March 24, 1998 in Nation/World

Kremlin Intrigue

Alessandra Stanley New York Times
 

Ever since President Boris Yeltsin was re-elected in 1996, the battle for Russia has been portrayed as a bitter struggle between a small group of tycoons who bankrolled his campaign in exchange for insider privileges, and the band of economic reformers he appointed to rein in those powerful bankers and businessmen.

No political decision is made in Russia without setting off an explosion of conspiracy theories. When Yeltsin dismissed his entire Cabinet Monday, including his loyal prime minister, Viktor Chernomyrdin, the question was not just why did he do it, but who was really behind the decision.

In the frenzied search for a rational - or at least tidy - explanation, Russia’s political elite was torn between crediting the byzantine world of backroom intrigue or the byzantine thinking of the president.

While some observers painted the decision as a maneuver by powerful bankers seeking to consolidate their influence, economic reformers chose to view the shake-up as a small victory for their team. It may have been a little of both.

Chernomyrdin, after all, is a former chairman of the state gas monopoly, Gazprom, who likes his economic reform served up slow and steady. And he is someone who has acted as a buffer between the country’s top businessmen and the government’s reform zealots. He was replaced, at least temporarily, by a young, reform-minded technocrat who was praised by economic reformers for being a political outsider with no allegiances to financial powers.

Even as he was preparing to clear out his desk, Anatoly Chubais, the first deputy prime minister and leading economic reformer who was also dismissed Monday, expressed some satisfaction that the reshuffle would not be much to the liking of some of the country’s most powerful bankers and businessmen, who had been baying for his removal for months. “Some oligarchs,” Chubais said with a smile, “woke up this morning in a cold sweat.”

Journalists who raced to the Kremlin Monday morning hungry for clues to a financial conspiracy, already were pointing their pens at Boris Berezovsky, the powerful oil and media tycoon who was one of Yeltsin’s key financial backers in his 1996 re-election campaign. Berezovsky, who was forced to resign from his post as secretary of the national security council last November, remains an influential figure, one who was openly at war with Chubais.

Berezovsky seemed to place himself in the center of the storm by giving an interview on Sunday night to the country’s top political talk show, “Itogi,” in which he boldly dismissed Chernomyrdin as unelectable in 2000, along with all other leading candidates ready to pursue Yeltsin’s policies.

“I do not view this as a tragedy,” Berezovsky said about the dearth of viable presidential candidates in the government. “I think that the government has immense opportunities for promoting new people.”

Surely, conspiracy theorists argued, Berezovsky was not only in the know, but had deviously plotted to persuade the ailing president to dump Chubais and Chernomyrdin and open the field to candidates more sympathetic to Berezovsky’s business interests. “It was not accidental that Yeltsin’s decision was made right after Berezovsky returned from Switzerland,” the newspaper Izvestia wrote.

Bankers and journalists alike pointed to recent examples where Chernomyrdin had made decisions that clashed with Berezovsky’s interests, most notably the privatization of Rosneft, one of the largest state oil companies. One of Berezovsky’s companies vied with other powerful financial groups, including Gazprom, to bid on Rosneft, and the government’s decision to sell off 75 percent of its shares would have required a far larger cash investment than Berezovsky’s group was able or willing to raise.

The war over Rosneft, like other recent and bitterly contested privatization deals, pits some of the country’s most powerful tycoons against each other and the government’s economic reformers.

Privatization in Russia has become a fierce and ugly battle for power and economic position, and one that has put severe strains on the economic reform effort.

Chernomyrdin may well have infuriated Berezovsky and lost his support. And while it is entirely possible that Berezovsky used his influence to lobby against Chernomyrdin, Yeltsin is unlikely to be deeply moved by anyone’s interests but his own.

And Berezovsky could hardly have been thrilled with some of the other consequences of the ouster.

For one thing, it propelled Sergei Kiriyenko, 35, into sudden prominence as first deputy prime minister in charge of forming a new Cabinet. Kiriyenko, who was brought to Moscow from Nizhni Novgorod a year ago by his friend and mentor, First Deputy Prime Minister Boris Nemtsov, took over as minister of fuel and energy when Nemtsov was stripped of that post six months ago.

One government aide said that while Berezovsky had won his bid to oust Chernomyrdin, he lost his chance to replace him with a candidate more to his liking.

The firings, moreover, did not seem to hurt the presidential chances of Nemtsov, who, like Chubais, is a leading economic reformer. Nemtsov, who sided with Chubais against Berezovsky in a recent skirmish over the privatization of state telecommunications giant Svyazinvest, was not singled out for dismissal by decree, as were Chernomyrdin, Chubais and Anatoly Kulikov, the minister of interior.

Kiriyenko made a point Monday of showing that Nemtsov is still in power: He put him in charge of cutting duties for oil and gas to offset the worldwide drop in oil prices, and asked him to work out a plan to pay wages and pensions on time.

Nemtsov was widely viewed as a rival to Chernomyrdin in the next presidential election. If he stays in power, as most analysts predict, he will have a better shot at becoming Yeltsin’s anointed successor with Chernomyrdin out of the way.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email