Russians expect a president to preside. There is always a big hand for the firm hand, unconstrained by notions of individual rights and constitutional protections. President Boris Yeltsin was probably never more popular than after his suppression of a parliamentary rebellion in 1993. His failure thereafter to control the Chechens, or the oligarchs, or even himself, caused him to resign his office with an approval rating in public-opinion polls that was smaller than the margin of error.
Vladimir Putin is determined to restore executive power. His efforts to reshape Russian federalism have strengthened the Kremlin against regional leaders, who have yet to mount an effective defense of their position.
Now he is taking on the private sector, bumping bellies with some of the most swollen stomachs in the land.
The prosecutor general and the tax authorities have come down hard on the country’s top metallurgical enterprise, Norilsk Nickel; its largest oil company, LUKoil; and its biggest auto maker, AvtoVAZ. The federal Audit Chamber announced an investigation into foreign minority shareholders in UES, the state-controlled electrical monopoly. Even Boris Berezovsky, arguably the most powerful private citizen in the land, has been called for questioning. All this activity follows the politically inspired arrest of Vladimir Gusinsky, the media baron whose print and broadcast outlets have been sharply critical of President Putin and his government.
Norilsk Nickel fell into the hands of Vladimir Potanin in 1995, when the company defaulted on loans Potanin’s Oneksimbank had provided. Prosecutors now claim Potanin owes the state $140 million because the company was undervalued, and fraudulently so. At LUKoil, tax authorities claim the company used false export documents to claim value-added tax rebates on product that in fact was sold domestically. The tax police say AvtoVAZ evaded taxes by using duplicate vehicle identification numbers on some 600,000 cars. At UES, questions have been raised about whether some stock buys by foreigners should be voided because the transactions were not properly registered. And an official in the prosecutor general’s office questioned Berezovsky for two hours about the suspected diversion of the hard-currency revenues of Aeroflot, the former state airline that Berezovsky controlled, into companies allegedly established in Switzerland to receive them. All this in the past few weeks.
These are not new cases. Russia’s interior minister called Norilsk Nickel “a criminal enterprise” in 1996, after Potanin gained control. Tax and finance authorities threatened AvtoVAZ with bankruptcy for tax arrears in 1997. In 1998, prosecutors had a warrant out for Berezovsky’s arrest in the Aeroflot and related investigations. These probes had no political sustenance and simply dribbled away. But the intent to pursue the investigations seems stronger now. There is no apparent resistance in Putin’s cabinet, little restlessness in the Duma and general approval from the public.
The move against Berezovsky is the most interesting. Berezovsky is the most political and most visible of the oligarchs. Putin owes Berezovsky a political debt: Berezovsky was one of the small group around Boris Yeltsin that proposed Putin’s elevation to power and engineered Yeltsin’s resignation last December. But Berezovsky himself recognized that this obligation may count for nothing. He told the press last March: “I am often asked…: Do you think Putin will jail you when he comes to power? I say: Of course he might. Why not? If it seems rational to him, if he’s a regular politician then he should. It’s his duty.”
Berezovsky is a member of the Duma, having won election from a small, largely Muslim district near the Caucasus. But even though his Duma seat affords him immunity from criminal prosecution, he says he will resign from parliament to protest Putin’s authoritarian ways. Many observers believe the prosecutor’s move against Berezovsky is a feint, and that in fact the campaign against the oligarchs will benefit Berezovsky by weakening his rivals. Berezovsky is a man of manifold interests and manifold motives, an opportunist who does not lack for opportunities. It is hard to believe that in President Putin’s new order, he will not find his niche.