Kremlin's corporate seizure as a war of elites

Behind-the-scenes Kremlin intrigues are changing the face of Russia's ruling elite, as opposing factions parry and thrust to gain power.

In the latest, dramatic escalation in what is being seen as essentially a confrontation between the Kremlin and big business, Russian judicial authorities seized a large chunk of shares in oil giant Yukos yesterday.

The arrest last weekend of Yukos' head - Russia's richest man, the resulting chaos in Russia's markets, and the widely expected resignation of President Vladimir Putin's pro-business chief of staff have also exposed the longstanding tug-of-war that is finally coming to a head as key December and March elections near.

A group of Kremlin hawks loyal to Putin known as siloviki - many of them former KGB and security officials from St. Petersburg - has all but declared victory over its main rival, the influential "family" of superwealthy oligarchs close to former president Boris Yeltsin who engineered Putin's rise to power.

The recent developments have raised the prospect of more conservative rule in Russia that, some observers are warning, could lead to an effort to renationalize industry.

The impounding of shares in Yukos was the largest seizure of private assets since the collapse of the USSR and communism in 1991. Tne news sent shivers through the investment community.

"It's not a renationalization, but it's a changing of property," says Sergei Markov, a political analyst in Moscow with Kremlin ties. "They want to have managers and owners who will be more patriotic."

Until now, Putin has apparently kept the two conflicting Kremlin clans in check by playing one off the other. But the likely departure of Putin's chief of staff, Alexander Voloshin, is being seen as a symbol of the new power shift - and a warning to business. Voloshin - a main Kremlin advocate of big business - is a former Yeltsin aide known as the "Gray Cardinal" for his master-of-intrigue influence. He played a critical role in bringing Putin to power.

Dmitri Orlov, deputy head of Moscow's Center for Political Technologies, predicts that "the authoritarian nature of the current regime will increase ... and expansion of the siloviki will have negative consequences for the whole of civil society and the political future of the country.

"The problem is that, being aggressive as they are, and expanding quickly, this group has no positive program," says Mr. Orlov. "It's clear a change of elites is taking place at the top, but what is their message? Let it be a totalitarian program, but it should be clear. It can't just be power for power's sake."

Critics of the growing power of the siloviki faction, including many in Russia's print media, charge that the informal system of checks and balances that prevailed in the Kremlin until now is crumbling, as the St. Petersburg faction makes its play for more control over Russia's vast natural resources, which in turn means more political power.

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