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Russia Report: April 16, 2001

16 April 2001, Volume 1, Number 11

It is said that politics creates strange bedfellows, and nowhere has this adage proven more true than in the battle over NTV. Gazprom's bid to assert managerial control over the network culminated on the night of 13-14 April, when guards helped executives appointed by Gazprom take over NTV's headquarters. Over the last year and a half, as the campaign to wrest control of NTV from Vladimir Gusinskii has progressed, events have produced amazing shifts of allegiance in the political and journalistic communities.

The conflict has divided former friends and NTV colleagues. Mentors and their proteges (for instance, Oleg Dobrodeev and Svetlana Sorokina, Vladimir Kulistikov and Grigorii Krichevskii) have found themselves on opposite sides of the barricades. Some of NTV's prominent news anchors appear willing to work with the new management, while those who resigned in protest on 14 April include personalities who have no connection to politically oriented programming (such as NTV's leading soccer commentator, the host of its late-night talk show about sex, and the host of Russia's version of "Who Wants to Be a Millionaire").

Some politicians who have occasionally been on the receiving end of NTV's politically biased coverage have condemned the Gazprom takeover. Some others who have benefited from friendly coverage on NTV have been virtually silent. As the standoff between NTV journalists and the network's new management was reaching its climax, Fatherland announced plans to merge with the pro-government Unity party. NTV's friendly coverage of Fatherland-All Russia and mixed coverage of Unity during the 1999 parliamentary campaign and "information war" incurred the wrath of the Kremlin.

This list represents one observer's view of the most remarkable twists of fate over the last two years. It is by no means comprehensive -- the ironies of the battle over NTV appear endless.

10. Union of Russia and Belarus Secretary of State Pavel Borodin's indirect role in helping build NTV up and, much later, helping bring it down. According to an open letter Oleg Dobrodeev published in "Izvestiya" on 9 April, Borodin was one of the Kremlin officials working behind the scenes to help NTV get its first license to broadcast in late 1993. Then President Boris Yeltsin awarded the license by decree. No other television companies were able to compete for use of the frequency, and the decree overrode legal procedures in place at that time for issuing television licenses.

In the summer of 1999, NTV was among the main Russian media publicizing corruption allegations against Borodin and other members of the Yeltsin "family." This editorial policy, among other things, helped solidify the Kremlin's determination to bring NTV's editorial policy in line with that of the Russian authorities.

9. The evolving attitudes of Unified Energy Systems head Anatolii Chubais and Union of Rightist Forces faction leader Boris Nemtsov. NTV's coverage of those two politicians has differed wildly over the years. NTV, and in particular Yevgenii Kiselev, helped Chubais get out of a bind on the night of 19-20 June 1996. Two Yeltsin campaign aides were caught carrying more than half a million dollars in cash out of the government's headquarters. Kiselev broadcast news bulletins throughout the night putting forward a false version of events: that Presidential Security Service operatives had planted the money on the arrested men. The reports helped Chubais and others persuade Yeltsin to fire his chief bodyguard Aleksandr Korzhakov. Soon after the presidential election, Chubais became Yeltsin's chief of staff, and he worked closely with NTV in the ensuing year. (In the letter mentioned above, Dobrodeev wrote that NTV managers helped devise many of the Kremlin's tactical moves in late 1996, and NTV journalists wrote speeches for Yeltsin in 1997.)

In spring 1997 Chubais and Nemtsov became first deputy prime ministers, and they were among NTV's prime targets in the aftermath of the Svyazinvest auction that July. A consortium involving Gusinskii failed to win a stake in the telecommunications giant, and NTV's editorial policy toward Chubais and Nemtsov shifted dramatically. For their part, the deputy prime ministers denounced what they called the political use of the media by businessmen who wanted to bend the government to their will. Throughout late 1997 and up to August 1998, NTV's coverage of several scandals and important political stories was highly critical of the "young reformers."

During the 1999 parliamentary campaign NTV gave quite a lot of exposure, most of it neutral or positive, to the Union of Rightist Forces, the alliance of Chubais, Nemtsov, and others.

