06 ноября 2003

Focus: Analysts see positive outcome to Kremlin power struggles

Prime-Tass

 

MOSCOW, Nov 6 (Prime-Tass) -- Changes in personnel at Russia´s biggest oil company Yukos have been grabbing the headlines this week, most notably with Mikhail Khodorkovsky resigning as company CEO Monday - via a letter from his jail cell that was then reproduced on Yukos´ website. But the Yukos imbroglio has brought about a few changes in the presidential administration too. Analysts were worried by last week´s resignation of the Kremlin Chief of Staff, but expressed satisfaction with President Vladimir Putin´s resultant appointments of Dmitry Medvedev to the post, and Dmitry Kozak as Medvedev´s first deputy. Putin officially accepted Thursday 30 October the resignation of Alexander Voloshin, who reportedly tendered his resignation from his long-held post as Kremlin Chief of Staff immediately Khodorkovsky was arrested Saturday 25 October. Analysts have said Voloshin resigned when he realized he was no longer able to defend in government the interests of big business. Voloshin was widely expected to be forced from the Kremlin post after the presidential elections, due March, as a left over from the Yeltsin-era administration and representative of the Family of Yeltsin´s cronies. But his early departure caused a ripple of worry among analysts as it represented a breakdown in the system of political checks and balances that has been a centerpiece of the much vaunted stability that has characterized Putin´s presidency. In a politics flashnote published Friday, October 31, Aton Capital wrote that the departure of Voloshin is indicative that Putin´s priorities as president are now in flux. This could eventually have positive implications for the economic reform program, Aton Capital implied. "The reduction in the political clout of the head of the presidential administration is also a function of Putin´s increasing experience as a leader. Voloshin had to work very hard to smooth the path for Putin and help him navigate the minefields of both domestic politics and the international stage following the latter´s election in 2000; having gained experience Putin is now more in need of a presidential chief to do the heavy bureaucratic lifting in order to get Russia running smoothly," the investment house wrote, suggesting that Medvedev fits that bill. However, the situation is not necessarily so straightforward. Roland Nash, chief strategist at Renaissance Capital, said the appointment of Medvedev was made more out of political expediency than out of a desire to see economic reforms boosted. Nash said Voloshin has "immense connections throughout the political system, which made him a very powerful political player." He added that Voloshin served as a voice for big business in the Kremlin. "His removal, therefore, considerably weakens the influence of big business over policy in Russia. Whether that influences the reform process remains to be seen," Nash said. The remaining representatives of Yeltsin´s inner circle, most prominent among whom is Prime Minister Mikhail Kasyanov, are under increasing political pressure to step down as Putin´s support base seeks to consolidate its grip on the reigns of power. Those who arrived in the Kremlin along with Putin in 2000 are broadly divisible into two groups. Both groups have their origins in St. Petersburg, where Putin rose to prominence as Deputy Mayor of the city. One group, popularly known as the siloviki, has its roots in the security organs, whilst the other has a mostly legal and academic background and is referred to as the St. Petersburg liberal faction. The former group is generally considered to be interested in redistributing Russia´s natural resources wealth in its own favor, and is particularly embittered about the results of the 1990s´ carve up of Russia´s resources, while the latter group is seen as committed to Putin´s program of broad economic reforms. Analysts were therefore pleased to see Voloshin being quickly replaced by his deputy Dmitry Medvedev, a component of the St. Petersburg liberal faction. "Like many observers, we breathed a sigh of relief when we heard it was the moderate to liberal Medvedev taking Voloshin´s job and not one of the former KGB officials who are working a rung below Medvedev in the Kremlin," Aton Capital wrote in its flashnote. "Medvedev is a modern official with good knowledge of the requirements of economic reform in Russia and the global economy and we do not expect to see any dramatic change of course in government policy resulting from his ascension, rather, simply, a continuation of the current economic programs and possible increase in the efficiency of the state apparatus," the note continued. It has become all too evident lately that a power shift is underway within the Russian government, which analysts with faith in Putin say is aimed at decoupling business and the state, and is part and parcel of Putin´s stated reform goals. The handling of the Yukos situation certainly leaves something to be desired, but essentially the reform program is on track, they argue. However, not everyone subscribes to this view.

 

Among those who do not is Alexander Bim, a political analyst with Moscow based Image-Contact Consultant Group.

Bim argues that the authoritarian tendencies of Putin´s presidency have been steadily growing, and that the reform process has been dead in the water for some time. Bim said Voloshin´s resignation demonstrates that the Family has definitely lost this latest round of the struggle for power. "But contrary to broad opinion, I don´t think his resignation is very bad, because I think he played a prominent role in the strengthening of authoritarian trends in the administration - Voloshin´s role in the process was very significant, he did a lot to establish control over the Kremlin, the Duma, and the Federation Council," Bim said. Bim said he expects the role of the presidential administration in Russia´s economic reforms to be diminished over the next few years. This is not linked to Voloshin´s departure, though, he said. "The reforms had already been put on hold before the Yukos affair - and not due to the forthcoming elections, but for other reasons," he said. Bim described the rise of the siloviki as key here, and said reaching the next phase of the reform process has become impossible as a conflict of interests between preserving state power and initiating market-focused reform has become insurmountable. He gave the example of restructuring Russia´s state-controlled gas giant Gazprom, saying the reform is crucial to Putin´s economic reforms, yet has become undesirable since it would imply too great a concession to business on the part of the state. By contrast, he said, "the initial reforms on the macro (economic) side, for instance tax reform, did not imply any conflict of interests, because everyone was interested in having a flat tax band. However, Gazprom reform is going to require a break - it is about breaking up the company against the interests of the state," Bim said. However, Bim said the intensification of the power struggles within the Kremlin has not necessarily been a bad thing. "It is not only negative, it is also positive, because the hidden trends have now become obvious - it could have long term positive outcomes. If we can look beyond the sad events around Yukos, there are certain new developments within the elite, which may attract Putin´s attention and as a result it is possible the new Duma will be less controlled and more interested in reform," he said, adding that the next presidency is likely to be dominated by the issue of succession rather than control. United Financial Group´s Chief Strategist Christopher Granville said the threat to the reform program comes not from the siloviki directly, but from another area entirely. "That is - how to deal with the oligarchs and their wealth, and how they interact with the state. In that area it is very clear that the siloviki are bringing a strong influence to bear. But as for having an effect on the broad economic reform program, I don´t think that´s an issue," he said.