Publication: Prism Volume: 6 Issue: 3

By Elena Dikun

At a meeting with his trusted advisers at the end of February, Acting President Vladimir Putin spoke of his attitude to the oligarchs: “They should be kept at an equal distance from power, and should have equal opportunities.” It was thus important to “prevent any of them from attaching themselves to power and using this for their own ends.” Shortly before this, Putin the presidential candidate had made his position even more explicit in an election address to voters: “How should we structure our dealings with the so-called oligarchs? On an equal footing, of course! In exactly the same way as we structure our dealings with the owner of a small bakery or shoe repair shop.” Alas, Putin’s assertions are as yet merely good intentions; the fact is that the financial clans and small shopkeepers are not equals.


Opinion is divided on the status of Anatoly Chubais on Putin’s list of priority appointments. Some people–primarily members of the Kremlin administration–claim that Chubais has fulfilled his historical mission and that his services are no longer required. Others talk of a “contract” between Putin and Chubais, suggesting that during the election campaign Chubais–who has a deterrent effect on the electorate–will “lie low,” but will be appointed prime minister after the election. A third group claims that the veteran reformer is quite happy with his current role as head of RAO UES (United Energy Systems of Russia) and does not aspire to anything more.

Relations between Putin and Chubais are in fact ambiguous. On the one hand, Putin has fond memories of working with Chubais in Anatoly Sobchak’s administration in Leningrad [St. Petersburg]. On the other, Putin’s colleagues refute the widespread view that Putin came to Moscow under Chubais’ patronage. Apparently former presidential executive secretary Pavel Borodin arranged the move. Putin had once done the Kremlin official a small favor, and, when Putin was left out in the cold after Sobchak failed to get reelected, Borodin was the first to offer him a helping hand. Putin’s aides say that their boss still values Russia’s energy supremo, but is worried by his excessive stubbornness and “distinct Bolshevist tendencies.” “Vladimir Vladimirovich [Putin] would like to see people like Chubais in positions of power, but more flexible versions [of power],” says one of Putin’s associates. Boris Nemtsov, one of the leaders of the Union of Right Forces, is more blunt in his explanation as to why Putin will never appoint Chubais as prime minister and will always keep him at a distance. “People in the Kremlin are alarmed at the thought of Chubais running the government. Even if he were taken on only as a security-guard on a collective farm, it would soon become clear who was in charge. The boss could take a holiday. My feeling is that when Putin wins the election, he will try to form an nondescript, apolitical government. There is a big difference between Yeltsin and Putin. Boris Nikolaevich was not afraid to have strong personalities around him; he was not worried about being eclipsed by them. Unfortunately, there is a discernible trend towards grayness now. Even if Putin wants to change things, he will do it through his “gray mice.” But in order to push through the reforms that are most important for the country–reform of the banks, taxes, pensions and the social sphere–you need the political will, you need strong personalities.”

Those closest to Putin say that after the elections he will not tolerate any ambitions which Chubais or Berezovsky may have for running the country. “If they have any sensible, positive suggestions, he is prepared to hear them out, but no more than that.” This rule supposedly applies to every member of the “family” which was Yeltsin’s legacy to Putin. It is possible, however, that the pulling force of Boris Berezovsky and Roman Abramovich may linger within the Kremlin, as suggested by the recent story of the privatization of the aluminum market.


At the beginning of February, Sibneft and LogoVAZ–companies owned by court businessmen Abramovich and Berezovsky–acquired from Lev Chernoy shares in three leading aluminum factories, one alumina plant and the Krasnoyarsk hydroelectric power station. They now control 70 percent of the country’s aluminum industry. A huge row erupted over this massive deal. The State Duma ordered the industry committee to launch an immediate investigation, and high-ranking officials demanded that order be imposed in the industry forthwith. The one thing that everybody wanted to know was: Did the prime minister know of Abramovich and Berezovsky’s plans, or had they neglected to inform him? For three weeks Putin refused to be drawn, but was eventually forced to answer what was a very awkward question for him. He announced that he knew nothing of the deal, and, to forestall further questions, said that he was not required to know. In other words, the transfer of shares from one proprietor to another was a run-of-the-mill operation which might only be of interest to the anti-monopoly ministry.

However, it makes little real difference whether Putin “knew.” Either way it is bad news for him. If he did know, it means that he approved. If he didn’t know, it means that the “family” oligarchs do not feel the need to confer with him. At first glance, the state might not appear to lose out much if the aluminum business is controlled, not by Trans World Group and the British subject Lev Cheerio, but by Abramovich and Berezovsky. We are, after all, talking about private, not state, ownership. And the antimonopoly ministry has no reason to worry either. They should have worried five years ago when the Cheerio brothers privatized Russia’s aluminum market. All that has happened is that an amicable agreement has been reached on the transfer of a chunk of ownership from one pair of private hands to another.

