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Russia: Rumors Flying Over Possible Resignation Of Influential Putin Adviser

Moscow's political rumor mill is running at high speed over the possible resignation of presidential administration head Aleksandr Voloshin, who took up his post at the very end of the Yeltsin era and has played a significant role in shaping Vladimir Putin's regime. Formally, Voloshin is the president's chief of staff, but in reality he is head of what is seen as Russia's real policy-making organ. RFE/RL looks at why political observers in Russia are holding their breath over Voloshin's fate.

Moscow, 30 October 2003 (RFE/RL) - Rumors about the possible departure of Aleksandr Voloshin from his four-year tenure as presidential chief of staff are sparking fears of a looming political crisis in Russia.

Voloshin, who rose to power during the era of former President Boris Yeltsin, in more recent times has served as a kind of one-man bridge between the Yeltsin-era oligarchs and the new security-service elite surrounding Vladimir Putin. Observers speculate his departure could set off a feud between the two groups that could prove severely destabilizing to the Putin government.

Russian press reports say the presidential adviser tendered his resignation after Yukos billionaire Mikhail Khodorkovskii was arrested and jailed over the weekend without Voloshin's knowledge. What is it about Voloshin's alleged resignation that has observers so alarmed? As head of the presidential administration, Voloshin -- with his trademark beard and balding pate -- is a constant presence in most top presidential affairs and meetings.

However, Voloshin is said to be much more than the mere organizer of the day-to-day running of the Kremlin staff. Reputed to be a fiercely smart political strategist and kingmaker, Voloshin is said to have been a key thinker behind Putin's rise to power.

Vladimir Pribylovskii, a political analyst with the Panorama think tank, told RFE/RL: "There's one official prime minister, and then there's another -- the head of the presidential administration. The head of the presidential administration is higher than the prime minister. He is like a shadow prime minister plus a shadow president -- because there are a lot of things that Putin did not intervene in, where Voloshin made the decisions."

Voloshin is also a key bridge to the power brokers of an earlier era -- an ally of one-time Kremlin insider Boris Berezovskii and one of Yeltsin's most influential representatives. As such, he acts as the modern-day protector of the former oligarchs, the handful of businessmen who continue to control the vast majority of Russia's wealth. A Yukos official once described Voloshin as the "oil that greases the transmission chain between big business and Putin."

In fact, Putin's rise to power marked the end of the oligarchs' direct and free Kremlin access they enjoyed while Yeltsin was president. Never a prominent businessman himself, Voloshin had ties to several dubious investment schemes and an indirect hand in the privatizations of the mid-1990s, as head of a key stock-managing fund. He moved up to the presidential administration as an aide in 1997.

Sociologist Olga Kryshtanovskaya, who studies the Russian business and political elite, said Voloshin has since become invaluable as a mouthpiece for the oligarchs. "[Voloshin] helped Putin subtly -- in half shades -- balance and maneuver between different forces. That was Voloshin's strong suit. He was the business community's appointee among the political power," Kryshtanovskaya said.

Voloshin is said to have orchestrated the 1999 ouster of Prime Minister Yevgenii Primakov, who was unpopular with the oligarchs. He was reported to support Putin's rise to the premiership. Voloshin, in fact, is said to have masterminded the pro-Kremlin Unity party ahead of the 1999 parliamentary elections and later the transfer of power from Yeltsin to Putin to ensure Putin's victory in presidential elections three months later. According to the Russian daily "Vedomosti," Voloshin was also behind the recent controversial election of Akhmed-hadji Kadyrov as president of Chechnya. Kryshtanovskaya said Voloshin fulfills a triple role as a day-to-day manager, a strategic thinker, and a representative of the old Yeltsin clan. It is this last capacity that she said has bred the current crisis -- Voloshin's apparent resignation appears to signal the oligarchs' defeat against Putin's secret-service cronies, also known as the "siloviki."

"Of course, he's a symbol for everyone, like a regiment's flag. As long as the flag is still being carried, the regiment is still alive. When the flag is caught, then it's over. [Voloshin's resignation would mean] defeat, a signal that the old Yeltsin clan has been defeated at the end of a long war," Kryshtanovskaya said.

