Publication: Monitor Volume: 3 Issue: 208

Russian billionaire businessman Boris Berezovsky reacted with fury yesterday to his dismissal by President Yeltsin from the post of deputy secretary of Russia’s powerful Security Council. Berezovsky told Ekho Moskvy radio that Yeltsin had been talked into sacking him by First Deputy Prime Ministers Anatoly Chubais and Boris Nemtsov, and that neither Prime Minister Viktor Chernomyrdin nor Berezovsky’s immediate boss, Security Council secretary Ivan Rybkin, had been consulted.

Berezovsky, 51, is one of Russia’s richest men, estimated by Fortune Magazine to be worth $3 billion. Since his appointment by Yeltsin to the influential Security Council in October 1996, he has been deeply involved in negotiations between the federal authorities and the Chechen Republic.

Nemtsov said Berezovsky’s dismissal was "an important step in the campaign to move Russia away from oligarchic capitalism." (RTR, November 5) Since Yeltsin reshuffled the government in March, Chubais and Nemtsov have promised to reduce the political influence of the clique of seven bankers and financiers who bankrolled Yeltsin’s 1996 reelection campaign. The tycoons were rewarded, as Berezovsky admitted in a remarkably incautious interview with the Financial Times, by being allowed to take their pick of government posts and to privatize some of Russia’s most desirable enterprises at a fraction of their true value.

Chubais and Nemtsov argued that the incestuous relationship between government and big business was distorting the operation of the market, degrading the government in the eyes of the population, and deterring foreign investment. They undertook to uproot "bandit capitalism" and establish a level playing field for all. First to lose his post as first deputy prime minister was Oneksimbank chairman Vladimir Potanin, and Berezovsky’s departure from the Security Council had long been expected. He hung onto his position partly, it seemed, because of his personal friendship with the Yeltsin family, and partly because of Yeltsin’s hallmark technique of dividing and ruling the members of his entourage.

A furious Berezovsky accused Chubais yesterday of hypocrisy, saying that Chubais wanted to be rid of him in order to boost the position of Potanin’s business empire. The government’s sincerity will be put to the test in the next few months, as it prepares to sell sizable stakes in four major state-owned oil companies. These include a 63 percent stake in the oil giant Rosneft, which the government expects to raise at least $1.5 billion. It has promised that the Rosneft auction, in which both Potanin and Berezovsky are expected to bid, will be the most transparent to date.

As for Berezovsky, he vowed yesterday to continue his activities in Chechnya as a private individual (tending to bear out Nemtsov’s allegations that Berezovsky used his political position as a cover for his business interests). In or out of the Kremlin, Berezovsky remains a consummate networker and a key figure on the financial scene. As he himself put it yesterday, "Never say ‘never’ in politics." (RTR, November 5)

U.S. Lawmakers Target Moscow.