In recent days Nemtsov, along with several other State Duma deputies in the Union of Rightist Forces, has become an outspoken critic of the authorities' and Gazprom's handling of the NTV controversy. Chubais, on the other hand, has supported Gazprom's position in the conflict. (A third important figure in the Union of Rightist Forces, Sergei Kirienko, has maintained a tactful silence as one of Russian President Vladimir Putin's representatives in the seven federal districts.)

8. Mikhail Lesin's transformation from NTV's business partner to its nemesis. Since July 1999, Lesin has served as head of the Ministry for the Press, Radio and Television Broadcasting, and Mass Communications. He has played a key role in shaping the government's media policy. In July 2000 he signed the infamous "protocol 6", in which Gusinskii was promised that criminal charges against him would be dropped if he sold Gazprom a controlling stake in his media empire.

But Lesin rose to prominence, and reportedly earned a fortune, as a founder of the Video-International advertising agency. That agency had an exclusive contract with NTV for years (Video-International ended that relationship in December 1999). Lesin and NTV president Igor Malashenko worked together during Yeltsin's 1996 re-election campaign, when Video-International produced the pro-Yeltsin commercials and Malashenko was a key campaign strategist.

7. The emergence of Mikhail Leontev as vocal NTV critic. On his Russian Public Television (ORT) program "Odnako," Leontev has repeatedly sought to undermine NTV's reputation. But he was once a prominent columnist for "Segodnya," the newspaper Gusinskii founded in 1993. In one commentary from 1994, Leontev argued that the Press and Information Ministry should become the ministry for privatization of mass media, liquidating "the parasitical institution of official media, as well as the office that controls them."

6. The emergence of Sergei Dorenko as vocal NTV defender. Dorenko joined NTV in 1995 after ORT cancelled his late-night program "Versii." After returning to ORT to anchor its leading weekly "analytical program," Dorenko and NTV sometimes found themselves on the same side of political controversy (for instance, during the "information war" sparked by the Svyazinvest auction). However, during 1999 and 2000 Dorenko did his best on many occasions to trash NTV's reputation and that of Gusinskii. Having himself fallen afoul of the Kremlin's information policy, Dorenko has had a change of heart. On 14 April 2001, Dorenko lamented that "only five percent of the population" understands what is going on with NTV, Interfax reported. He added that NTV journalists who stay on to work with the new management are "shameless."

5. The claims advanced by Igor Malashenko and others that NTV has consistently been an "independent" network. They have airbrushed out of NTV's history a series of politically motivated decisions that favored the network over other media outlets. Not only did NTV receive its original license in violation of established procedures, it received a license to broadcast around the clock on Channel 4 in September 1996 in what was widely viewed as a payoff for supporting Yeltsin's re-election. NTV faced no competition for that license and paid less than $1,000 for it. Other gifts to the network over the years include an exemption from customs duties on imported equipment, preferential rates for state-controlled transmission services (far less than the fees charged to other private television networks), and loans from para-statal institutions such as Vneshekombank and Gazprom.

4. Gazprom, which once viewed NTV as a weapon in its battles with government officials, has become the government's main weapon in its battle to make NTV politically pliant. Gazprom first invested in NTV in 1996 and issued or guaranteed several large loans to the network and its parent company over the years. When government officials sought to collect more taxes from Gazprom in July 1998, NTV vigorously defended in the gas monopoly in newscasts and commentaries. Relations between Gazprom and the network began to deteriorate in February 2000. Soon after meeting with Putin, Gazprom's chief executive Rem Vyakhirev criticized NTV's coverage of Chechnya. The following month, Gazprom demanded repayment of one of its large loans to Media-MOST.

3. The appointment of Alfred Kokh as head of Gazprom's media subsidiary. Media-MOST executives could hardly have faced a less sympathetic negotiating partner during the protracted attempts to settle their disputes with Gazprom-Media over debt and shares. Kokh, a senior architect of Russian privatization, was the first scalp claimed following the Svyazinvest auction. NTV and related media outlets helped publicize corruption allegations that prompted Yeltsin to fire Kokh in August 1997.

