Publication: Fortnight in Review Volume: 6 Issue: 22

?Russia’s political fortnight marked what future historians might view as a decisive phase in what some present-day Russia watchers are calling the “replacement of the elites.” The key event was the transformation of Vladimir Gusinsky and Boris Berezovsky, two of the most influential Yeltsin-era tycoons, into de facto political exiles.

Gusinsky, who had been spending most of his time outside Russia after being jailed briefly earlier this year, became a fugitive after failing to turn up in Moscow for questioning as a suspect in a fraud case. Deputy Prosecutor General Vasily Kolmogorov, who had accused Gusinsky and his Media-Most holding of defrauding Gazprom by borrowing more than US$400 million under the natural gas monopoly’s guarantees, issued an arrest warrant for the media mogul. The timing of the warrant was significant: Kolmogorov issued it just as Gazprom and Media-Most were announcing that they had resolved their differences and reached an agreement for repaying the loans. The prosecutor’s apparent sabotaging of the Gazprom/Media-Most agreement suggested that the state was determined to rob Gusinsky of Media-Most and its highly influential television channel, NTV.

This apparent end game for Gusinsky was not only not a surprise, but long expected. While his media outlets had played a key role in Boris Yeltsin’s 1996 re-election campaign, they had later turned against the first Russian president, devoting increasing attention to accusations of corruption against members of Yeltsin’s inner circle–including First Daughter Tatyana Dyachenko, Kremlin “property manager” Pavel Borodin and (ironically, in hindsight) Boris Berezovsky. Thus the first raid by the tax authorities on Media-Most took place in the summer of 1999, before Vladimir Putin had even become prime minister. Later, Gusinsky’s media, which had led the way in criticizing the 1994-1996 war in Chechnya, returned to the role of critic with the second Chechen military campaign. Thus it didn’t take a clairvoyant to predict that Yeltsin’s successor, a state security service veteran and a nationalist, would make separating Gusinsky from his media properties a top priority.

The fact that Boris Berezovsky finally became a real target of the Putin-era Kremlin was more surprising. After all, Berezovsky and his media, including the all-powerful Russian Public Television, had played a major role in Putin’s rise and in the creation of Unity, the pro-Putin political bloc. This perhaps explains why Berezovsky–despite his criticism of Putin over a host of policies, including Chechnya, regional policy and the Kursk submarine disaster–seemed to consider himself untouchable. The tycoon even showed up for an “informal” chat with prosecutors about the Aeroflot case, which involved charges that several Swiss firms connected to Berezovsky had embezzled hundreds of millions of dollars from Russia’s state airline. He even promised to return if the investigators had any remaining questions.

Any “gratitude” Putin may have felt for Berezovsky’s past services, however, had apparently worn out. The tycoon was formally summoned as a suspect in the Aeroflot case, and, on the eve of the interrogation, he announced he would not return to Russia to honor the summons. The authorities, Berezovsky said, and Putin personally, had presented him with the choice of either becoming a “political prisoner or a political emigre.” Berezovsky’s farewell statement contained the hint of a threat: He claimed that profits from the Swiss companies connected to Aeroflot had been used to finance Putin’s presidential campaign and Unity. The tycoon may have been signaling that he had “kompromat”–compromising material–on Putin. Whatever the case, Berezovsky predicted that Putin would not serve out his “first constitutional term” in office. Whether this marked the end of an era or the beginning of an epic battle remained to be seen.

The Kremlin’s war against Gusinsky and Berezovsky, of course, represented something far less radical than a complete “replacement of the elites.” It was more like a war by “the oligarchy against ‘the oligarchs,'” as one newspaper memorably put it in a headline. Indeed, many other Yeltsin-era tycoons and power brokers–such as the Sibneft oil company’s Roman Abramovich, Alfa Bank’s Pyotr Aven, United Energy Systems chief Anatoly Chubais and Press Minister Mikhail Lesin–had managed to retain their power and perks. At the same time, it was also clear that Putin was determined to elevate his own men, like Security Council Secretary Sergei Ivanov, a long-time associate and fellow KGB veteran from St. Petersburg. Putin’s merger of Russia’s two main arms exporting agencies, Rosvooruzhenie and Promeksport, into a new state arms trading company called Rosoboroneksport, was widely interpreted as a transfer of control over the highly lucrative arms trade from Prime Minister Mikhail Kasyanov to Ivanov. Putin also dismissed Ivanov from the foreign intelligence service–a move many observers saw as a prelude to Ivanov’s promotion to the post of defense minister, or even prime minister.