Trouble brews between the Kremlin and the oligarchs

Putin's first year was marked by tough clashes between the Kremlin and two oligarchs who refused to play by the new rules. Media baron Vladimir Gusinsky and oil, auto, and airline magnate Boris Berezovsky found themselves charged with criminal offenses dating back to the '90s and were gradually stripped of their property holdings and hounded into exile. Mr. Berezovsky, currently living in England but still very vocal on Russian politics, is fighting a Kremlin extradition warrant. In contrast to Berezovksy, Mr. Gusinsky keeps a low profile.

The first hint that trouble might be now brewing beneath the apparently placid surface of Kremlin-tycoon relations came last month when 23 political experts, calling themselves the Center for National Strategy (CNS), warned of a "creeping oligarchic coup." The experts alleged that a cabal of business kingpins was plotting to take control of parliament and rewrite Russia's Constitution to drastically curb presidential powers. Khodorkovsky was singled out as ringleader, accused of bankrolling both liberal and communist parties and scheming to become prime minister.

"I think that (CNS) paper was designed to present Yukos as a political threat," says Vyacheslav Nikonov, head of the independent Politika think tank, adding that many Kremlin or oligarchic factions, hoping to stir the pot, might have funded it. "Myths can take on a life of their own and become more powerful than reality."

The rumors of Khodorkovsky's political activism are not entirely mistaken, say experts. He is believed to have supported the Communist Party. Two Yukos executives are expected to be running for the Duma, or lower house of parliament, as Communist candidates, in December elections, which precede the presidential vote in March. The businessman has acknowledged funding the liberal Yabloko party.

"Khodorkovsky is the only tycoon who's helping Yabloko," says Ms. Shevtsova. "He's also aided independent media and given money to human rights groups. It's very depressing: he's the first [of the oligarchs] to start behaving in a different way, and he gets slapped down for it."

Just 40 years old, and named by Forbes magazine as Russia's richest man, with an estimated worth of $8 billion, Khodorkovsky acquired control of Yukos in a dubious 1995 privatization, paying just a fraction of its real worth. But unlike many of his fellow oligarchs, some experts say, he has tried to straighten out his firm's business practices. "Yukos is not only one of the largest and most prosperous Russian companies, it is also one of the most progressive in terms of transparency and investment plans," says Mr. Kolmakov. Khodorkovsky recently agreed to merge Yukos with another Russian oil major, Sibneft, owned by tycoon Roman Abramovich - a $45 billion deal that will create the world's fourth largest petroleum giant.

Most experts believe Khodorkovsky will heed the warning he's been handed, and stay out of politics. But some fear that harm has already been done to Russia's fragile economic stability.

"The signal this [prosecution of Yukos chiefs] sends will have a dire impact on all investors in this country," says Kolmakov. "If a big company like Yukos can get hit because of something that wasn't quite right in 1994, then no small or medium business is safe."

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