- The Washington Times - Monday, July 31, 2000

Mikhail Margelov says you can tell a lot about Russia by studying its roads.

Mr. Margelov is not a cartographer, but the man who helps set the ideological course for Russia's Unity Party, the second-biggest faction in Russia's State Duma (parliament) and the one most closely associated with Russian President Vladimir Putin.

"If you take a satellite picture of our country's roads, you see that the local roads connect, but the highways don't intersect when you get to the regional borders," Mr. Margelov observed during a Washington visit last week.

"It's the best example I can think of, of the kind of regional feudalism President Putin has to deal with."

Attacking on two fronts last week, Mr. Putin showed he understands one of the fundamental rules of politics: Keep your friends close and your enemies closer.

Having clipped the wings of the country's 89 nearly autonomous regional governors in a government overhaul Thursday, Mr. Putin announced the creation of a new "state council" of governors to directly consult with the Kremlin.

A day later, the Russian president made a similarly barbed peace offering to a second group of challengers to the Kremlin's power: Russia's billionaire "oligarchs," who accumulated immense fortunes and political influence in the chaotic unwinding of the Soviet Union and its state-controlled economy in the 1990s.

Meeting with nearly two dozen leading businessmen at the Kremlin Friday, Mr. Putin said he would not try to undo past privatizations of state assets that formed the basis of most of the oligarchs' wealth.

But he pointedly refused to promise an end to a string of tax and financial fraud investigations into some of the country's top oligarchs, arguing that the investigations are legal matters and "that the process should not be political."

Russian news agencies yesterday quoted Mr. Putin, in his first public comment on the meeting, saying the main result had been "the easing of all the speculation about a redistribution of property and about an attack on business."

Boris Nemtsov, a liberal State Duma lawmaker who helped organize Friday's meeting, said afterward: "Russia is done with oligarchs. Everyone has agreed to work under the same rules."

The Kremlin issued a statement after the meeting, saying Mr. Putin had "again stressed that the authorities do not intend to revise the results of privatization."

"However," the statement noted, "at the same time [Mr. Putin] said that it was inadmissible that important companies were trying to use the state apparatus and the law-enforcement agencies to settle their commercial rivalries."

Among those in attendance at Friday's meeting were top executives from Russia's giant oil, gas and aluminum monopolies, bankers and officials from leading consumer products firms.

"Putin is going to dictate the rules of the game," the business daily Kommersant said. "He has won the first round of the fight with the oligarchs."

Absent from the meeting were Boris Berezovsky perhaps the most well-known of the oligarchs and now a fierce Putin critic and Vladimir Gusinsky, a media tycoon whose brief detention on vague fraud charges last month inspired an international campaign of protest that forced the government to backtrack.

Mr. Putin, who honored Russia's navy at festivities in the Baltic enclave of Kaliningrad yesterday, has embarked on an aggressive round of diplomacy and prepared a major overhaul of Russia's creaky economy. But analysts said that consolidating power in the Kremlin has clearly emerged as his top priority.

Some say the consolidation is needed after the drift of the Boris Yeltsin years, but the moves to strip regional governors of their powers, use the legal process against Russia's oligarchs and target Mr. Gusinsky have raised fears that the centralization under Mr. Putin, a one-time KGB agent, has gone too far.

Mr. Berezovsky, who resigned his Duma seat earlier this month to protest the bill to rein in the powers of the regional governors, has called Mr. Putin's pressure campaign against leading Russian businessmen "totally destructive."

The regional governors originally fought Mr. Putin's plans to end their automatic right to seats in the upper house of Russia's parliament and to strip them of their immunity from prosecution while in office.

But faced with overwhelming support for Mr. Putin's reorganization plan in the State Duma, the governors last week ended up approving the president's plan in exchange for only minor amendments.

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