Russia's Reckoning: Super-rich power-brokers who pull the strings in a crumbling empire

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The Independent Online
THE SMALL and pugnacious figure of one of Moscow 's most ruthless oligarchs appeared centre-stage yesterday in the battle for power in a fracturing Russia.

No list of oligarchs is complete without the name of Yuri Luzhkov, the mayor of Moscow, who emerged amid nego-tiations over who will run Russia, and how.

The bald and charismatic Mr Luzhkov, long tipped as a future president himself, has built an enormous business empire in Moscow that embraces the media, financial institutions, and - as the Moscow Times pointed out this week - an "asset base that is growing so fast that he may soon own the air we breathe".

Yesterday he established himself at the heart of those engaged in hammering a path out of Russia's crisis, appearing alongside premier-designate Viktor Chernomyrdin as one of an apparently united triad - the mayor, the Prime Minister, and Yegor Stroyev, the moderate chairman of the Federation Council. The three men visited a beleaguered Boris Yeltsin.

"Do not look for differences between us," said the mayor afterwards. "There are none."

As the haggling over the redistribution of power - a tug-of-war between the executive and the legislature - goes on, Mr Luzhkov has become a bargaining chip in his own right. The Communist leader, Gennady Zyuganov, whose party is threatening not to confirm Mr Chernomyrdin unless it strikes a power- sharing deal with the Kremlin, has named him as a possible alternative candidate for prime minister.

The mayor's presence in the centre of this extraordinary process will be viewed with deep alarm, at home and abroad, by those pushing for the continuation of Russia's so-called "reforms", not least the Clinton administration and the International Monetary Fund. That camp was in heavy retreat yesterday with the formal sacking of its arch-priest, Anatoly Chubais, as Mr Yeltsin's international negotiator.

Although an elected official - in 1996, Mr Luzhkov bagged a highly suspect 88 per cent plus of the vote - the line between city ownership and Mr Luzhkov's fiefdom has long been impossible to decipher. He rules his city like a personal kingdom, using a mixture of brow-beating, showmanship and economic interventionism that he would sorely love to see extended to the whole of Russia.

Such is the range of the city's enterprises that he can fly on his personal jet, run on fuel from his own refinery, reading a paper he controls, eating snacks from a fast-food chain in which he has a stake, while making a telephone call with his own cellular provider, before landing to give an interview to his television station.

He governs Moscow with an iron hand. Whenever the city holds major festivities - he has a penchant for Soviet-style events, most recently the risibly pompous Youth Olympics last month - the streets are cleared of prostitutes, beggars and Caucasian shuttle traders. Human rights and individual liberties are not high on his list of priorities. Grandiosity is, though: his contribution to Moscow includes a glittering underground shopping centre, the grotesque rebuilt Cathedral of Christ the Saviour and the even more hideous statue of Peter the Great in the Moscow River.

While the past four months have bought economic chaos to most of Russia, the mayor has been extending his realm, acquiring full control of the Moscow-based ZIL motor manufacturer; doing an oil deal that allows a city- controlled company to tap its own crude; buying a stake in Atlant-Soyuz, an airline company; and seizing control of the capital's monopoly phone provider. A highly energetic man, who looks and behaves like a cannonball in a Lenin-style leather cap, Mr Luzhkov has acquired a reputation for a being a man who can, when the rest of the nation patently can't.

This extends to sport: he plays football, despite his years, and swims daily in the Moscow River. And to politics: he regularly takes up national, and nationalist issues, such as the rightful ownership of the city of Sebastopol and the treatment of Russians in the Baltics.

One "can only classify him as an oligarch", said the Moscow Times. "But do not compare him with the others, for the Moscow mayor is way ahead of the pack ... only he has a semblance of credibility in the eyes of Russians." As for the others, the last few days have seen them scrambling to save their empires and to form alliances to strengthen their political hand. The reappointment of Mr Chernomyrdin was undoubtedly orchestrated by Boris Berezovsky, the billionaire tycoon whom Russians darkly refer to as their modern-day Rasputin.

But there are others who are also used to pulling strings, not least the Seven Oligarchs, who poured cash into Mr Yeltsin's 1996 election campaign coffers - Pyotr Aven and Mikhail Fridmen, both from Alfa Bank; Vladmir Potanin, from Uneximbank; Vladimir Gusinsky, of Most-Bank; Mikhail Khodorkovsky, from Menatep; Alexander Smolensky, of SBS-Agro, and Mr Berezovsky himself.

In the past few days, as the banking system enters melt-down, three of the banks - Menatep, Uneximbank, and Most - have merged. Alfa has also entered an alliance with five others. SBS Agro is being nationalised. All the players are assumed to have taken heavy hits from the collapse of the GKO treasury-bill market, in which $40bn (pounds 25m) of paper has become almost worthless.

In their forced business alliances, all these men - who control newspapers and broadcasting concerns - will hope to retain their ability to pull political strings, in an effort to ensure a business environment that favours their interests.

"They are regrouping and strengthening themselves," said Peter Westin, from the Russian European Centre for Economic Policy. "They will be wanting credits from the Central Bank to see them through this crisis. And that seems already to be happening, which could be very serious."

Reports in Moscow suggest that two of the troubled banks - Inkombank and SBS-Agro - have already received $100m each from the Central Bank's dwindling coffers.

"They are already pulling," said Mr Westin. "Pulling on the strings of power."

Four of The Oligarchs Who Matter

Pyotr Aven

From the now-merged Alfa Group, with his associate Mikhail Fridman. Dapper young man, formerly foreign trade minister in the 1992 government of Yegor Gaidar. Big in oil, and real estate.

Vladimir Potatin

Media-shy banker and political wheeler-dealer. Uneximbank, now merged, was one of Russia's largest empires. Former deputy prime minister for the economy. Fifth richest man in the country - or was.

Boris Berezovsky

Former car dealer who runs a web of oil, media and trading interests under the flagship Logovaz. Friend of Tatyana, Yeltsin's daughter. Owns Nezavisimaya Gazeta newspaper and controls ORT television.

Vladmir Gusinsky

Flamboyant former theatre director. Tycoon behind the Most-Group. A close associate of Yuri Luzhkov, mayor of Moscow. Controls NTV television, Ekho Moskvi radio station, and Segodnya newspaper.

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