2. The transformation of Oleg Dobrodeev. NTV's founding news director and later its general director, Dobrodeev was highly respected in the journalistic community throughout the 1990s. His resignation in January 2000 and subsequent appointment as chairman of state-owned Russian Television (RTR) shocked many observers. He helped craft a favorable image for Vladimir Putin, both before and after the presidential election. Asked about his network's pro-Putin editorial policy in July 2000, he asserted that "at this stage, the interests of society and the president coincide." During the crisis following the sinking of the Kursk nuclear submarine, Dobrodeev himself edited RTR's exclusive feed to remove potentially embarrassing scenes during Putin's meeting with grieving relatives of the sailors.

After refraining from criticizing NTV in public for many months, Dobrodeev has increasingly sought to air the network's dirty laundry. In his open letter to Kiselev published in "Izvestiya," Dobrodeev was scathing about the political agenda behind NTV's editorial policy. Dobrodeev announced in the early hours of 14 April that he was resigning as chairman of RTR, but it was not clear whether his resignation would be accepted or whether he planned to return to NTV.

1. Boris Berezovskii's emergence as benefactor for NTV journalists. Berezovskii and Gusinskii were at first bitter enemies (1994-5), then became close allies (1996-8), and went back to being bitter enemies (1999-2000) before again cooperating in recent months. Berezovskii was the most influential shareholder in ORT from the network's creation until the late summer of 2000. During that time, ORT news and analysis programs attacked Gusinskii and NTV on numerous occasions. Many of Berezovskii's allies have since been forced out of ORT, and he has formally relinquished his shares in the network, but he still owns a controlling stake in the private network TV-6. He has made clear that all NTV journalists are welcome to work there. On 14 April, Kiselev was appointed general director of TV-6 -- a remarkable turnabout for the commentator who popularized the use of the term "family" to describe Berezovskii and other members of the allegedly corrupt coterie of Yeltsin advisers. (Laura Belin is a longtime observer of Russian media and is a doctoral candidate at St. Antony's College at Oxford University.)

NEW OLIGARCHS FOR OLD? During his presidential campaign, President Putin promised to rid the country of oligarchic influence, severing the tie between money and power. And during his first year in office, a number of analysts have suggested that Putin has indeed removed oligarchs from politics although he may be giving them a freer hand in the economic realm (see "RFE/RL Russian Political Weekly," 19 March 2001). However, some Moscow-based newspapers have recently suggested that the role of oligarchs in Russia's political life has not necessarily been diminished -- instead, a new cast of characters has emerged. While the "state oligarchs," such as Unified Energy Systems head Anatolii Chubais and Gazprom head Rem Vyakhirev remain in the forefront, there is a new set of business titans who wield significant political influence in the Kremlin undetected, behind the scenes. As "Moskovskii komsomolets" suggested on 4 April, the new oligarchs -- unlike those active during the tenure of Putin's predecessor former President Boris Yeltsin, such as Boris Berezovskii and Media-MOST head Vladimir Gusinskii -- strive to maintain a lower profile. According to the daily, there are three new "oligarchs," all from St. Petersburg, who, it claims, are close to Putin . These are Sergei Pugachev, leader of Mezhprombank, Vladimir Kogan, head of Promstroibank, and Vladimir Litvinenko, the head of the St. Petersburg Mining Institute.

In a long article last month on 12 March, "Versiya" also dubbed Pugachev one of the "new oligarchs," calling him "one of the most politically influential oligarchs in recent times." Like Putin, Pugachev is also a graduate of Leningrad State University and like Putin, he also went to work in the office of then Kremlin facilities directorate head Pavel Borodin, according to "Moskovskii komsomolets." Pugachev and Putin developed "close contacts" when Putin was Borodin's deputy. Pugachev considers himself a deeply religious person and has reportedly managed to become a member of the inner circle around Patriarch of Moscow and All Russia Aleksii II. When Putin's father died last year, Pugachev brought a high-ranking Orthodox church official to the funeral, according to the daily. While some unidentified sources told the newspaper that Pugachev serves primarily as a kind of liaison between Putin and Patriarch Aleksii, other sources maintained that Pugachev gives Putin political advice and even played a role in the last-minute appointment of Vladimir Ustinov as Prosecutor-General rather than Dmitrii Kozak (see "RFE/RL Russian Political Weekly," 19 March 2001).

