#9 - JRL 7250
Moscow Times
July 16, 2003
Russia Headed Toward Junta of the Siloviki
By Yulia Latynina

Russia's siloviki, the law enforcement and the security services, have been very busy lately expropriating the expropriators. After searching a Yukos office for 17 hours last Friday and Saturday, it was reported that men in masks had turned up at Sibneft. What's going on? Several theories are now doing the rounds.

Theory 1: President Vladimir Putin ordered the crackdown as part of an election campaign strategy based on doing battle with the oligarchs. This was a tactical decision with guaranteed voter appeal calculated to ensure a first-round victory. The strategic problems that could arise later do not affect the president.

Theory 2: This is a minor case of campaign fever. The St. Petersburg chekists in the presidential administration, led by Viktor Ivanov and Igor Sechin, are dissatisfied with the current arrangement for bankrolling United Russia, whereby all the oligarchs' money goes through presidential chief of staff Alexander Voloshin and his deputy Vladislav Surkov. Ivanov and Sechin want a hand in dividing up the pie. The president will never allow one clan to defeat the other, however. The siloviki and the oligarchs are like the two wings of an airplane. They may jostle for dominance, but the president knows full well that the plane can't fly with one wing.

Theory 3: A few years ago the siloviki went after Vladimir Potanin, demanding that he pay the government $140 million for what they called the undervalued privatization of Norilsk Nickel. Rumor has it that they secretly asked for money. And that Potanin agreed. And that if he hadn't, some of his people would now be behind bars. Then they went after Yukos. Again with their hands out. But Mikhail Khodorkovsky wouldn't grease their palms.

These three theories have one thing in common: They accept as a given the intervention of the siloviki in the economic process. That's more than a little disconcerting. In the United States, the FBI and the police deal with criminals, not share prices.

The security services participate in the political and economic life of a contemporary state only when the state is ruled by a junta. While the leaders make a big show of defending the people's interests, they hoard the country's wealth for themselves or sell it off to foreigners for a song. Foreigners enter the picture because, although siloviki are hopeless businessmen, they regard domestic entrepreneurs as a direct threat to their influence.

The siloviki resemble our army. As it has demonstrated in Chechnya, the army does not know how to win, but it does know how to steal. Our siloviki also do their job poorly. They aren't terribly good at preventing terrorist attacks or solving crimes, but they're great at gutting businesses. What our army does to civilians in Chechnya, our siloviki do to businesses in the rest of Russia.

When you get right down to it, Russia is currently in the midst of a watered-down civil war, not an election campaign. And a country in that state is unlikely to double its GDP by 2008.

But that's not the most important thing.

If the moves against Yukos et al. are part of a campaign strategy, the siloviki need to hire a new campaign manager. Big business won't wait around to be gutted. Top executives and their money will head West. Russia will wind up in poverty, and an impoverished Russia will vote for the Communists.

If the siloviki insist on revisiting privatization, their own skeletons are sure to be placed on public view, from the Tri Kita dispute to the $340 million spent on restoring the Konstantin Palace. When the two ruling classes expose each other's dirty laundry, neither wins at the polls. The Communists do.

Thirdly, when you conduct an extremist election campaign, the extremists win, not the bureaucrats. And finally, in a country where the generals gut the oligarchs, it won't be long before the lieutenants start gutting everyone. And in a country where people hate the cops, they don't vote for the siloviki. They vote for the Communists.

This means that the siloviki cannot win the election. And that they will have to hang onto power in some other way. Like I said -- a junta.

Yulia Latynina is a columnist with Novaya Gazeta.