carefully chosen acts of power.

This hopefully dismantles the Russian nationalist myth that the west preyed on a weak and naive Russia. The west made choices advantagous to the Russian state every time such a choice could be made.

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*This article draws on analysis of Russian regional politics in the Yeltsin and early Putin eras. Some interpretations, particularly regarding sub-threshold violence at oblast borders and the deliberate political logic of Western financial centralisation, represent analytical inference rather than documented fact, and should be treated accordingly.*

The story of the modern economy didn't begin in a Silicon Valley garage, but in the soot-stained air of the Ruhr Valley and the clanging heat of Henry Ford's Highland Park. When the assembly line arrived, it didn't erase the worker — it dismantled the craftsman. The blacksmith who once understood every nuance of tempered steel was replaced by a line operator who understood only the repetitive torque of a specific bolt. Power concentrated in the hands of the architects of the system, while the line itself became more valuable than any individual standing beside it.

There are very few skilled blacksmiths left. This is not a tragedy unique to our moment — it is simply what mechanisation does. It hollows out craft, redistributes skill upward into the machine, and moves on. The workers who remain earn their living operating systems they did not design and do not own. The tragedy of the first industrialisation was not the disappearance of the blacksmith. It was that Europe, having built the machines, captured the surplus. This time, it has not built them.

Today, that same mechanisation has arrived for the ivory tower. The quiet offices of the lawyer, the analyst, the consultant, and the engineer are being reconfigured into digital factory floors. We are witnessing the industrialisation of thought — and Europe, whose economy rests almost entirely on knowledge-intensive services, is watching it happen from the outside.

What the New Machines Actually Do

To understand the stakes, we must move past the twin poles of "magic" and "uselessness." Modern AI is a high-speed engine for bounded tasks. It excels when the inputs are digital, the output format is predictable, and the cost of a minor error is lower than the cost of human slowness.

Specifically, it has mastered three things.

Massive-scale synthesis. Summarising ten thousand pages of discovery documents or classifying a decade of financial filings in seconds. Work that once required a team of junior associates for weeks is now done before lunch.

Drafting and translation. Generating reliable first passes of contracts, code, marketing copy, or technical reports — not perfect, but good enough to be the starting point rather than the blank page.

Pattern recognition. Finding the relevant precedent in a million cases, spotting the anomaly in a vast dataset, flagging the clause that deviates from standard form.

AI thrives in what might be called known answer spaces — wherever the solution exists within the corpus of previous human output, the machine can find it, rephrase it, and present it at speed. It is the ultimate refiner of the existing.

From Craftsman to Refinery: The New Workflow

The core transformation is not that AI replaces humans — it is that AI restructures the workflow around itself, and humans reorganise accordingly. The early vision of a "centaur" model — human and AI working side by side, each compensating for the other's weaknesses — is already giving way to something more asymmetric.

The emerging model is the closed-loop refinery. It works like this.

A human expert — a lawyer, an analyst, an engineer — no longer performs the foundational work of their discipline. Instead, they design the constraints. They define the no-go zones: common error types, jurisdictional requirements, quality thresholds, ethical bounds. These are encoded not as instructions to a colleague but as automated validation tests.

The AI then enters a recursive loop. It generates a draft, runs it against those tests, detects its own failures, and retries — what might be called a Ralph Loop, a self-correcting agentic cycle that repeats until the validation suite returns green. The human does not read the entire drafts. They intervene only when the system encounters a problem it was not programmed to check.

The result is that a single person can oversee a volume of work that previously required a large team. The human has moved off the production line entirely. They are the factory manager watching a floor of silent, self-correcting machines.

Where Deep Human Understanding Remains Essential

The closed-loop refinery has a structural weakness that its proponents rarely advertise: it requires that correct can be defined and verified in advance.

The Ralph Loop only works when a test suite can be written. The AI checks its output against known standards, established precedents, encoded rules. When it fails, it knows it has failed and tries again. This is powerful. But it is entirely dependent on the map existing before the journey begins.

There is a category of work where no such map exists — where the human must hold genuine ambiguity, contradictory evidence, and novel context in mind and reason through it without a verification shortcut. This is not the "edge" of a profession — it is closer to its substrate: the deep contextual reasoning that cannot be made explicit enough to encode.

A lawyer arguing a case with no precedent. A consultant navigating a geopolitical situation that has not happened before. A doctor interpreting symptoms that don't fit the pattern. In these moments, the refinery stalls. The human is not a fallback — they are the only viable instrument.

There is a further complication. Agentic AI systems — those that perform multiple steps autonomously in sequence — become progressively less reliable as the chain lengthens. A slight misinterpretation at step two compounds into a confident hallucination by step ten. The machine does not know what it does not know, and when it is wrong in genuinely novel territory, asking it to check its own work produces a more assured version of the same error. Deep human understanding also remains essential as the diagnostician of these failures — the person who can see not just that the output is wrong, but why, and what category of wrongness it represents.

