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Russia Report: September 11, 2007

Beyond The Duma Vote, Presidential Succession Looms

By Robert Coalson

St. Petersburg Governor Valentina Matviyenko is seen as one of several possible successors (file)

September 7, 2007 (RFE/RL) -- Despite the flurry of activity in recent days surrounding the December elections for the State Duma, the March 2008 presidential succession remains firmly at the center of Russia's political agenda. Indeed, the Duma vote has repeatedly been described as merely an opening act for the main bit of political theater looming in the spring.

Much of the analysis of the party positioning as the Duma campaign was officially launched this week focused on who would feature at the top of the party lists for the pro-Kremlin Unified Russia and A Just Russia parties. If the two seeming front-runners at this point -- First Deputy Prime Minister Sergei Ivanov or First Deputy Prime Minister Dmitry Medvedev -- agreed to (or, more appropriately, were ordered to) participate in the Duma campaign under the banner of one or another party, analysts say, it would be a strong indicator of the prevalent Kremlin thinking about March. President Vladimir Putin is expected to address Unified Russia's pre-election congress in October (he addressed a similar gathering in September 2003), and it is possible he could make a surprise announcement then about the party's slate of candidates.

Possible Surprise Candidate

On the other hand, Putin in June threw wide open the speculation on successors when he told foreign journalists that "some governor might get elected." Although this sort of statement might easily be dismissed as posturing for international consumption, it corresponded with other indications from administration officials that the field of candidates is far from limited to two -- and that a surprise is likely in the offing. At the same gathering, Putin described his successor as "a decent and honest person with a high level of professional qualities and work experience who has proven himself well and positively either in a region or at the federal level," "Kommersant-Vlast" reported.

The succession process, however, must be managed carefully. Putin's personal approval ratings across Russia remain staggeringly high and that popularity is a major political asset that the Kremlin planners must manage and leverage. However, opinion polls show the public less wholehearted in its views of much of the platform that has come to be called "Putinism." According to a poll issued this week by the All-Russia Center for the Study of Public Opinion (VTsIOM), 56 percent of respondents favor increasing the role for the state in the economy, while 51 percent support Putin's efforts to boost Russia's position in the international arena.

But when it comes to the so-called vertical of power, or the centralization of political power within the Kremlin, public support is much weaker. Of course, much depends on the exact phrasing of the question, but the poll reported that just 26 percent of respondents back increasing centralization, while 30 percent urge increased democratization, transparent elections, and independent media.

Political analyst Dmitry Oreshkin told "Vedomosti" that that 30 percent could grow to 50 percent within two or three years if the government is ineffective. However, it seems even more likely that the proportion of dissenters could grow in the next few months as the Duma campaign unfolds if Kremlin manipulation of the process is too heavy-handed.

Return Of Putin?

The Renaissance Capital investment group recently issued a report entitled, "The Russian Elections: The Investors' Manual," by economist Yekaterina Malofeyeva. The report lays out two possible models for the 2008 presidential transition.

If the Kremlin decides the main goal is to maintain the status quo, then the most likely successors to President Putin are Prime Minister Mikhail Fradkov, St. Petersburg Governor Valentina Matviyenko, and Deputy Prime Minister Sergei Naryshkin, it argues. These candidates are most suitable because they have no known affiliations with business or political groupings and are most likely to receive consensus support.

If, on the other hand, the Kremlin seeks someone who will create an active economic policy, the leading candidates are Russian Railways head Vladimir Yakunin or presidential envoy to the Southern Federal District Dmitry Kozak. These candidates, Malofeyev argues, are most capable of using Putin's strong vertical of power to push forward with state-centered economic development.

Malofeyeva argues that in any event the main tasks of the next president will be to balance the interests of the country's leading business and political interests, protect the interests of Kremlin-connected businesspeople, and find an acceptable post-presidential role for Putin. She says the selection of a status-quo president could signal that Putin plans to return to the Kremlin in 2012.