The second oligarch, Vladimir Kogan, is another banker from St. Petersburg, where he attended the Leningrad Engineering Construction Institute. He developed close ties to Putin during the latter's tenure as deputy mayor of St. Petersburg. According to the "Moskovskii komsomolets," "many sources confirm that the friendship continued also after the president moved to Moscow." When Putin became a presidential candidate, he was forced to reveal personal financial information, such as the fact that he had a bank account as well as stock in Kogan's Promstroibank (see "RFE/RL Newsline," 21 February 2000). In February 2000, while acting president, Putin called on the Central Bank to stop bankruptcy proceedings against Promstroibank and hand over consideration of the bank's fate to the Agency for Restructuring Credit Organizations -- an act that "Kommersant-Daily" alleged at the time was technically illegal since Promstroibank had lost its license to operate. (Pugachev's Mezhprombank has also had its troubles. From the beginning of 1996 to the end of 1998, Mezhprombank was fined for various violations 74 times, winding up on the Central Bank's list of problem banks in 1998, according to "Versiya.") In addition to Putin, both Kogan and Pugachev, according to "Moskovskii komsomolets," have developed close ties to presidential office head Igor Sechin.

Sechin himself studied at the St. Petersburg Mining Institute, which the third "oligarch" tied to Putin, Vladimir Litvinenko, heads. Litvinenko is perhaps more of a potential business tycoon than an actual one: a professional geologist, Litvinenko is considered a likely replacement for Rem Vyakhirev as head of Gazprom. Putin and Litvinenko met in St. Petersburg in the early 1990s, when Putin was overseeing international business ties at the mayor's office. Litvinenko reportedly maintains that he does not want to leave academia but his name is frequently touted as a likely successor not only to Vyakhirev but also for Natural Resources Minister Boris Yatskevich. In addition, Litvinenko's "detailed reports" on "the most urgent questions of developing Russia "are regularly dispatched to the president," according to "Moskovskii komsomolets."

Neither "Moskovskii komsomolets" or "Versiya," both of which are close to Moscow Mayor Yurii Luzhkov, commented on what role the "old" oligarchs, such as former Sibneft head Roman Abramovich or MDM Bank's Aleksandr Mamut, are playing in the Kremlin now. Of course, Abramovich is now governor of Chukotka Autonomous Okrug, where he and his staff reside at least part of the time. In an interview with "Novaya gazeta" on 9 April, Novgorod Governor Mikhail Prusak perhaps provided partial support for this new thesis that a new group of moneyed men has emerged in Moscow. He declared that President Putin "is not a hostage to the old system" but is rather a "hostage to the money of several people." Prusak did not elaborate. JAC

DEPUTIES REJECT ONE PROPOSED COMMITTEE CHANGE. The State Duma on 11 April refused to satisfy a request by the People's Deputy group to strip their former member, Oksana Dmitrieva, of her post as deputy chair of the Budget Committee. The measure fell 13 votes short of the necessary 226 votes, according to Interfax. Also on 11 April, deputies approved on first reading amendments and changes to the Arbitration Procedure Code. The bill regulates questions relating to the peculiarities of legal proceedings of arbitration courts in the sphere of entrepreneurial and other economic activities, according to ITAR-TASS. On 12 April, deputies approved in its first reading changes and amendments to the law on education and the law on higher and post-graduate education. The legislation introduced state educational standards, among other things. On the same day, deputies approved in its third reading amendments to the Civil Code and the law on privatization of the housing fund, according to "Kommersant-Daily" on 13 April. The legislation, which was supported by the Moscow city government, gives the state and municipal proprietors the right to rent housing without the danger that the housing will be privatized by the renters, according to the daily. JAC

Name of Law___________Date of approval___________# of reading

On the introduction of________11 April___________________1st
changes and additions to the
Arbitration Procedure Code

