Email This Post - Print This Post Print This Post

In “Les Liaisons Dangereuses”, the 18th century French expose of the way vicious people plot to undermine virtue, it is allowed to a manservant to point out to the villain, the Vicomte de Valmont, that “going to bed with a girl only means getting her to do something she wants to do; but from that to getting her to what we want is often quite another story.”

For many years now, first as a deputy finance minister, then as finance minister, and finally as ex-President Boris Yeltsin’s choice of prime minister to succeed Vladimir Putin, Mikhail Kasyanov has played everyone’s choice of the willing girl. It has been a lucrative and pleasurable run for him. There was even a time last October, just before President Putin had Yukos oligarch Mikhail Khodorkovsky arrested and jailed, that Kasyanov imagined that he could invite ExxonMobil into the bed he was sleeping in. And that has ultimately proved to be a problem for Putin: getting Kasyanov to do what Putin wanted was quite another story.

Until Tuesday in Moscow, Russian politicians, including some close to President Vladimir Putin’s St. Petersburg circle, believed that Premier Kasyanov had a 50 percent chance of being reappointed to the post, after Putin wins reelection. The poll, scheduled for March 14, looks likely to be a walkover for Putin. Until now, he had not been expected to do anything to his ministers except oblige them to curry favour, and hold their breath.

Putin’s unexpected announcement that he is relieving Kasyanov of his duties, and dismissing the entire cabinet, not only ends Kasyanov’s chances. It also clears the slate of all the remaining Yeltsin appointees, and those ministers who have been closest to the oligarchs, the half dozen or so wealthy individuals who control most of Russia’s oil, mining and metals companies.

Putin has explained the surprise move as “not connected the evaluation of the Cabinet’s activity, which in my opinion have been satisfactory.” Rather, he said in a brief television announcement, the change reflects “my desire to show once more my position in the course of events which will develop after the presidential election slated for March 14, 2004.”

Removing Kasyanov, and putting an apolitical caretaker, deputy prime minister Victor Khristenko, in his place allows Putin to campaign as the sole candidate in the presidential race committed to a radical reorganization of Russia’s wealth. He said as much in his television statement. “Russian citizens have the right to know the proposals in stock, including the composition of the highest executive arm of government, in case I am reelected president of the Russian Federation.” That’s a nice way of saying that a vote for Putin will bury the unpopular past; interring Kasyanov & Co. is a politically adept way of demonstrating who is to blame. If Russian voters were entertaining the thought of staying home on election day, voting against all, or casting a protest vote for one of the minor runners, then Putin’s announcement demonstrates again, as he did last autumn, that he should be the popular choice by acclamation.

Putin’s decision to fire both Kasyanov and the cabinet together — while leaving the latter to act as caretakers until the new lineup is named — appears to have had no particular political trigger, although Putin is known to feel personally frustrated by what he views as the loyalty to the oligarchs of cabinet ministers who profess to be loyal to him.

His moves last autumn to charge the Yukos oil company shareholders with tax evasion, fraud, embezzlement, and forgery are well-known, and were one reason for the sweep in the December parliamentary elections of the pro-Putin movement, United Russia.

Less well-known is the move at the start of this month by Sergei Stepashin, a Putin ally from St.Petersburg, and possible candidate to be the new prime minister. Stepashin has ordered the state Accounting Chamber, which he heads, to investigate another oil oligarch, Roman Abramovich, for possible corruption in his administration of the Chukotka region, which he has headed since 2000.

Last Thursday, in another surprise move, Putin’s legal staff intervened to block oligarch, Vladimir Potanin, the controlling shareholder of Norilsk Nickel, Russia’s largest mining company, from releasing hitherto secret data on his company’s production, sale, reserves, and stockpiles of platinum group metals. Declassification of these secrets had been lobbied by Potanin last October, and backed by Alexei Kudrin, the finance minister, and another contender to be the new prime minister. Kudrin pushed the legislation through parliament at record speed, and Putin signed it into law last November.

The President appears to have woken up to the implications of the legislation only now. Potanin’s hopes for cashing out part of his multi-billion dollar stake in Norilsk Nickel have depended on the declassification measure, and on backing from ministers like Kasyanov and Kudrin. Now that they are gone, Potanin is stymied. A source close to the Kremlin has told me that Potanin has “reason to be a nervous man. Redivision of Norilsk Nickel is inevitable.”

The same source also told me that he believes Putin will continue playing one oligarch off against another, and that he expects aluminium boss, Oleg Deripaska, to run into Kremlin trouble later in the year. Deripaska, who controls Russian Aluminium (Rusal), one of the largest producers of aluminium in the world, is also the most active of the Russian oligarchs in Africa. He controls bauxite mines and an alumina refinery in Guinea, and is publicly said to be bidding for a Nigerian aluminium plant, due to be awarded in April. An English High Court judge recently issued a tough ruling criticizing Rusal’s political and commercial tactics in Guinea.

At home Deripaska’s attempt to cash out some of Rusal’s downstream aluminium plants is now likely to attract much keener attention from the Kremlin than it would have, under the outgoing government. According to local government sources, Deripaska is trying to persuade US aluminium giant Alcoa to buy him out of the Samara Metallurgical Plant in the Samara region, and the Belaya Kalitva Metallurgical Plant in Rostov.

An outsider who has been advising Putin on policy reform in the oil and mineral resource sector, Vladimir Litvinenko, was not given much chance of winning a seat in the new cabinet — until now. Litvinenko, Rector of the St.Petersburg Mining Institute, has been a strong advocate of blocking foreign corporation takeovers of strategic Russian mineral assets. He has also told me he favours the use or lose rules that were recently invoked by the government to cancel ExxonMobil’s licence for the Sakhalin-3 offshore project in the Fareast. The big American had held on to the licence for years, without doing anything to upset Prime Minister Kasyanov. But by doing nothing at all he and ExxonMobil have invited a veritable revolution in Russian resource policy – and Putin now appears to be committed to that direction.

By putting his prime minister to bed, Putin has sent a wake-up call to Russian policymakers, and the oligarchs, that is unmistakable.

Leave a Reply