Asked to comment on the Renaissance report, political commentator Dmitry Badovsky of the Institute of Social Systems told "Vedomosti" on September 6 that a status-quo president is almost certain since he believes Putin intends to return to power in 2012. However, he said the "pause" between Putin terms could be filled by some unpopular but necessary reforms that must be carried out in a way that does not harm Putin's personal popularity.

Analyst Alexander Rahr, however, told the daily that Putin himself most likely favors a more aggressive approach that would maintain the momentum of Putinism, especially regarding the expansion of the state's role in the economy. Rahr predicted that Sergei Ivanov, whom he described as "Putin's clone," will be the most likely successor.

Powerful New Investigative Body Begins Work

By Brian Whitmore

Prosecutor-General Yury Chaika will lose some powers

September 10, 2007 (RFE/RL) -- Russian law-enforcement is in the midst of a quiet revolution.

On September 7, a powerful new agency called the Investigative Committee, which will operate alongside the Prosecutor-General's Office, formally came into existence. Today it opened its doors and began its first full day of work.

Russian officials describe the Investigative Committee's creation as an attempt to reform and streamline federal law-enforcement. Some call it the first step toward creating a U.S.-style FBI. But analysts say the move has a political subtext as well.

Aleksandr Bastrykin, a former law-school classmate of President Vladimir Putin's, will chair the new agency. Bastrykin, who formerly served as deputy prosecutor-general, will now have broad powers to operate independently of Prosecutor-General Yury Chaika.

Dmirty Oreshkin, a Moscow-based political analyst, calls the move an attempt to curtail the enormous power and influence the Prosecutor-General's Office had accumulated over the years:

"It [the Prosecutor-General's Office] was too large a center of influence," Oreshkin said. "It had judicial authority, police authority, and most importantly, it has the ability to reveal compromising information about the most important officials in the Russian Federation. This is very important in the political battle," Oreshkin added.

Investigative Committee

The new Investigative Committee will indeed usurp many of the prosecutor-general's powers and manpower. In addition to taking over control of more than 18,000 investigators formerly employed by the Prosecutor-General's Office, it will also assume jurisdiction of over 60,000 criminal cases -- including high-profile murders like that of former security officer Aleksandr Litvinenko and journalist Anna Politkovskaya.

The prosecutor-general, meanwhile, has been stripped of his authority to direct investigations, seize property, and initiate criminal cases. Chaika, for example, cannot launch criminal proceedings against Bastrykin -- although Bastrykin can launch proceedings against him.

"Even though Putin is himself a silovik by background, he understands the danger in concentrating power and resources in the hands of any law-enforcement or security structure."

Is this a case of Putin trying to rein in the Prosecutor-General's Office? Oreshkin says the president, in fact, is trying to prevent any law-enforcement agency -- with the possible exception of the Federal Security Service, or FSB -- from gaining too much power and influence:

"Even though Putin is himself a silovik by background, he understands the danger in concentrating power and resources in the hands of any law-enforcement or security structure," Oreshkin said, using the Russian slang term for members or veterans of the security services.

"Chaika is absolutely loyal. He isn't going to play any dirty games. But it is better to have several competing law-enforcement and security structures. They watch each other, they control each other. None of them can play a decisive role -- with the exception of the FSB," Oreshkin added.

Other law-enforcement agencies such as the Interior Ministry and the Federal Drug Control Service still have the power to conduct criminal investigations.

Russian FBI?

But Vladimir Pribylovsky, head of the Moscow-based Panorama think tank, says the Investigative Committee has the potential to develop into a massive power center if -- as some officials have suggested -- it eventually gains control over all of Russia's investigative agencies.

"Formally this organization is part of the Prosecutor-General's Office, but in fact, if you look at the amount of power he has, Bastrykin is in fact another prosecutor-general," Pribylovsky said. "And his role can get even stronger. If [the Investigative Committee] takes over all the other investigative agencies and creates a truly unified Investigative Committee, then it will have enormous power," Pribylovsky added.

