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Sunday, December 09, 2007

Lifestyles of the Rich and Russian

The BBC reports:

Many of Russia's rich and powerful seem to be nervous.
President Vladimir Putin is due to leave office in the spring. Just months away from the end of the final term which the Russian constitution allows him, it is far from clear who comes next. Even when the apparent successor is known, there will be concerns over how Russia might or might not change under a new ruler. That is causing apprehension among those who have prospered during Mr Putin's time in office. Those who suspect they will not hang on to power seem to be trying to ensure they will not need to worry about money. There have already been suggestions of a struggle between competing branches of the security forces, each apparently having ties to different clans of Kremlin insiders.

Financial conflict

In October, a rare and intriguing incident shed some light on this jockeying. Viktor Cherkesov, a former KGB officer who now heads the federal anti-narcotics agency, broke the silence which is so often the Russian secret policemen's rule. At the time, the FSB - the main successor agency to the KGB - had detained several officers in General Cherkesov's service. "Already experts and journalists are talking about a 'war of groups' inside the secret services," he wrote in an open letter to the business newspaper, Kommersant. "In this war, there can be no winners. A war like this -everyone against everyone - will end in the complete collapse of the corporation." What was so remarkable about this letter was that it was a public acknowledgement of what to outsiders was only rumour. A member of the network of ex-secret policemen, who hold so much sway in Russia today, had admitted that battle had been joined.

Financial interests lay at the heart of the conflict which General Cherkesov described. He had this warning for his fellow "Chekists", as the Russian secret police in their various incarnations are known. The name comes from the Russian initials for the "Extraordinary Commission" set up by the Bolsheviks in 1917. "Anyone who finds out that his main vocation is business should go into another area. Don't try to be a trader and a warrior at the same time," he wrote.

'Velvet re-privatisation'

Oleg Shvartsman
Mr Shvartsman says the interview in Kommersant was distorted

Now comes the story of a fund manager called Oleg Shvartsman. Kommersant printed an interview with Mr Shvartsman. In the reported conversation, Mr Shvartsman is quoted as saying that plans are under way for what he allegedly terms a "velvet re-privatisation" to "acquire strategic assets" which would then be held by a state corporation. The suggestion is that the plan has the backing of senior figures in politics and business. In Russia, they are often the same people. They would stand to benefit - thereby ensuring their continuing influence after the end of President Putin's second term. Mr Shvartsman subsequently dismissed the published version of the interview. Kommersant stands by its story. It was enough to set alarm bells ringing at the European Bank for Reconstruction and Development. Following the publication of the article, the EBRD announced that it would not go ahead with plans for an investment fund "following statements by a minority shareholder in the fund's management company".

Then there is the case of the Deputy Finance Minister, Sergei Storchak. He has been charged with trying to embezzle $43m (29.5m euros). Mr Storchak has denied any wrongdoing. The investigation is seen as having damaged the reputation of his boss, Alexei Kudrin. Its progress is being closely watched for any political consequences it might have. No-one in Russia today comes close to President Putin in terms of political profile. The whole system revolves around one man. The uncertainty over what happens next seems to be sending shockwaves through the political establishment.

A reader writes:

I am hearing that the Shvartsman story may be quite significant. He now denies it but Kommersant are sticking by their story and have a photocopy of the transcript of the interview. It is significant that Kommersant carried the story not some lesser paper. Moreover Shvartsman has a reputation for integrity. Don't know why he gave the interview. Maybe some of your other contacts have some insight. I noted your recent post about Putin not getting the overwhelming % he hoped for. Are the first cracks appearing even when everyone is celebrating that all has gone well? Some people who are saying this are not just street radicals who have to keep themselves buoyed up with fabricated optimism. We shall see. Maybe it is not all so gloomy. I keep on thinking that if they just knew about his $41bn and could see how he has totally surpassed the likes of public enemies such as Berezovsky, then the edifice would crumble. Is that too naive? Well, we live in hope

1 comment:

Michael Wines said...

Note to the quoted Reader:

"Yes, that is too naive?" While a small clique of Russia-haters (Edward Lucas, La Russophobe, Robert Amsterdam) write what they write reality goes on in Russia.

The reality is something much closer to Boris Jordan's description of it in this Washington Post article. Here's the link: