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Yezhenedelny Zhurnal
No. 2
January 2003
The Kremlin has failed to cleanse Russian politics of big business
Author: Alexander Ryklin
[from WPS Monitoring Agency, www.wps.ru/e_index.html]


Business tycoons have retained at least some political influence in Russia

Media reports in late 2002 said that the Kremlin had calculated all the election campaign costs of United Russia, the pro-government party; sums between $300 million and $500 million were mentioned. That is a lot of money. As far as the regime is concerned, however, all these expenses are expedient and truly necessary. The Kremlin needs the money to establish total control over Russia's political territory. The administration is setting an ambitious goal for United Russia, with its satellites like the People's Party. They are supposed to win two-thirds of Duma seats, and thus earn the privilege of being able to revise the constitution. However, there are serious doubts that this goal will be achieved.

A prominent political consultant says: "If the figures given were correct, if the oligarchs do pay such unprecedented sums to the Kremlin, and if all of the sums are spent on the United Russia party, it would mean the restoration of a single-party system in Russia. But that will never happen. For starters, a substantial part of the sum will be stolen, regardless of who is in control - Alexander Bespalov or anyone else. Money is always stolen in Russia."

This conversation took place shortly before the political future of Alexander Bespalov, chairman of the General Council and chairman of the Executive Committee of United Russia, was decided. Judging by the latest developments, the party coffers will be in the hands of Deputy Director of the Presidential Administration Vladislav Surkov, the Kremlin official in charge of political parties. Bespalov had secured the president's support and thus found himself at the helm of the most influential party in Russia. But he no longer has that mandate, says a Kremlin source. The presidential administration wants Bespalov to remain chairman of the General Council (an unimportant structure now that United Russia has set up the Supreme Council headed by Interior Minister Boris Gryzlov), while the Executive Committee will be turned over to Sergei Popov, another party functionary.

An adviser to the Fatherland faction of the Duma told us (Fatherland ceased to exist as a party when it became an integral part of United Russia, but retained a faction in the Duma - Yezhenedelny Zhurnal): "Bespalov has had the president's trust until recently. It seems, however, that Surkov persuaded the president that the elections might be utterly ruined if Bespalov retained leadership of the party. I hear that Surkov acquainted the president with the so-called United Russia manifesto, sent out with Bespalov's blessing to regional party branches in late 2002. (Bespalov bent a major rule and an important provision of the party charter in doing so - documents of this kind should be adopted by a party congress - Yezhenedelny Zhurnal). Among other things, the manifesto includes a promise to voters to transform Chechnya into a Mecca for tourists in Russia, to build a highway from St. Petersburg to Anadyr by 2006, and to solve all the nation's energy problems with the help of a contraption invented by some scientist..."

Extracts from the manifesto make an unforgettable impression. And yet, it is not the political helplessness of Putin's protege that sparked the lengthy conflict between part of the presidential administration and Bespalov. Boris Gryzlov, recently appointed chairman of the Supreme Council, is not exactly a fountain of new ideas either. Neither can we seriously expect Oleg Morozov, leader of the pro-presidential Russian Regions faction, who was recently elected chairman of the program commission (a ruling party without a program - imagine that), to come up with anything new or to become United Russia's major ideologue. Had the Kremlin really considered this to be a serious problem, it would have found someone smarter.

The power-struggle between Surkov and Bespalov began over the privilege of being called the most effective political manager. (In the eyes of the president, needless to say.)

A political consultant known for his closeness to the Kremlin says: "If the party is being run by Bespalov on election day, any outcome of the vote would be fatal for Surkov. If United Russia wins, it would be clear that finesse and intrigues are no longer effective, and not worth pursuing. Draw your own conclusions. If United Russia loses, Surkov would still have to answer for that, as the Kremlin's foremost political manager."

That was why Surkov desperately needed to oust Bespalov and reestablish control over United Russia - and, naturally, over its campaign funds, though accumulation of funds seems to be encountering some problems.

