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Russia: Oligarch Meeting Offers Few Results

President Vladimir Putin's meeting today with 21 of Russia's business tycoons was requested by the businessmen themselves, who hoped the Kremlin would agree to a compromise arrangement with the so-called "oligarchs." But RFE/RL correspondent Sophie Lambroschini reports from Moscow that few expect the meeting will fulfill their expectations.

Moscow, 28 July 2000 (RFE/RL) -- Shaken by recent law-enforcement attacks against some of Russia's economic giants, Russian big business wanted to hear a plausible explanation from President Vladimir Putin. After the Prosecutor-General's office earlier this month threatened to reverse the privatization of Norilsk Nickel -- the base of some oligarchs' power -- businessmen got the message: Putin had changed the rules of the Kremlin's game. But most participants in today's meeting did not expect a clear outline of the new rules.

The Kremlin is trying to force the business community to change the bad habits picked up in the eight years under Putin's predecessor, Boris Yeltsin. These include tax-dodging, illegal privatization and capital flight. They are also being asked to give up what made them oligarchs in the first place: their direct involvement in government policy-making.

The term "oligarch" was first publicly used by former Kremlin insider Boris Berezovsky, when he boasted that half of Russia's riches were controlled by a handful of businessmen. These empire-builders were at first mainly bankers who financed Yeltsin's re-election in 1996 and then continued to bail out the cash-strapped federal government until the August 1998 financial crisis that sent the ruble tumbling.

The price the Kremlin paid for such funding was to transfer to the oligarchs control over many the country's resources -- oil and precious metals, including nickel -- through fake privatization tenders. Controlling the state's resources, the big businessmen inevitably sought to make government policy subservient to their own interests.

Under Putin, the Kremlin first signaled it was ready to destroy the basis of Russia's economy by overturning the Yeltsin-era wealth distribution. But more recently officials have sought to be reassuring. Yesterday, Economic Policy Minister German Gref told a news conference that Putin had dealt with the oligarchs' worse fear, that the deals would be reversed.

"I think the president spoke Russian when he said that there would not be any reversal of privatization. It is the biggest bomb that would blow us all up."

But, Gref added, with the government having taken a first step by cutting taxes, the businessmen are now expected to make the next compromise.

Economist Mikhail Delyagin, head of the Institute on Globalization Issues, says the Kremlin's demands are actually quite pragmatic:

"On the one hand the Kremlin will demand tax money, and on the other hand unconditional agreement to all of the state's actions."

Still, as electricity-monopoly chief Anatoli Chubais admits, the oligarchs' concern over the Kremlin's actions against them later became a "panic." Yukos oil company boss Mikhail Khodorkovsky told a Swiss paper that he felt he might be arrested any time. Chubais said the one thing that might calm down all the tycoons would be to know "what to expect."

Norilsk Nickel boss Vladimir Potanin told Britain's Financial Times this week that the Kremlin "should tell us what to do next. Many oligarchs," he said, "are tired of the lack of well-defined rules and are waiting for the Kremlin to define the guidelines."

The Kremlin had earlier made clear that it would not draw up a charter with big business, as oligarch Boris Nemtsov -- who brokered the meeting -- had initially proposed. Nemtsov, head of the Union of Right Forces Duma faction, suggested that the Kremlin promise a moratorium on criminal investigations against the oligarchs and fight corruption, while businessmen promised to obey the law.

According to some observers, many of the businessmen considered key economic and policy players are not attending the meeting. Berezovsky, who is thought to have fallen out with the Kremlin, was not invited. Another so-called "dissident," media baron Vladimir Gusinsky, was not invited, either. In any case, Gusinsky yesterday hurriedly left for Spain after criminal charges of embezzlement against him were lifted.

Chubais was also not due to attend the meeting. A political and economic figure since Russia began its transition to a market economy in 1991, Chubais today is meeting with another head of state, the president of Finland. Finally, oil magnate Roman Abramovich -- reputed to be the last of what are called the "real" oligarchs, with daily influence in the Kremlin -- allegedly declined an invitation to the meeting. Abramovich's business interests were to be represented by lesser oligarchs.

Those who are attending the meeting are a mixed group, representing mainly the banking sector and natural resources such as oil, gas, and metals. Among the most influential attendees are Gazprom head Rem Vyakhirev, Lukoil boss Vagit Alekperov, and Interros chief Potanin. In addition, many less influential oligarchs -- such as the head of the Saint Petersburg brewery Baltika -- are also due to attend.

Economic analyst Delyagin says such relatively modest businessmen are not really oligarchs. "An oligarch," he says, "is a person with big influence over state affairs, with the major criterion being an ability to force the state to take new actions or new policies. But," he adds, "an ordinary businessman who controls only a few officials is not capable of this."