Analysts say it is unclear whether the new system will help or hinder Russia's law-enforcement and judicial processes.

Aleksandr Gorshkov, a St. Petersburg-based investigative journalist who writes extensively about law-enforcement issues, says the Investigative Committee makes perfect sense in theory.

"There is logic behind this decision," Gorshkov said. "The prosecutor-general's basic function is to control and monitor to ensure that the law is followed. Investigators needs to be independent. According to this logic, the establishment of the Investigative Committee is completely logical," Gorshkov added.

But in practice, Gorshkov said the new agency could in fact create more problems than it solves. Conflicts between the Prosecutor-General's Office and the Investigative Committee, for example, must be resolved in court -- which could paralyze Russia's already slow justice system.

Moreover, Gorshkov says it is still not clear whether the Investigative Committee can handle the caseload it has just inherited from the Prosecutor-General's Office. Gorshkov points out also that the potential for evidence to be lost as tens of thousands of criminal cases are transferred is uncomfortably high:

"It will be several months before we can assess how this is turning out. We need to see how this agency will work and how it will resolve some of the internal contradictions that are present at the start," Gorshkov said.

The changes in Russian law-enforcement come as a series of high-profile criminal investigations appear to be picking up momentum.

On August 22, police in St. Petersburg arrested Vladimir Barsukov -- also known as Vladimir Kumarin -- the alleged leader of the Tambov Group, one of Russia's most powerful organized crime clans.

Five days later, in a Kremlin meeting with Putin on August 27, Chaika announced that 10 people -- including a Chechen crime boss, a Federal Security Service officer, a police major, and three former police officers -- had been arrested in connection with the Polikovskaya assassination.

Gazprom Gears Up For Image Makeover

By Roman Kupchinsky
September 4, 2007 (RFE/RL) -- Gazprom is attempting to show a new face to the world, one that will lure Western clients and shareholders into viewing the company and its business practices in a better light.

To oversee its image makeover, the Russian state-owned gas monopoly has hired three international public relations firms, all members of the Omnicom Group, a U.S. communications company, to replace PBN, its former PR firm. Two of the newly hired companies are already working with the Kremlin, advising Russia's leadership on relations with the West.

The cost of the contract is somewhere in the range of $11 million, according to the Russian daily "Kommersant."

Nontransparent Image

Gazprom's image problems date back to Viktor Chernomyrdin's leadership of the company following the collapse of the Soviet Union.

His close relationship with President Boris Yeltsin was instrumental in getting the company special status with generous tax benefits, and set the groundwork for making Gazprom a "state within a state."

Under Chernomyrdin's leadership a corporate culture that rewarded opaqueness set in, spawning Gazprom's reputation as a company that operated outside the law.

After Chernomyrdin was succeeded by Rem Viakherev, Gazprom was implicated in a number of corruption schemes. In one, the gas giant was accused of involving its fully-owned insurance company, Sogaz, in insurance scams that served to enrich Gazprom's top management. Western reinsurance companies largely bore the financial losses from these schemes.

Gazprom's most controversial era began in 2001, with the arrival of Aleksei Miller as Russian President Vladimir Putin's hand-picked CEO of the company. A colleague of Putin's in the St. Petersburg governor's office during Yeltsin's presidency, Miller was in good standing with the future president and with other city officials who would soon reach high positions in the Kremlin. Among them was Valery Golubev, a former KGB agent who recently became the deputy head of Gazprom's management committee.

Following Miller's appointment, Gazprom executives conceived a new scheme to transport Turkmen gas to Ukraine.

With Miller's and Putin's approval, they created a Budapest-based company named Eural Trans Gas, which began acting as the middleman for Turkmen gas exports to Ukraine. The opaque company soon became the subject of a number of investigative reports in the Western media.

The negative publicity Eural Trans Gas generated forced Putin and then-Ukrainian President Leonid Kuchma to dissolve Eural in July 2004 and replace it with a similar company called RosUkrEnergo headquartered in Switzerland.