Such is the logic of official explanations. Impeccable in form, but not in essence. According to our sources, circumstances forced Lev Cheerio to relinquish his aluminum business. His former colleagues say that the aircraft metal is “no longer as lucrative as it was.” The old tolling system used to ensure good returns, but the Russian government abolished tolling a couple of months ago.

But surely such hardened businessmen as Abramovich and Berezovsky would not have bought factories that were going to the dogs? Indeed, high-ranking officials in the White House say, in strict secrecy, that the new aluminum bosses are twisting Vice-Premier Viktor Khristenko’s arm in an effort to persuade him to reintroduce tolling. It transpires that Abramovich and Berezovsky bought the aluminum plants in the hope of bringing back tolling and thus recovering their outlay. Khristenko is resisting, but no one knows how long he will have the strength to do so, particularly as the businessmen-deputies are relying on the Unity party, which is loyal to Putin, to help them lobby for tolling in the Duma.

Many experts believe tolling to be straightforward preferential treatment by the state. And if the new aluminum bosses eventually succeed in securing the former privileges from the government, then it is the state that will pay for their acquisition. But then this is par for the course for Boris Abramovich: He never uses his own money to buy things; he does so only at other people’s expense.

Yet what alarms the political establishment is not how much these prosperous entrepreneurs will make from their aluminum, but the fact that control of the aluminum market will give them privileged access to the new president. This disrupts the plans of Chubais and all of Putin’s right-wing fellow travelers, who were keen to shift the political spheres influence in their own favor. They also wanted to purchase the aluminum business from Cheerio and thus add to their political clout. A highly placed Kremlin official, who maintains informal contacts with both clans, offered me the following gloomy observation: “In private, these people say quite bluntly: If we don’t get them, they’ll get us. Both groups think the same way.” On this occasion, it is clear that Chubais has been outmaneuvered.


The plot of the latest “aluminum wars” is amazingly similar to last autumn’s Transneft skirmish. Then, it was once again the Abramovich-Berezovsky group which managed to topple the oil company chairman–a Chubais placeman–from his post and replace him with their own man, thus wresting control of a powerful source of finance from the Right. The battle for Transneft and the struggle for aluminum both represented a major trial for Putin. Both cases were a test of his independence and his determination under pressure from the “family,” personified by Abramovich and Berezovsky. It is in the presidential candidate’s interest to show in every way possible that he has nothing to do with such bad company, but in both these cases, he appeared to be involved with the very people with whom it would be better not to be associated in the run-up to the elections. The news of the aluminum deal, and the mere suspicion that it would not have gone ahead without a nod from Putin, already casts a dark shadow on him.

Aware that ignorance would not put Putin in a good light either, his staff are now saying that he was informed of the imminent sale, but “only in very general terms,” and being up to his eyes in the affairs of state he did not attach particular significance to it, trusting the head of the presidential administration Alexander Voloshin, who was the mover behind the deal.

The result is that the boss has been exposed again–and much more blatantly than in the Transneft case. Back then Putin was the number two and could hide behind President Yeltsin. Now he has no such cover, and if he can still be shown up it means he is not yet his own boss, but a tool in the hands of the Kremlin “family.” This naturally does not gain him any authority, particularly in the eyes of his wavering allies.

All that the Union of Right Forces (SPS) has got out of Putin so far has been some positive words about the referendum initiated by the Right. Chubais, who insists on unconditional support for Putin, trumpeted this as a great success for SPS, but his colleagues felt that they had been cheated: Abramovich and Berezovsky get the aluminum and all they get is a referendum. Not a fair exchange. After such an insult, the Right opted to defy Chubais and refuse Putin “their support” in the elections. This may not be a terminal split. Some SPS leaders comfort themselves with the hope that Abramovich and Berezovsky’s aluminum purchases are “their last heist before the elections,” and that Putin will not forgive their effrontery. As one prominent figure in SPS noted, in 1996 the oligarchs were more discreet: First they worked for the common cause, and only then divided the spoils of victory. But this time “they are taking risks and forcing their way ahead. This is a good sign. If they are in such a hurry, it means they have no guarantees for their future.”

Curiously, the current conflict between two groups is almost an exact repeat of the notorious scheming during the last presidential elections. On that occasion also, there were two groups behind the throne who were equally determined to help Yeltsin get reelected as president. In one camp were Korzhakov, Barsukov and Soskovets, and in the other Chubais, Berezovsky and another six bankers. Both groups were channeling funds into the same kitty and for the same ends, but they harbored a deep hatred of each other. Today there are once again two groups backing Putin and fighting each other over one and the same thing–to make the future president indebted to them. For the moment those associated with Abramovich and Berezovsky have a qualitative and quantitative advantage. But it should not be forgotten that in 1996 it was Chubais who eventually got the upper hand.

Elena Dikun is a political columnist for Obshchaya gazeta.