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 ...