On education__________________12 April_________________1st

On higher and post-graduate______12 April_________________1st
Professional education

On the privatization of ___________12 April________________3rd
housing fund

Amendments to Civil Code_____12 April___________________3rd

More Portraits in Gray: Boris Vyacheslavovich Gryzlov Like the president who selected him last month to head the Interior Ministry, Boris Gryzlov, 50, has risen quickly in national political life following a modestly successful political stint in St. Petersburg. Like Putin, Gryzlov showed promise pursuing a conventional Soviet educational path, entered the political realm later in life, and is an avid sportsman. And like Putin, Gryzlov is purported to display little of that quantity usually thought vital for a public politician: charisma. Dmitrii Pinsker, writing in "Itogi" on 20 March, noted that compared to the other "lively" Duma leaders, Gryzlov appears "flat and faded," almost like a cut-out "plywood copy of himself from a street photograph." "Gryzlov, of course, is not charismatic," Vladislav Reznik, a well-known St. Petersburg businessman acquainted with Gryzlov, told "Itogi.," "However, he is a brilliant organizer and splendidly led the campaign for Unity in St. Petersburg. He is a systematic and consistent person�" Born in 1950, Gryzlov moved to Leningrad when he was four years old with his parents. His father was in the military, and his mother was a teacher. Young Gryzlov was a model student and pioneer, according to "Profile" on 14 February 2000. In 1968, Gryzlov entered the Leningrad Electronic Institute, where he specialized in radio engineering, according to "Nezavisimaya gazeta-figury i litsa" on 12 April 2001. There, Gryzlov was also an accomplished student and "most active" member of the komsomol. He met his wife, Ada Borisovna, at the institute. Ada works as the pro-rector at the Institute for Accelerated Learning in St. Petersburg, according to the monthly. They have two children. Their son, Dmitrii, is law student at the Academy for State Service, and their daughter, Yevgeniya, studies at the Movie and Film Institute in St. Petersburg.

In 1973, Gryzlov defended his dissertation, and after that began work at the industrial association Electronpribor in Leningrad where he worked as an engineer for the next 20 years, becoming director of one of the factory's largest units. In 1985, Gryzlov was elected to head the factory's union. And, during his union work, Gryzlov made the acquaintance of people who would later prove useful during his Moscow political career. According to "Profil," he became acquainted with "most useful people" in the raion administration and played football on the raion administration's team. It was there he met Nikolai Patrushev, the current head of the Federal Security Service. (At that time, Patrushev was a deputy in the raion council.)

In 1998, Gryzlov became more actively engaged in politics, waging an unsuccessful campaign to get himself elected to St. Petersburg's legislative assembly. The next year, from August-September, he headed the campaign headquarters for Viktor Zybkov, a candidate for the governor of Leningrad Oblast. Zybkov got only 10 percent of the vote, but his campaign was considered very successful in terms of how well it was organized, according to "Nezavisimaya gazeta-FIL." Zybkov's headquarters was supposed to have been headed by Dmitrii Kozak, but Kozak was summoned at the last minute to work in Moscow, according to "Profil," (see "RFE/RL Russian Political Weekly," 19 March 2001). Kozak, who is now deputy head of the presidential administration, recommended that Gryzlov take his place. One of the workers at the campaign bureau recalled to "Profil" that "When listening to a report, Gryzlov practically never expressed his own opinion on this or that question. He would just nod his head, [murmuring] yes, indeed, very good -- not any kind of discussion. On the one hand, he was very easy to work with -- he agreed with almost everything -- but on the other hand, it seemed to me that he simply never made an independent decision."

In October, during the lead-up to the December 1999 State Duma elections, Gryzlov headed Unity's St. Petersburg headquarters and topped the movement's regional list. The movement polled around 17 percent of the votes in that city and Gryzlov won a deputy's mandate in Russia's lower legislative house. Kozak again played an important role in Gryzlov's career, recommending him for the job that would catapult him into the national spotlight, the head of the Unity faction in the State Duma, according to "Profil." The Kremlin tapped Gryzlov, who was completely unknown at that time on a national level, to head the Duma's second-largest faction.

