Putin in emergency reshuffle as he seeks to escape first crisis

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The Independent Online

Almost four years of relative calm and stability in Russia have come to a sudden end with the eruption of the first real political crisis of Vladimir Putin's presidency - just five weeks before parliamentary elections.

Russians yesterday woke up to newspaper headlines more reminiscent of the turbulent years of Boris Yeltsin than of the quiet, teutonic orderliness they had become used to under Mr Putin. There was a series of formal announcements that amounted to the most significant personnel changes in the Kremlin since he came to power.

With immediate effect, Mr Putin has reorganised his Kremlin operation, bringing in a new chief of staff - Dmitri Medvedev, a lawyer and administrator he worked with 10 years ago in St Petersburg - and two new deputies - Dmitri Kozak, another former St Petersburg associate, and Igor Shuvalov. Both are lawyers who have worked in Mr Putin's presidential office and have now been promoted to his inner circle.

What preoccupied Moscow pundits was the political allegiances of the three who have been newly promoted. All are essentially Putin loyalists, technocrats and centrist reformers. They are not, as the reformist media noted with grudging relief, members of the "siloviki". These conservative "enforcers", many of whom worked in the old KGB security services had reportedly argued with increasing vehemence for more law and order and slower economic liberalisation. Their particular enemies were the so-called "oligarchs" - the billion- aire businessmen who made their fortunes in the chaotic privatisations of the early Nineties - whose wings (and political ambitions) they wanted to clip.

It had been clear all week that Mr Putin did not want the reshuffle and that the timing was not of his choosing. It was forced by the sudden resignation of chief of staff Aleksandr Voloshin, apparently over the handling of the Yukos affair - the investigation into Russia's largest oil company. Mr Voloshin, like many reformers in the Putin administration, had been shocked by the clumsy arrest the previous week of Yukos chief Mikhail Khodorkovsky, reputedly Russia's richest man, realising at once the highly negative message it would convey to entrepreneurs and investors.

The Moscow rumour mill maintained that Mr Voloshin had not been warned about the prosecutor-general's action against Mr Khodorkovsky, and saw it as a challenge to his, and Mr Putin's, authority. Supporters of further deregulation did not conceal their fears that the move presaged a review of the whole policy of privatisation, including all previous privatisations of state resources - a review that could cast doubt on the security of property rights in Russia.

The Russian media, especially newspapers advocating faster reform, spent the week indulging themselves in intricate and conspiratorial analysis of the autumn's shenan- igans in the Russian leadership. They portrayed a scenario of multiple Kremlin cliques: the siloviki who wanted to put the clock back; the so-called "family" of out-and-out reformers associated with the former president, Boris Yeltsin; and the Petersburg group - those who had worked with Mr Putin in the early Nineties and joined him in Moscow.

This analysis may owe more to the tradition of Kremlinology, which Russians adopted as keenly as their Western counterparts in the dying days of the Soviet Union, than it does to reality. As a former KGB man, chosen by Mr Yeltsin as his successor, Mr Putin in a sense belongs to each camp, which is one reason why he was acceptable as President. His new appointments avoid giving victory either to the proponents of faster market reform or to their opponents, but this may also mean that the endgame is yet to come.

What is clear, however, is that the Yukos affair, culminating in the arrest of Mr Khodorkovsky, has laid open the fissures in Mr Putin's hitherto tightly controlled administration for all to see. Moreover, the discipline he had exerted over his Kremlin operation and over his ministers has broken down. While Mr Putin tried to project an image of normality, by spending Friday in the Perm region on a pre-arranged visit and saying nothing about the re-shuffle, his Prime Minister was breaking ranks during a regional visit of his own.

Mikhail Kasyanov, it was said, had been asked by Mr Putin not to say anything about the Yukos affair. But he expressed "concern" about the freezing of Mr Khodorkovsky's assets in Yukos and suggested that the prosecutor's office had not considered the consequences. By this he meant the undeniably damaging effect on the stock market, of which Yukos was the biggest constituent, and on the rouble and investor confidence in general.