October 1997 | Age 22 | Smolny Institute, St. Petersburg
The October chill had arrived, frost spreading across the windows of the mayor's conference room. Alexei sat across from Anatoly Sobchak, a thick contract draft between them. Behind Alexei sat Boris and Olga. Behind the mayor sat three city council members, two legal advisors, and Yuri Petrov—the Vodokanal director, his face a mask of barely concealed hostility.
"We've reviewed your proposal," Sobchak said, his voice tired. "Twenty-year concession. Fifty million dollars in capital improvements. Tariffs capped at fifteen percent above inflation. City retains ownership of all assets. Vodokanal employees keep their jobs."
"That's correct," Alexei said.
"With one addition," Petrov interjected. "The director of Vodokanal is appointed by the city, not the concessionaire."
Alexei had expected this. Petrov wanted to keep his job—or at least, keep the illusion of control.
"The director reports to the board," Alexei said. "The board will have five members: three appointed by the city, two by Neva Group. The director serves at the board's pleasure."
"But the city appoints the director?"
"The board appoints the director. The city has three votes on the board. If you want to keep Petrov, you can vote to keep him. If you want him gone, you can vote to remove him. Either way, the decision is shared."
Petrov's face tightened. He'd hoped for exclusive control over his own position. Now he was subject to a board—and Alexei's two votes might be enough to block him if the city was divided.
"Acceptable," Sobchak said before Petrov could object. "What about tariffs?"
Boris stepped forward. "Current tariffs are three rubles per cubic meter—about five cents. That barely covers operating costs. There's no margin for investment."
"Your proposal increases tariffs?"
"To six rubles per cubic meter. Ten cents. Still far below European rates of fifty cents to one dollar. But enough to generate a reasonable return on our investment."
The council members exchanged glances. Doubling water rates was politically dangerous.
"And what do residents get for that increase?" one of them asked.
"Clean water. Reliable service. No epidemics. Plus, we're offering a lifeline rate for low-income households—two rubles per cubic meter for the first ten cubic meters monthly. That covers basic needs for families below the poverty line."
Boris distributed spreadsheets. The numbers showed that most families would pay an additional three to five dollars per month—a significant increase in 1997 Russia, but not catastrophic.
"We'll need to present this to the public," Sobchak said. "Explain the benefits. Justify the increase."
"I'll handle the public relations campaign," Alexei said. "My treat. The city doesn't need to spend anything."
Petrov couldn't contain himself any longer. "This is a giveaway! You're stealing our water system for pennies!"
"I'm investing fifty million dollars," Alexei said calmly. "That's not pennies. That's more than Vodokanal has spent on capital improvements in the past decade combined."
"Fifty million dollars that you'll earn back in tariffs—with interest."
"Of course I'll earn it back. I'm not a charity. I'm a businessman. I invest capital, I take risk, I earn a return. That's how infrastructure works."
"You're a predator."
"I'm the only person in this room with the money to fix your pipes. If you have a better offer, I'm happy to step aside."
Petrov had no better offer. Everyone knew it. The foreign companies had looked at St. Petersburg's water system and walked away. Too much political risk. Too much corruption. Too many unknowns.
Alexei was the only bidder.
Sobchak sighed. "Yuri, sit down. We're going to vote."
The city council had nine members. Six were present. Four votes were needed to approve the concession.
Sobchak voted yes. Two of his allies voted yes. The fourth vote came from a communist council member who had been promised that all Vodokanal employees would keep their jobs.
"Four to two," Sobchak announced. "The concession is approved."
Petrov stood abruptly. "I'll fight this. I'll go to the newspapers. I'll go to the prosecutor."
"Do that," Alexei said. "And I'll release the audit I commissioned. The one that shows three million dollars in procurement fraud. The one that identifies your ghost employees by name. The one that traces inflated contracts to shell companies owned by your brother-in-law."
Petrov went pale.
"You've been stealing from a water utility while people got sick," Alexei continued. "You should be in prison. Instead, I'm offering you a chance to keep your job—if you cooperate. Don't make me reconsider."
The room was silent. Then Petrov sat down, his defiance gone.
The contract was signed an hour later. Alexei's pen moved steadily across each page—twenty-three signatures in total.
As he finished, Sobchak extended his hand. "You've taken on a terrible burden, Volkov. If this fails—if the water isn't clean, if the tariffs cause riots, if anything goes wrong—I'll blame you publicly."
"I understand."
"And if it succeeds?"
"Then you'll take credit for saving the city. I'm fine with that. I don't need the glory. I need the cash flow."
Sobchak laughed—a genuine laugh, the first Alexei had heard from him. "You're an unusual oligarch. Most of them want statues. You want spreadsheets."
"Statues don't compound at twelve percent annually."
That evening, Alexei met with Vladimir Tretiak—the water engineer Olga had identified. Tretiak was in his late forties, with calloused hands and the weathered face of someone who had spent decades in treatment plants.
"You've seen the contract," Alexei said.
"I've seen it. Fifty million dollars. Three years. Clean water."
"Can you do it?"
Tretiak pulled out a notebook. "I've been designing this in my head for five years. The treatment plants need new filters—that's ten million. The pipes need replacement—that's twenty million. The pumping stations need modernization—that's fifteen million. The remaining five million for contingency."
"Seems straightforward."
"Nothing about water is straightforward. The Neva is polluted with industrial waste. The treatment chemicals are unreliable. The workforce is demoralized. And the city government will blame us for every backup, every leak, every complaint."
"You're not inspiring confidence."
"I'm being honest. You asked if I can do it. The answer is yes. But it won't be easy, and it won't be quick, and there will be setbacks."
Alexei studied the man. He wasn't a salesman. He wasn't a politician. He was an engineer who understood pipes and pumps and filtration.
"Two percent equity in the water company," Alexei said. "Vested over five years. Plus a hundred fifty thousand dollar annual salary. Plus a performance bonus tied to water quality metrics."
Tretiak blinked. "That's generous."
"That's what I pay for competence. When do you start?"
"Tomorrow."
That night, Alexei wrote:
October 15, 1997
The water contract is signed. Fifty million dollars. Twenty years. Two million residents.
Petrov was the obstacle. Now he's the ally—reluctant, resentful, but cooperative. He knows I have evidence of his corruption. He knows I could destroy him. So he'll do what I say.
That's not ideal. I'd rather have willing partners than coerced ones. But in Russia, in 1997, willing partners are rare. Most people need incentives—or threats.
Tretiak is different. He wants to build something. He wants to fix what's broken. He's like me, twenty years older, with less capital and more calluses.
I trust him. Not completely—I don't trust anyone completely. But enough.
The water system will take years to modernize. Years to generate returns. But once it's done, it's permanent. The pipes will last fifty years. The treatment plants will last thirty. The revenue will flow regardless of oil prices, regardless of politics, regardless of crises.
That's the seventh pillar. Water. The most essential of all.
The empire grows.