#13 - JRL 7245
June 27, 2003
THE KASIANOV CABINET IS FINISHING ITS GAME
What are the tycoons really hoping for?
Author: Alexei Bogaturov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
KASIANOV IS FINISHING HIS GAME. CURRENTLY, HIS FUNCTION IS TO PROCRASTINATE ANE TO THINK OVER THE SCENARIOS FOR A NEW "ACCORD" WITH THE BUSINESS SECTOR. IT IS NOT A CONFLICT BETWEEN PUTIN AND KHODORKOVSKY - IT IS RATHER THE BEGINNING OF A FIGHT FOR CHANGING ECONOMIC PRIORITIES.
Beneath the noise of the sham parliamentary race, the Russian business world has secretly announced a tender for replacing the prime minister. The major intrigue is not who wants to replace Kasianov in his position, but that the replacement has been initiated by the business elite rather than the president or the Duma. The present structure of the Russian elite strikingly differs from what it was when Kasianov was appointed prime minister three years ago.
Kasianov came to power as a guarantee of the "historic compromise" between a group of tycoons who were to be protected by "Yeltsin's Family" under the new president and the new team brought to power by Putin in order to stir tycoons up without eliminating them. A three-clause "Pact on rights" was concluded according to which Putin was to "put tycoons in their place without crashing them". Second, experienced business intriguer Mikhail Kasianov was to convey president's claims to tycoons and simultaneously lobby for their interests in the government. Third, the St. Petersburg team was restricted from bullying the business sector and the government without an utter necessity but it was to constantly monitor how they observe new rules and frightening them with punishments if they are willing to resume the "arbitrariness" of Yeltsin's time. From the balance standpoint, the prime minister was to some extent even more "central" figure than the president.
However, the situation has changed by the forth year of Putin's presidency. The matter is not that the term "tycoon" has become outdated - as the president told the press; but that the priorities of the Russian business society have substantially changed as well as its structure.
First, Khodorkovsky has become the most prominent figure in business circles - he is mega-rich, influential, and for the first time in the past twelve years Chubais has an intellectual rival. However, he may be more promising than Chubais. Currently, Chubais is the only survivor of those who were Putin's open and bitter critics when he was prime minister in 1999. Khodorkovsky is a new-style person: having taking into account the lessons of his predecessors, he is not rushing to get into power. His credo is to shape power. Until recently, this feeling of the situation was almost Chubais' monopoly which makes Khodorkovsky a "special person in business: still young but already perceptive; while Chubais is also perceptive, but not so young. This type of entrepreneur prefers indirect actions: to find a 'loyal' prime minister rather than become a prime minister dependent on the president". That is why Khodorkovsky invests money not in vulgar self-promotion, but in plans for reforming the whole Russian political spectrum.
Second, the need to insure business leaders against the government's actions has already disappeared, or almost disappeared. It seems Putin will not allow punishment for old mistakes, and the majority of tycoons have learned not to be too audacious. Hence, the prime minister has lost his key protective function.
He has also lost his monopoly on lobbying for business interests. Putin issued a "royal command" for all Russian business leaders to unite in the Russian Union of Industrialists and Entrepreneurs and to submit all complaints via this body, collectively, after working out a common opinion. This was the beginning of a mechanism for legal representation of business in government. Of course, it was not perfect, but it was quite reliable. Now, it protects large companies from misunderstandings with the government.
The prime minister has exhausted his "moral novelty" store rather than his qualification. He came to power as the leader of the first stabilization government and it is not his fault that it is time for the "new generation prime minister", head of the cabinet for Putin's second term.
Third, the unwritten basis of the old "pact" is also decaying. The prior system was created by Yeltsin in order to "insure" him and his close associates. Despite seeming to be energetic, the first president is less and less able to play politics - this is noticeable on TV. He will not have enough strength for Putin's second term. Moreover, the objective to protect the past has lost its acuteness. New money brings new conflicts. The budget has more money, leading to fights over its distribution. The future is more important than the past, even the recent past. The strongest "economy-wise" person is Khodorkovsky and he represents the strongest and most conservative sector of energy resources. This sector has saved the people and the state for fifteen years. It is grandiose, but everything has its end. Having posed the objective of doubling the GDP, President Putin did not tell all the truth - next time, he will have to be tougher and to say the secret words, "also at the expense of increased production in the processing industries." The key issue of his second term will be moving away from the "oil and gas economy" model. Naturally, it would be suicidal for Russia to undermine the energy resources sector - but it is a crime to restrict the whole economy to that sector. They know it even in Saudi Arabia.
The first option is that an anti-oil prime minister will be appointed and launch a war against the oil industry. The second option is that tycoons will "promote" a prime minister loyal to them once again. The third option is a dialogue and a compromise between Putin and Khodorkovsky's team.
One way or another, Kasianov is finishing his game. Currently, his function is to procrastinate and give Putin time to think over the scenarios of a new "accord" with the business sector. It is not a conflict between Putin and Khodorkovsky - it is rather the beginning of a fight for changing economic priorities. As usual, the compromise will be more in favor of the stronger party. The "energy lobby" is preparing for bargaining with Putin seriously, hoping that in the heat of the election race he will fail to see Khodorkovsky's strategic intrigue.
The main thing is that the tycoons are rich. Where will state- oriented Putin find supporters?
(Translated by Arina Yevtikhova)