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Russia: Putin Presidency At Two-Year Mark -- Do Oligarchs Still Have A Role? (Part 1)

When Vladimir Putin was elected president two years ago, he came to office promising to free Russia from the influence of the so-called oligarchs -- businessmen who under former President Boris Yeltsin acquired control of many of the country's newly privatized industries and who wielded considerable clout in the Kremlin. In this first of a two-part series on the Putin presidency, RFE/RL Moscow correspondent Francesca Mereu talks to political analysts about whether the Russian leader has lived up to his promise.

Moscow, 19 April 2002 (RFE/RL) -- Looking back at the mid-1990s in Russia, analysts say it was not government leaders, but a small group of businessmen who held the real power. These were the oligarchs -- entrepreneurs who had snapped up much of Russia's natural and industrial resources in the privatization free-for-all that followed the collapse of the Soviet Union.

When Vladimir Putin was elected president in March 2000, he vowed to eliminate the oligarchs' political and economic domination of the country. Two years later, however, observers remain divided on whether much has changed since the era of Putin's predecessor, Boris Yeltsin.

Sergei Markov is the director of the Institute for Political Studies, a think tank with ties to the Kremlin. He told RFE/RL that Putin's first aim as president was to restore government order, something that could be done only by clipping the wings of oligarchs like Vladimir Potanin of Norilsk Nickel and Mikhail Khodorkovsky of the Yukos oil giant.

"The oligarchs were given an ultimatum. They had to accept that they weren't oligarchs anymore, but simply big businessmen, and that they had to stop influencing the [country's] political life. Most of them agreed, with the exception of two people: Vladimir Gusinsky and Boris Berezovsky. They did not agree because they considered themselves more politicians than businessmen," Markov said.

Markov said that despite Berezovsky's and Gusinsky's determination to stay in the political fore, Putin has been largely successful in clearing the government of the oligarchs' influence. He explained how the structure of the oligarchy has changed over the past two years.

"Today, the oligarchs as a class don't exist anymore. [Earlier], the idea was that the oligarchs could put [their own] ministers in place. But now a powerful businessman doesn't have the possibility of having his own minister appointed. Consequently, the oligarchs' role has changed. Previously, oligarchs used to work in the political arena -- now they work in the economy. They were given the task of improving the [country's] economy. [Putin told them], 'You can get the support of the state as businessmen, but we are not going to tolerate any longer your trying to influence higher political decisions. If you try, you'll be struck down,'" Markov said.

Markov said the former oligarchs are now allowed only an official inroad to political life, as members of the Russian Union of Industrialists and Entrepreneurs. This still allows them to participate in decisions that affect their business interests, but it is a considerable step down from the days when they were a regular presence in government ministries, where they freely lobbied for their own projects.

Svyatoslav Kaspe is a program director at the independent Russian Public Policy Center. He told RFE/RL that the union allows the government to keep a comfortable distance from former oligarchs and other business officials while still providing a forum for dialogue. He said that while entrepreneurs can still influence the Kremlin's economic policy, their political influence has been eradicated.

"When the government elaborates its economic strategy, it takes into account the opinion of those entrepreneurs whose interest lies in that economic sphere. But there is no entrepreneur who now has the power to influence the political decision [of the government]. The Kremlin power center has broken its links with business. Politics now lives independently from the oligarchs," Kaspe said.

Kaspe cited as an example a recent discussion between oil executives and government officials over Kremlin plans to reform the oil market. The oil executives were clearly dissatisfied with the proposals, Kaspe said. But, he added, "Their disappointment could only be very moderate and balanced, and not political. None of the entrepreneurs is now willing to start a political, media, or any kind of war against the Kremlin."

Andrei Piontkovskii is the director of the Moscow Center for Strategic Research. Piontkovskii told RFE/RL he does not believe the oligarchs have been effectively sidelined. To the contrary, he says, Russia's economy still functions in an "oligarchic" way, "where rich people settle their economic problems thanks not to good economic strategies, but to the links they have to the corridors of power."

Moreover, Piontkovskii said the Kremlin's confrontation with Gusinsky and Berezovsky -- typified by the NTV and TV-6 media-takeover scandals -- was a fight between Putin and two political foes, not a struggle to declaw the oligarchy overall. Of all the oligarchs, he said, Gusinsky and Berezovsky were traditionally the most intrusive in terms of forcing their political will on the Kremlin.

The only notable change since Putin came to office, Piontkovskii said, is the route by which influence flows to the top. If earlier, oligarchs felt free to take their concerns directly to President Boris Yeltsin, they now turn to ministers or other government officials to make sure their message is heard.

In reality, he said, the oligarchs' power has diminished only slightly. "We have one more bureaucratic structure. [Oligarchs] now meet under the umbrella of the [Russian Union of Industrialists and Entrepreneurs] led by [Arkady] Volsky. But this is such a superficial change. It doesn't influence either life or the economy in this country. We still have [old problems like] the flight of some $20 billion of capital from the country. And it is those same oligarchs who are doing this. We don't have investment in industry, and this is another consequence [of the oligarchy]. We don't have a bank system or a stock exchange. These are also clear characteristics of an oligarchic system," Piontkovskii said.

In Russia, Piontkovskii said, politics invariably comes down to a fight for influence over the president. And despite Putin's good intentions to rid the Kremlin of any traces of oligarchic power, he said, the country will never be entirely rid of the oligarchy.

"It seems to me that the country' oligarchic system is strong. Even if Putin wanted to fight it, I don't think there's anything he could do. He can throw one or two people out of the country, but he can't do anything to change the political and economic power structure that developed under Yeltsin and that over the past two years has showed itself to be quite strong," Piontkovskii said.

RFE/RL political analyst Mikhail Sokolov agreed. He said the long arm of the oligarchs continues to stretch into the regions and their myriad industries and natural resources. He cited the northwestern region of Vologda as an example of how big businessmen have managed to maintain political influence by keeping close allies in power.

"Let's take the example of the Vologda region, where you have [Russia's leading steel maker,] Severstal, in the town of Cherepovets. In the region, the Legislative Assembly is fully controlled by men supported by this enterprise. It means they push their own people into lawmaker posts, and you have the so-called 'metallurgic party.' Not long ago, elections were held in that region and [this party] won an absolute majority. Moreover, the governor, Vyacheslav Pozgalev -- a man who comes from [Serverstal] -- practically does the bidding of the enterprise's managers, helping them to solve production, financial, and social problems," Sokolov said.

Vladimir Pribylovskii, the head of the independent Panorama information and analysis group, also said the oligarchy is alive and well. But he told RFE/RL that the country's true oligarchs are not big businessmen, but those who hold political power -- from the presidency on down.

"The main oligarchs in our country are [President] Putin, [Prime Minister Mikhail] Kasyanov, and [presidential Chief of Staff Aleksandr] Voloshin, and they aren't businessmen. And when people say that the oligarchs should be separated from [political] power, it is like saying that a hockey player should be divided from the hockey game. This is why an oligarchic regime cannot be separated from the oligarchs and why it hasn't happened at all," Pribylovskii said.

Pribylovskii ended on a pessimistic note, saying the Putin presidency, while more even-keeled than the Yeltsin presidency, continues to blend the same elements of oligarchy and autocracy. Only this time, he added, the proportions are different: "Yeltsin was sick 25 days a month, so we had five days of autocracy and 25 days of oligarchy. But now with Putin you have a more harmonious arrangement: 30 days a month you have the union of autocracy and oligarchy."