Most analysts agree the rumored resignation appears to mean that Putin's "people" have won. Kryshtanovskaya said that is the logical outcome after Putin's slow but steady introduction of the "siloviki" in all key sectors of Russian government. She noted that former colleagues of Putin from the security service usually hold second- or third-level ministry and economic postings -- high enough in the decision-making pyramid to enjoy real power, but low enough to avoid publicity.

Kryshtanovskaya said the trend of putting "uniformed" officers in key political posts in the government, parliament, and regional political systems started under Yeltsin. But she said it became even more marked under Putin, in favor of the security services and to a lesser extent the Interior Ministry. "In Soviet times, you had the gigantic military-industrial complex, but the 'military's' actual presence in the political sphere was just over 3 percent," she said. "It then grew under Yeltsin to reach 19 percent in 1999, and from 2000 to 2002 the 'military' reached 25.1 percent of Putin's elite."

Kryshtanovskaya echoes the view held by many observers that the siloviki are behind the attack on Khodorkovskii. This new elite is generally regarded as a new twist on the Soviet-era principle of order through control over society. As a group, they are believed to be resentful of the Yeltsin-era oligarchs, who hold the key to Russia's oil wealth and have far greater economic resources.

The Kremlin can count on the revenues of a number of state-controlled companies like Gazprom, Rosneft, and the Transneft oil-transport monopoly. But Yukos alone is a significant counterbalance to the entire state sector.

Valerii Nestorov, an analyst with the Troika investment fund, said Yukos and its smaller partner, Sibneft, together bring in twice as much as Gazprom, Rosneft, and Transneft together. With a net annual income of $3.6 billion, Yukos alone brings in more than the state majors, which earn $2.14 billion combined.

"You can see that in terms of net income, the state companies [earn] less. What is the issue? That Yukos represents 20 percent of total oil extraction. Its role in deliveries of oil and oil products is very important in some regions. The thing is that from the very start, during privatization, companies became affixed to specific regions that they had to provide with petroleum products," Nestorov said.

Yukos-Sibneft is responsible for 7 percent of Russia's GDP, and one-fifth of its taxes. They account for about a third of the RTS, the main stock index. According to an article in yesterday's "Nezavisimaya gazeta," Yukos is the major provider of heat, electricity, and petrol for about half of Russia's regions, including Siberia, the Altai, and part of the Volga. It also has the largest gas-station distribution in Russia.

Ironically, Yukos also provides for almost half of the oil-product needs of the Defense and Interior ministries, as well as the border police.

Khodorkovskii, Russia's richest man, is theoretically wealthy enough to single-handedly finance a political party or campaign. So while other oligarchs would need to forge alliances to make a real splash in Russian politics, Khodorkovskii's Yukos-Sibneft group could play it alone. This fact, ahead of key parliamentary and presidential elections, could have fueled Kremlin fears of a political loss -- and may explain Khodorkovskii's weekend arrest.

So would Voloshin's resignation signal a Kremlin victory over the oligarchs? Political analyst Igor Bunin says no. The gesture would not be an admission of defeat but a counterattack, a way of gaining back the upper hand in the oligarch-siloviki clan war. Putin, he said, cannot afford to lose Voloshin ahead of a crucial election season.

"If [Putin] accepts the resignation, then the whole pre-electoral machine set up by Voloshin and [deputy chief of staff Vladislav] Surkov would fall apart. Destroying the electoral machine just before elections, that's quite a big step for our president," Bunin told RFE/RL. On the other hand, keeping Voloshin would imply for many that the Kremlin is ready to compromise on the Khodorkovskii case -- something that would not go down well with the siloviki. But would that be a bad thing? Economist Ksenia Yudaeva said the attitude of the siloviki is not as antibusiness as is often portrayed.

"Foreign investors can be useful or not useful to the powers. Useful because obviously they will not try to weigh in on politics. It's the Chinese model -- in China direct foreign investment is encouraged and does not unsettle the political system," Yudaeva said. At the same time, she said, "the Kremlin couldn't afford to treat a foreign CEO the way they treat their own."