Sunday, Feb 02, 2003
Boris Yeltsin clan keeps Russia in its grip
By Vladimir Radyuhin
MOSCOW FEB. 1. Three years ago, Russia's first post-Communist President, Boris Yeltsin, sprang a stunning New Year surprise on the nation by stepping down a full six months before his second and last term expired. The decision confounded political pundits, who had predicted the power-addicted leader would cling to the throne to the very end.
Today, the pundits can feel partly vindicated. The Yeltsin clan, known as The Family, has not only retained power, but increased it, resisting timid attempts by Mr. Yeltsin's hand-picked successor, Vladimir Putin, to ease the stranglehold of the Family-linked oligarchs on the Russian economy. The Family dramatically demonstrated its might earlier this month by snapping cheap the last big state-controlled slice of Russia's lucrative oil industry, the Slavneft giant. What was touted to become Russia's first open and fair auction, turned out to be a carbon copy of the rigged sell-offs of the Yeltsin era.
A front company set up by two oil tycoons acquired Slavneft for a fraction over the $1.7 billions starting price in the absence of any credible challenge. The Russian budget lost over $1 billion it would have earned if other big bidders had not been discouraged from taking part in the auction or disqualified through dubious court rulings.
The auction also dealt a painful blow to Mr. Putin, who during his recent visit to Beijing, had personally invited the Chinese National Oil Corporation to bid for Slavneft. However, on the eve of the auction, Russian Government officials persuaded the Chinese company to pull out. A handful of magnates belonging to The Family reportedly control 30 per cent of Russia's economy, including oil, aluminium, coal, copper, steel, automotive, aviation, pulp and paper and other industries.
Roman Abramovich, whose acquisition of Slavneft has made him one of the top Russian oil moguls, had the reputation of being the former President's ``family purse.'' His partner in the RusAl company, which controls 80 per cent of aluminium production in Russia, Oleg Deripaska, is married to the daughter of Mr. Yeltsin's former speech writer, Valentin Yumashev, who, in turn, is married to Mr. Yeltsin's younger daughter, Tatyana.
They all have close links with Mr. Putin's Chief of Staff, Alexander Voloshin, who was appointed to the job way back by Mr. Yeltsin. Mr. Voloshin is believed to be even more powerful than even the Prime Minister, Mikhail Kasyanov, who is also regarded as being close to The Family. The retention of both officials in their posts is said to have been part of the succession deal between Mr. Yeltsin and Mr. Putin. The Moskovsky Komsomolets daily calls Mr. Yeltsin "the main transmitter of the political will of his clan'' who has virtually unlimited access to the incumbent. But Mr. Yeltsin also plays a broader role of standing guard on the economic system he helped set up, when Kremlin-connected oligarchs snatched up oil wells, mines and factories for a song.
During his presidential campaign three years ago, Mr. Putin vowed to dismantle the system, saying, "the oligarchs will cease to exist as a class.''
He launched judicial inquiries into the two most politically-active tycoons, Boris Berezovsky and Vladimir Gusinsky, and drove them out of the country. Yet, on the whole, the oligarchs have grown more powerful today. A hundred or so people are estimated to control 85 per cent of Russia's economy.
Not surprisingly, while Mr. Putin's popularity has recently exceeded 80 per cent, only 33 per cent think his handling of the economy has been a success, while 62 per cent consider it a failure. Analysts believe Mr. Putin will mount a major offensive against the oligarchy next year to establish a solid base for his re-election in 2004.
During a call-in interaction with Russians earlier this month, Mr. Putin promised to take away super-profits in the commodity sector by taxing natural resources on which the oligarchs sit.
Sergei Markov of the Institute of Political Studies warns that the oligarchs will put up fierce resistance to the plan.
"They may even hatch a conspiracy against Mr. Putin if he acts in a radical way,'' the analyst said. But the President has no option but cut the oligarchs to size. ``It is basically a question of who has power in this country - the oligarchs or the Government,'' Mr. Markov said. "Putin just can't go for re-election without first resolving this problem.''
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