It is common knowledge that all contemporary political parties in Russia (and the Communist Party is no exception) survive on contributions from large companies. Under Boris Yeltsin, the tycoons cooperated with the Kremlin according to an unwritten rule: funding in return for some powers. In this way, the oligarchs had a direct impact on the domestic political situation between elections and on the correlation of forces prior to election campaigns. The most vivid example is presented by the presidential election of 1996, when large companies were handsomely rewarded for their contributions to Yeltsin's campaign.

Extricating Russia from the burden of oligarchy was one of the first priorities the new regime set out to pursue. Business tycoons were told in no uncertain terms that the time of their interference was over. Those few who were reckless enough to object were rapidly forced to flee Russia. Absolute loyalty was demanded from all the rest. They obliged.

But this "removal" of capitalists from politics doesn't mean that the Kremlin decided to get by without their financial contributions, of course. Even "removed", business tycoons were expected to go on contributing - either directly to the Kremlin (there are stories circulating about the size of this "tax") or to the addresses indicated by the Kremlin. Moreover, these sponsors cannot expect their contributions to earn them broader political influence with the regime, not like they did in the Yeltsin era. Former oligarchs got the message: behave yourselves, and you will not follow in the footsteps of Vladimir Gusinsky and Boris Berezovsky - your assets will not be seized, and you will be permitted to continue living in Russia. They could only agree, keep a low profile, and play along - contributing to United Russia and any other projects thought up by the Kremlin. (There are some valid reasons to assume that the YUKOS oil company became Yabloko's major sponsor six months ago, on explicit orders from the top.) Everything is somewhat more problematic with the Union of Right Forces. Companies would probably sponsor the URF entirely of their own accord, without prompting. There can be no doubts, however, that the Union of Right Forces will find itself without any funding at all the minute the Kremlin says the word. The Kremlin has to have various parties as rivals for United Russia, supported and financed in order to create the illusion that the regime is a democracy, for the benefit of the international community. The financiers and industrialists have been forced to pay for it. And they would like to change the rules set four years ago.

The first symptoms of disobedience by the tycoons became noticeable in late 2002. Moscow seethed with rumors that YUKOS chief executive Mikhail Khodorkovsky had flatly refused to sponsor Gennadi Seleznev's party. The Russia's Revival organization was founded by the Kremlin in 2002 in order to win over at least part of the traditional communist electorate. It was clear from the very beginning, however, that Russia's Revival would fail. And that is probably why the Kremlin decided to let Khodorkovsky get away with his rebellion.

According to what information is available at its point, this was just the first indication of trouble. In early 2003 the tycoons began grumbling over the size of the "tax" the Kremlin demanded from them for United Russia's parliamentary campaign.

An analyst close to the Kremlin said: "I don't know anything about specific sums, but they will pay everything to the last ruble, that much is clear. It is also clear that oligarchs are annoyed by the methods of payment. They have started screaming about not being able to raise the necessary sums in time. There are even rumors that they have made some financial and political demands. Allegedly, the tycoons want to monitor spending. I can believe that. However, I don't buy the rumors that tycoons said they would sponsor United Russia only if they themselves could take part in drawing up lists of candidates. Had they said anything like that, it would have been all over for them."

Neither can there be any doubts that even meek protests by the "unofficial sponsors" of the Russian regime concern the Kremlin greatly, especially when United Russia campaign funding is back in the hands of the presidential administration. In the meantime, the very fact of some discord between the Kremlin and business is of considerable importance, even apart from the upcoming elections. Of course, it's too early to tell whether this will escalate into anything more serious than complaints about the size of the "tax", but some conclusions may still be drawn.

The conflict indicates that big business has retained at least some influence in political processes, and essentially remains the only social force with which the regime is forced to enter into some dialogue. It is not a dialogue of equals, but it is still a dialogue. (Political parties, Duma factions, and regional leaders are unable to discuss any important issues with the Kremlin. They are merely told the terms of survival, and diligently comply with them.)

And since the dialogue is underway, the oligarchs must be playing at least some role in Russian politics. Among other things, they have an impact on United Russia's campaign prospects, regardless of who leads the party - Bespalov or Gryzlov. The tycoons don't really care, one way or the other.

(Translated by A. Ignatkin)

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