Gazprom later came under severe criticism for its handling of a gas-pricing dispute with Ukraine in January 2006 when, with great fanfare, Gazprom briefly shut down the pipeline carrying supplies to Ukraine -- and inadvertently to Europe. Many in the West saw Gazprom acting at the behest of the Kremlin, which, many claimed, was taking its revenge on the newly elected, pro-Western Ukrainian President Viktor Yushchenko and his Orange Coalition.

During the Ukrainian election campaign of 2005 Putin had lobbied vigorously in support of pro-Moscow Viktor Yanukovych's bid for the presidency. This raised suspicions that by pressuring Yushchenko on gas prices in January 2006, Putin was underscoring the vital impact Russia has on Ukraine's economy. Many in Kyiv saw Gazprom and Putin's actions as blackmail.

Western observers became alarmed when Gazprom insisted that Ukraine give up its sovereign right to buy gas directly from Turkmenistan and do so only through the services of the mysterious RosUkrEnergo, controlled by Gazprom.

However, the worst publicity for Gazprom was generated by a series of questionable deals presided over by the Kremlin -- the apparent goal of which was to bring under its direct control most of the country's oil and gas industry.

Beginning with the questionable license revisions for Western oil companies developing the Sakhalin 1 project and followed by the ouster of BP/TNK from the Kovykta gas field, Gazprom benefited enormously.

Whitewashing Attempt?

Any attempt to polish -- or whitewash, as the case might be -- Gazprom's image will not be an easy task given the company's reputation as a bully and the cumulative effect of years of nontransparency.

A major problem facing the Western PR companies is that Gazprom's corporate culture does not tolerate any inquiries about the company's business from outsiders.

A recent incident highlights the tensions that exist between Gazprom and the West and the measures the state will take to silence criticism.

Hermitage Capital Management, one of the largest private investment firms in Russia, has long been critical of Gazprom's opaque dealings and had prepared reports outlining examples of what it believed to be its fiscal irresponsibility and suspect practices. In 2006, Hermitage head William Browder was forbidden entry into Russia on the basis that he was a "threat" to Russian national security.

But the real reason behind the new PR effort appears to be the need to create a new image not only for a company, but for Russia itself. Putin's efforts to restore Russia's pride and position in the world have often led his administration to resort to methods reminiscent of the Cold War. A curtailing of democratic rights, foul play against domestic and foreign critics, and the use of energy resources as a weapon -- all these charges have hounded Putin and his administration throughout his eight years in power.

It is feasible that in the last months of his second and final term, Putin wants to go the extra distance to help his successor inherit a Russia and a Gazprom that are perceived as conforming to Western standards of governance and transparency.

This should not be confused with an onset of good governance or a change in Gazprom's role as a shadowy state within a state. It is entirely possible that the PR effort is merely a cosmetic facelift.

Whether a new Russian president will insist that the PR campaign be matched by a move toward greater openness and responsible practices by Gazprom -- not to mention abandoning the use of gas as a tool of foreign policy -- remains to be seen.

Putin Signs Uranium Agreement In Australia

By Claire Bigg

Critics are skeptical about Putin's pledge not to sell the uranium on to Iran

September 7, 2007 (RFE/RL) -- Russia and Australia have signed an agreement that clears the way for Russia to buy exports of Australian uranium for use in Russian civilian nuclear power programs.

Russian President Vladimir Putin and Australian Prime Minister John Howard signed the deal during bilateral talks today on the sidelines of the Asia-Pacific Economic Cooperation forum summit now under way in the Australian city of Sydney.

Putin is making the first-ever visit to Australia by a Russian leader.

Speaking at a news conference in Sydney, he said Russia needed uranium to boost its nuclear-generated electricity supplies.

"During the Soviet era, we built about 30 major reactors in nuclear power stations in Russia," Putin said. "In the coming 15-20 years we are planning to build about the same amount, and of course for these purposes we need this Australian uranium. As regards supplies to other countries, if such a need arises, our own resources will suffice."

The deal with Australia, which has the world's largest reserves of uranium, will also help Moscow fulfill its ambitious plans to build and fuel a quarter of new nuclear reactors throughout the world. Russia has agreements to supply nuclear fuel to 13 different countries and currently sells 30 tons of uranium a year to the United States for nuclear fuel.

Under today's deal, Moscow cannot use Australian uranium for military purposes or export it to a third country without Australia's prior written consent.

Concerns Over Iran

But Putin's pledge that the atomic material would not be sold on to Iran has been met with a degree of skepticism.

Critics say Russia could use the inflow of uranium to sell its own atomic resources to rogue states such as Iran, which Western countries accuse of seeking nuclear weapons.

Greenpeace activists protesting the deal (AFP)

"This is simply a political statement that has no scientific basis," says Aleksei Yablokov, a respected Russian expert on nuclear security and an adviser to the Russian Academy of Sciences. "Receiving uranium from Australia will give us more opportunities to deliver our own uranium to Iran and other countries. These processes are closely linked. This agreement reflects the irresponsible position of our government, which says it is in favor of preventing nuclear proliferation, but does everything to spread nuclear weapons across the world."

Russia has helped build Iran's first nuclear power plant at Bushehr and has a significant financial stake in Iran's nuclear power program.

But Putin today strongly dismissed concerns about how Russia will use Australian uranium.

"Russia has enough [nuclear] material of its own for the realization of arms programs," he said. "Moreover, the volume of accumulated materials we regard as weapon-grade is excessive. Over the course of many years, we've been selling this enriched uranium to the United States, where we're jointly reprocessing it and selling it on the North American market. So those who speak about the possibility of Russia using Australian uranium for military purposes simply don't understand the issue. Or they're just spreading this thesis deliberately, to hinder the cooperation between the two countries."

The Australian prime minister also sought to soothe worries that his country's uranium could fall into the wrong hands, saying that the atomic fuel sold to Russia would be "subject to very strict safeguards."

Read Our Analysis: What the latest deal means for Russia's nuclear policy

Print-Run Buy Scuttles Russian Book Launch

No show: "Notes From A Survivor" was meant to be launched at the Moscow International Book Fair (file)

September 7, 2007 (RFE/RL) -- An unknown buyer has purchased the entire print run of a book by Russian political activist and rights campaigner Ruslan Linkov.

The move led Linkov to cancel the presentation of his debut book, "Notes From A Survivor," which was scheduled to be launched September 6 at the Moscow International Book Fair.

His publisher said the buyer ordered all 5,000 copies before they were printed.

Linkov told RFE/RL's Russian Service that his work mentioned several high-ranking politicians and looked into the 1997 assassination of Mikhail Manevich, then St. Petersburg's deputy governor.

"Gennady Nikolayevich Seleznyov, the former State Duma speaker, and St. Petersburg's former governor, Vladimir Anatolevich Yakovlev, are mentioned in this book," he said. "The book answers, among answers, the question of why and how did graffiti appear on St. Petersburg's walls and fences in 1997 and 1998 reading: 'Yakovlev, why did you kill Manevich?' I wouldn't want all my future books and articles to fall into the hands of one person or a group of people interested in stopping their circulation."

The book also refers to the assassination of crusading pro-democracy politician Galina Starovoitova, who was gunned down in 1998 in the staircase of her St. Petersburg apartment building. Linkov was shot in the head but survived the attack.

Another 5,000 copies of "Notes From A Survivor" are due to be printed and distributed to bookshops within weeks.

Garry Kasparov, the Russian opposition leader and former world chess champion, was also unable to present the Russian edition of his latest book at the Moscow book fair.

The Moscow-based publishing house Eksmo declined to publish his work, titled "How Life Imitates Chess."

Eksmo spokeswoman Maria Markova insisted there was no political subtext to the decision. She told RFE/RL the book was not issued because the Eksmo subsidiary that concluded the contract with Kasparov three years ago was shut down last year and no new contract was drawn up.