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#4 - JRL 7246
Moscow Time
July 14, 2003
Presidential Ambiguity Undermines

President Vladimir Putin's remarks to the country's political elite on Friday about methods of dealing with economic crime -- the president's first indirect pronouncement on the judicial attack against Yukos -- were delivered with trademark ambiguity.

While perhaps seeking to dampen the zeal of the Prosecutor General's Office, Putin did not send a clear signal to desist (as was underlined by the prosecutors' search of Yukos offices that also took place on Friday). And, for good measure, he also took a potshot at big business for its excessive interference in the legislative process. This is very much in keeping with his style of staying above the fray and not publicly taking sides.

But, just as it is almost unthinkable that a move against an oligarch on this scale could be made without the president's sanction (or at least tacit nod), it is exceedingly unlikely that the whole thing will simply blow over without a direct public intervention by him.

If the plan was to deliver a "surgical strike" against Mikhail Khodorkovsky for overstepping the mark politically and to flash a warning to the rest of the business elite in the run-up to the elections, without undermining political stability, things seem to have gone somewhat awry.

There is clearly concern in some quarters that what is essentially an intra-elite conflict could spill over and infect the body politic as we move into the election season, with unpredictable consequences. Coverage of the Yukos affair on state-controlled television would hardly have been so low-profile if it had been the Kremlin's main intention to engage in oligarch-bashing for populist ends.

The business elite, meanwhile, has been at the forefront of raising the specter of renationalization, presumably in order to put pressure on Putin to take a firm stance.

One of the problems is that the prosecutor's office is rather a blunt instrument, and once the mechanism has been set in motion it requires an equally blunt and public signal to bring it grinding to a halt.

With political stability under threat and the markets reacting badly to the events of the last 10 days, Putin cannot afford to continue hiding behind a mask of silence and ambiguity. At the same time, he is acutely sensitive to being seen as caving in to pressure from the business elite or siding too closely with one or another of the factions in his entourage.

But burying his head in the sand is not an option. If things are not resolved relatively quickly, Putin's authority will be undermined, as he increasingly comes to be seen as weak and unable to control the situation.

The president's silence, under the circumstances, is far from golden.

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