The practical division of cognitive labour, then, is this: the refinery handles volume, speed, and the retrieval and synthesis of existing knowledge. The human handles the genuinely novel, the irreducibly ambiguous, and the moments when the system's own verification cannot be trusted. This is a coherent workflow. The danger is not that it fails — it is that it works extraordinarily well, and that the economic surplus it generates flows almost entirely to whoever built and owns the refinery.

Europe's Impoverishment

This is where the European question becomes existential.

The European economy is built on knowledge-intensive services — law, finance, engineering, consulting, medicine, design. These are precisely the sectors the automated refinery will industrialise first and most profitably. They are also the sectors on which the European middle class depends. The junior associate, the graduate analyst, the junior consultant, the early-career engineer — these are not peripheral figures in the European economic story. They are its foundation.

If a single senior partner, equipped with a closed-loop system, can do the work of fifty junior associates, the pyramid inverts. The pathway into the professional middle class — that long apprenticeship of foundational work, the slow accumulation of judgment through exposure to thousands of ordinary cases — collapses. Not because the work disappears. Because the machine does it instead, and does it cheaper.

Europe will not become poor in any absolute sense. Living standards will not collapse overnight. But the trajectory is toward a continent that is prosperous but peripheral — comfortable enough, but no longer setting the terms. This is a subtler fate than decline, and in some ways more insidious. A craftsman who starves organises. A craftsman who earns a decent wage doing finishing work on someone else's assembly line does not immediately recognise what he has lost.

What Europe stands to lose is not income — it is agency. The capacity to shape the rules, set the standards, and capture the surplus of the industries that matter most.

The Infrastructure Problem

Here the asymmetry becomes structural.

The United States and China are building the economic engines of the next era — the foundation models, the agentic frameworks, the closed-loop architectures that will define how law is practised, how medicine is delivered, how engineering is done, how financial decisions are made. Europe is a large and sophisticated consumer of these systems. It is not, in any meaningful sense, a producer of them.

This is not unlike Europe's position relative to American software in the 1990s — a large market, a significant user, a generator of standards and regulations, but not a builder of the underlying infrastructure. The difference is one of degree and depth. Software was a productivity layer. These new systems are being built into the cognitive core of the professions that constitute the European knowledge economy. The dependency is more fundamental, more embedded, and harder to reverse.

Europe's instinct, when confronted with American technological dominance, has been regulatory. GDPR genuinely reshaped global data practices. The AI Act is influencing model deployment internationally. This is not nothing. Governing someone else's infrastructure is a real form of leverage.

But it is categorically different from owning it. Regulation can slow deployment, shape norms, extract compliance costs, and occasionally force structural changes. It cannot capture the economic surplus. It cannot ensure that the value generated by the industrialisation of European law, medicine, and finance flows to European workers, firms, or states. A continent that writes the rules for a machine it did not build, running on data it did not curate, generating profits that flow elsewhere, is not in a position of strength. It is in a position of managed dependency.

Who Designs the Line

The crucial asymmetry is this: a small number of people design the workflow, choose the tools, encode the validation constraints, and set the quality thresholds. Everyone else executes within it.

This is precisely what happened to craft labour in the first industrialisation. Knowledge moves upward and outward — into the system, away from the individual worker. The system becomes more valuable than the people operating it. The architects of the line capture the surplus; the operators receive a wage.

Europe's political economy was built to serve the knowledge-working middle class — the constituency of social democracy, the backbone of the welfare state, the assumed beneficiary of a university education. That class is not about to vanish. But its position in the global hierarchy of production is shifting, and shifting fast. The danger is not a Europe of poverty but a Europe of operators: educated, comfortable, and working on a digital assembly line that it neither designed nor controls.

Mechanisation Has a History

The first mechanisation took sixty to eighty years to reach equilibrium. It produced enormous wealth and enormous suffering, often simultaneously, and its benefits were distributed according to who owned the machines, not who operated them.

The pattern is not new. What is new is Europe's position within it. In the nineteenth century, the Ruhr Valley and the English Midlands were where the machines were made. The surplus flowed accordingly.

The question for the next generation of European policymakers is not how to stop the assembly line of the mind — it cannot be stopped, and attempting to stop it is simply a way of falling further behind. The question is whether Europe can move from being a market for these technologies to being a maker of them. Whether it can build the refineries rather than merely work in them.

The window for that shift is not permanently open.

*One i did not plan for AGI because AGI is not something you can plan for.
* Two I oversimplified many things in this piece for the simple reason of brevity many versions are possible for various forms of knowledge work and how much human involvement remains.