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By John Helmer in Moscow

The last of the titans who have dominated Alrosa, Russia’s diamond monopoly, since its founding in 1993 has handed in his resignation, and had it accepted by the Kremlin. Vyacheslav Shtirov (also spelled Shtyrov, right image) has left for “personal reasons”, announced an aide to President Dmitri Medvedev. The reasons are his health and his family, claims a high-level Sakha diamantaire. He hasn’t been pushed out, claims another.

Shtirov, 57, was born in Yakutia, but he was from ethnic Russian stock, rather than from the indigenous Yakut majority. A construction engineer, then economist by training, he served in ministerial posts in the Sakha republic government from 1991, rising to the vice presidency under the dominant Yakut politician during the 1990s, Mikhail Nikolaev. In 1996, Nikolaev dispatched Shtirov to run Alrosa in Moscow. But when Nikolaev fell foul of the incoming federal president, Vladimir Putin, Shtirov was ordered from Moscow back to Yakutsk, taking the presidency, and preventing Nikolaev from serving a third term. That was in 2002.

Since then, Shtirov has balanced the growing federal government pressure on the Sakha republic to release its financial and managerial hold over Alrosa, with the demands of local constituencies to retain control over Alrosa’s cashflows and diamond pipeline. As the regional boss, and for a time deputy chairman of the Alrosa Supervisory Council, Shtirov was the de facto controller of Alrosa, along with Otar Marganya, a Finance Ministry advisor and banking executive, who played go-between and fixer between Shtirov in Yakutsk; the Alrosa chief executive in Moscow; and the federal Finance Minister, Alexei Kudrin; Kudrin was also chairman of the Alrosa board. The troika of Shtirov, Marganya, and Kudrin arranged the appointments of successive Alrosa chief executives, Alexander Nichiporuk and Sergei Vybornov, and built up Investment Group Alrosa as a non-diamond investment unit active in non-diamond resources that took Shtirov’s fancy, inside and outside the Yakut territory.

In 2008, as Vybornov triggered a combination of financial and political problems between Moscow and Yakutsk, Shtirov lobbied to oust him, and replace him himself. The Kremlin turned him down, appointing Fyodor Andreyev, a finance technocrat, instead. Shtirov was told to stay at his post and assure the Sakha vote outcome for the 2011 and 2012 national parliamentary and presidential elections. His second five-year term officially runs out in 2012.

That he has had to wait almost a year since he first asked to leave, following Andreyev’s appointment in July of 2009, is easier to explain than the timing of his exit now. According to Ararat Evoyan, head of the Russian Diamond Manufacturers Association, Shtirov’s resignation is strictly personal. “There would be no point in making Shtirov resign now when the situation in Yakutia has very much improved,” Evoyan told Polished Prices.com. “If the government wanted to remove him, they would’ve done that several years ago. But evidently he left the post on his own. He certainly did a lot for Yakutia. He is a brilliant manager.”

To those who suspect that Shtirov was removed by Kudrin and other federal government officials, who want a politically weaker, personally more pliant figure in the Sakha presidency, as Alrosa tries to overcome local resistance to privatization and IPO, Evoyan is categorical: “To my mind, Alsosa shouldn’t go public now — it’s the wrong time. The management will not reach the expected effect.”

A source close to a leading Russian diamond company said that Shtirov had supported the idea of converting Alrosa into an open stock company as a preliminary to an initial public offering. “I believe that he resigned because he got tired of working far away from the capital [Moscow]. He was made president of Yakutia because Moscow needed a reliable representative in the region, and he does his work well. Now he thinks his mission is over; he wants to live and work in Moscow. Since he became president of Yakutia, he has diversified the regional economy. He introduced coal and steel production, and his contribution is great. Moscow can’t have any complaint about his achievements.”

Shtirov’s family includes two daughters, at least of one of whom lives in Turin, Italy, and he reportedly wants to spend more time abroad himself. That has encouraged the Kremlin to find a local successor with enough time and clout to keep the lid on the Yakut nationalism, which is hostile to Moscow, pro-Communist in voting orientation, and capable of mobilizing against such federal schemes as an Alrosa IPO. Candidates for the post include Shtirov’s interim successor, Yegor Borisov, the republic prime minister (left image in the illustration); and Vasily Kolmogorov, a former senior prosecutor, who is also a Yakut.

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