In his role as Unity head, Gryzlov developed a reputation for being both loyal and ambitious. The Unity faction has, on most issues, voted unanimously and according to the Kremlin's wishes. And, generally, only its top officials speak publicly. During last month's failed vote of no confidence, according to "Itogi," "Gryzlov never showed the slightest discomfort at the fact that by fulfilling the orders of the Kremlin's heads, he found himself in an absurd situation....What was important for Gryzlov was the Kremlin's stance and the sympathy of the president." A number of Moscow newspapers suggested that it was Gryzlov's demonstrated quality of loyalty that caused Putin to tap Gryzlov for the post of interior minister. Whether interior minister represents the fulfillment of Gryzlov's personal ambitions remains to be seen. When asked what one word would best describe his character in his interview with "Profil," Gryzlov responded "Hopeful. I am a very hopeful person." JAC

COMINGS & GOINGS RESHUFFLED: President Putin on 28 March made a series of personnel appointments. Sergei Ivanov, most recently Security Council secretary, was named to replace Igor Sergeev as defense minister. Sergeev was named a presidential aide, who will oversee an interdepartmental group on strategic stability. Three deputies for Ivanov were also named: Lyubov Kudelkina, most recently deputy finance minister; Aleksandr Moskovskii, a deputy secretary at the Security Council; and Igor Puzanov, Moscow military district troops commander, were all named deputy defense ministers. Boris Gryzlov, who had headed the Unity faction in the State Duma, was appointed interior minister replacing Vladimir Rushailo, who was given Ivanov's position at the Security Council. Vladmir Vasiliev, who had been deputy at the Security Council, was named deputy interior minister, a position he had held from 1997-1999. Mikhail Fradkov, most recently a deputy secretary at the Security Council, is now head of the Federal Tax Police, replacing Vyacheslav Soltaganov, who was named a deputy to Rushailo at the Security Council. Nikolai Bobrovskii, who previously worked in the presidential administration on cadre issues, was appointed deputy tax minister, according to "Kommersant-Daily" on 3 April. He replaced Sergei Verevkin-Rakhalskii, who is now a deputy to Mikhail Fradkov, Federal Tax Police head. Atomic Energy Minister Yevgenii Adamov was replaced by Aleksandr Rumyantsev, director of the Kurchatov Institute. A new position for Adamov has not been announced.

UP: Duma deputy Vladimir Pekhtin was named the new leader of the Unity party's faction in the State Duma, replacing Gryzlov who was named interior minister. Pekhtin is from Magadan Oblast.

IN: Unity tapped Andrei Vulf, president of the St. Petersburg-based Vulf Group, on 12 April to replace State Duma deputy-turned-Interior Minister Gryzlov in the State Duma.

POLITICAL CALENDAR 20 April: Council to coordinate the unification of Fatherland and Unity parties will hold its first session.

21-23 April: New Zealand foreign minister to visit Moscow.

23-25 April: Gabon President Omar Bongo to visit Russia.

25 April: Duma will discuss draft laws restricting the participation of foreign capital, according to "Izvestiya" on 11 April

May: Spanish Prime Minister Jose Maria Aznar will visit Russia.

16 May: State Council will discuss reform of Unified Energy Systems.

June: Netherlands Queen Beatrix will visit Russia.

19 May: Democratic Choice of Russia will convene a congress.

26 May: Union of Rightist Forces to host congress in Moscow.

27 May: Election for State Duma seat in a single-mandate district in Irkutsk Oblast will be held. The seat was left vacant when former State Duma deputy Vladimir Tikhonov was elected governor of the oblast.

20-22 June: International Financial Action Task Force to hold a new meeting at which issue of Russian money-laundering is likely to be discussed, according to "Izvestiya" on 23 March.

1 July: Audit Chamber to deliver its report on the effectiveness of Russia's expenditures of foreign credits in 2000.

20-22 July: G7/G8 summit will convene in Genoa, Italy.

November: Unification congress to be held for merger of Unity and Fatherland parties.