Hidden Hand In Moscow's Big Shuffle

Yeltsin's firing of his Cabinet Monday may reflect the power of one tycoon, whose views could shape future of reforms.

By , Staff writer of The Christian Science Monitor

Since Russian President Boris Yeltsin unexpectedly fired his whole government on Monday, one name has cropped up constantly: Boris Berezovsky.

Russia's most prominent business magnate was named by leading newspapers and analysts as an important figure behind the major shakeup. The assumption - still unproven - that he played a key role sums up the interdependent relationship between the Kremlin and business oligarchs in the post-Soviet era.

Mr. Berezovsky epitomizes the so-called "Big 7," feuding tycoons who united briefly in 1996 to fund Mr. Yeltsin's reelection campaign.

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In an interview with the Monitor, Berezovsky welcomed the firings of long-serving Prime Minister Viktor Chernomyrdin and chief economic reformer Anatoly Chubais. He had disputes with both men over privatizations that failed to benefit his empire, which spans the media, finance, and oil industries.

"I was not surprised [at the news]. I am very happy that my vision coincided with the president's," says Berezovsky, who is in Yeltsin's inner circle.

Berezovsky stopped short of claiming responsibility for the firings.

"I never influenced [Yeltsin] directly, although maybe articles in my newspapers had an impact," he said in the interview.

Who are the 'Big 7'?

Since the breakup of the Soviet Union in 1991, Russia's "Big 7" oligarchs have run conglomerates that now control half of the country's economy.

The new capitalists also include Vladimir Gusinsky, head of the Most banking and media group; Uneximbank boss Vladimir Potanin; Mikhail Khodorkovsky, chief of the Rosprom and Menatep finance groups; Pyotr Aven and Mikhail Friedman of Alfa Bank and Alfa Group; and Alexander Smolensky, president of the SBS-Agro bank group.

Berezovsky, a former mathematician, has built a fortune estimated at $3 billion around his flagship car dealership Logovaz and stakes in banks, media, airlines, and Sibneft, one of Russia's largest oil firms.

His worth, unlike that of his rivals, is mainly believed to be in shareholder assets rather than fixed holdings, but he has dominated the public eye more than other businessmen.

All the new tycoons have politicians they are associated with, but Berezovsky is by far the closest to Yeltsin, having once served as deputy head of the Kremlin Security Council.

He advises Yeltsin's chief of staff, Valentin Yumashev, as well as the president's daughter, Tatyana Dyachenko, one the most influential members of the Yeltsin entourage.

Early hints of a shakeup

Around the time of the Cabinet shakeup, Berezovsky was in suspiciously close contact with the main participants for a man who claimed he only heard about the bombshell on television. Fueling speculation of his involvement was the fact that he rushed back from Switzerland a couple of days before the reshuffle and hinted in a television interview on Sunday that changes were afoot.

He told the Monitor that he had met with the government's two former deputy prime ministers and principal economic reformers, Mr. Chubais and Boris Nemtsov, on Sunday. The object, he says, was to try to settle a "long-term fight, or let's say a misunderstanding."

On Wednesday he sought a meeting with Mr. Chernomyrdin to discuss possible future collaboration. "We have to integrate our activities and see what divorces and what joins us," Berezovsky says.

Berezovsky has clashed with the government reformers over their campaign for "people's capitalism," which limited tycoons' efforts to carve up all the spoils among themselves. He was especially irked by Chubais, architect of the privatization program, over the sale of a huge telecommunications company last summer in which Berezovsky's group lost out.

A fallout with Chernomyrdin

Chernomyrdin alienated Berezovsky by approving earlier this month the auction of a 75 percent stake in Rosneft, one of the government's last major holdings in the oil industry. The stake was valued at $2.1 billion - the high end of prior estimates. Berezovsky had lobbied for only a 50 percent stake to be sold.

Berezovsky has little chance of beating out some rival bidders, among them Uneximbank-British Petroleum and Gazprom-Lukoil-Royal Dutch-Shell. It just so happens that Chernomyrdin used to run Gazprom, Russia's biggest company, and still maintains close links with it.

Yeltsin's irritation

Political analysts say Berezovsky's disenchantment with the former premier influenced Yeltsin to fire him.

"Mr. Berezovsky's displeasure with Mr. Chernomyrdin was obviously a factor in the president's decision," says Sergei Kolmakov, who worked on Yeltsin's reelection campaign and is deputy director for the POLITY research institute in Moscow. But another component may have been the autocratic Yeltsin's irritation with what he saw as the prime minister's growing public profile, says Mr. Kolmakov.

Chernomyrdin has been mentioned in the media as a likely contender in the 2000 presidential elections, without being officially ordained as heir apparent. The premier has upstaged Yeltsin by serving as stand-in during his various illnesses and by hosting a weekly television show.

President's upper hand

While not denying the coziness between oligarchs and politicians, analysts stress that it is the government that holds the ultimate upper hand by deciding taxes, privatization rules, and the budget - and who will be ministers.

Some analysts see Berezovsky as a partial loser in this latest Cabinet change, however, by failing to install the man of his choice in the premier post - former Speaker of parliament Ivan Rybkin.

Besides, the position of the vocally anti-oligarch Mr. Nemtsov is expected to be strengthened when the new government is formed in the coming days - not a development that would favor Berezovsky.

It is unclear whether Sergei Kiriyenko, the acting prime minister, will remain in the job. A 30-something technocrat, Mr. Kiriyenko is seen as an acceptable compromise for both the barons of industry and the reformists. Kiriyenko is a Nemtsov protg, yet he developed good relations with oil tycoons during his few months in his previous post as fuel and energy minister.

Not ready to be prime minister

Perhaps more important, he seems to have the endorsement, albeit tentative, of Berezovsky. "Is he ready to become prime minister? I think not," Berezovsky recently told the Financial Times newspaper. "Can he become prime minister? I think so."

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