- The Washington Times - Monday, February 14, 2000

MOSCOW Businessmen associated with the more egregious Kremlin graft of the 1990s are winning out in the struggle with the country's economic reformers for influence over acting President Vladimir Putin and for control of the country's major state-run businesses.

Economic reformer Anatoly Chubais and his allies have suffered a series of reversals in the lower house of parliament the State Duma on votes coordinated between the Communists and the pro-Putin Unity party.

They are also on the losing end of a battle for board seats on Russia's mammoth state-owned companies. Mr. Chubais himself risks losing control of the national electric company.

The undermining of the Chubais-aligned Union of Right-Wing Forces and of the reform-minded Yabloko party augurs badly for U.S.-Russian relations, and for the International Monetary Fund's continuing efforts to get Moscow to cut back state control of the economy.

Mr. Putin offered assurances last month that his deal with the Communists to let Gennady Seleznyov remain as Duma speaker would not develop into a long-term legislative alliance.

But the cooperation between Communists and pro-Putin deputies has continued, prompting fears that parliament will block the opening of the economy to genuine commercial competition.

Mr. Chubais, who was the architect in the 1990s of Russia's privatization program, has been outmaneuvered, not only in the Duma, but also by Boris Berezovsky, the business tycoon frequently linked to corruption scandals that marred the last years of Boris Yeltsin's presidency.

Mr. Chubais has faced increasing Kremlin criticism of his stewardship of the national electric power company, Unified Energy Systems.

Last week, Mr. Putin himself described UES as an "unstable and disorderly state mechanism" and said a proposed boost in its utility rates would not be necessary if the company had been better managed.

The attack prompted speculation that Mr. Chubais could soon be stripped of his post as UES chief executive.

The electric company is not the only state-owned economic colossus that is being targeted for change at the top. The huge natural-gas monopoly, Gazprom, and Aeroflot airlines are also the subject of behind-the-scenes maneuvering.

Eight new candidates have been put forward for seats on Aeroflot's board all of them allies of Mr. Berezovsky. The business daily Vedomosti predicted last week that Berezovsky pal Alexander Krasnenker would be appointed the airline's general director this spring.

Mr. Berezovsky has also made himself useful to Mr. Putin by ensuring that ORT television, which he controls, provides favorable coverage of the acting president's military campaign to suppress separatist rebels in Chechnya.

The battle for control of the resource monopolies and other big state-owned businesses all of which work through influence and power rather than through the markets is crucial to the management of the economy.

In another sign of weakening power, Mr. Chubais acknowledged last week that he will not play a part in Mr. Putin's election campaign, either as an adviser or strategist.

He made light of the fact by saying Mr. Putin was so assured of victory that he didn't need his help. But on the same day, Mr. Putin expanded his campaign team with several people who worked with him in the mid-1990s when he was deputy governor of St. Petersburg.

It has emerged, meanwhile, that Mr. Yeltsin's daughter, Tatyana Dyachenko, an important Berezovsky ally, has been attending weekly campaign sessions in the Kremlin.

She was dumped from her Kremlin post just last month along with the Kremlin's property manager, Pavel Borodin. Both are at the center of a major Swiss-kickback probe. Mr. Putin's spin doctors put out word at the time that her dismissal demonstrated how eager their man was to clean up corruption at the highest levels.

Mr. Chubais is unpopular among ordinary Russians and blamed for overselling the benefits of capitalism and economic reform. Much of the criticism deals with the way he sold off state companies to insiders and former Soviet bosses.

"I had to choose between the Communists and the robber barons," he explained at the time. Some see him as a robber baron himself, but he and his allies in the Union of Right-Wing Forces and Yabloko are the only ones arguing for deep economic reform and integration with the developed world.



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