- The Washington Times - Tuesday, November 18, 2003

Perhaps the most surprising thing about Russian oil billionaire Mikhail Khordokovsky’s recent arrest on charges of embezzlement and tax evasion is that it is a surprise at all.

Russian President Vladimir Putin has sought to both stabilize and consolidate his power base since his first day in office, and he has never been above employing unsavory means to do so.

The so-called “oligarchy” of Russian businessmen, all of whom made their fortunes in the late 1980s and early 1990s with little concern for such Western pleasantries as the rule of law, has often been considered fair game for politically motivated, socially popular “cutting down to size.” This is especially true of the oligarchs foolhardy enough — and powerful enough — to enter the political fray in opposition to Mr. Putin and those who made him president.

Look at the case of Boris Berezovsky. During the 1990s, owing largely to his incestuous relationship with the so-called “Yeltsin Family,” Mr. Berezovsky was able to amass a fortune. The Yeltsin Family refers to the coterie of government officials, businessmen and organized crime figures that kept Boris Yeltsin in the Kremlin despite, or perhaps because of, the massive graft, embezzlement and egregious mismanagement that characterized his administration.

When Mr. Yeltsin anointed Mr. Putin his successor in 1999, Mr. Putin’s first act in office was to issue sweeping immunity from prosecution to both Mr. Yeltsin and his daughters. Mr. Putin obviously knew to whom he was beholden. At about this time, however, Mr. Putin reportedly warned the oligarchs, Mr. Berezovsky among them, that they would be left alone — provided they did not make political waves for his administration.

But make waves they did. Mr. Berezovsky ran for the Duma, or lower house of parliament, and very imprudently took some political swipes at Mr. Putin. The Kremlin leveled embezzlement and money laundering charges against him, and Mr. Berezovsky fled to exile in London.

Vladimir Gusinsky, another oligarch, used his media enterprises, Media-Most and NTV, to attack Mr. Putin politically as well, and he quickly found himself stripped of his assets and facing prosecution for embezzlement and money laundering. Mr. Gusinsky is also in exile.

Using state authorities and the security services against political troublemakers is by no means a new phenomenon in Russia, even since the end of the Soviet Union. Remember that in the late 1990s, the prosecutor general of the Russian Federation, Yuri Skuratov, began an investigation into Mr. Yeltsin’s personal involvement in financial misdeeds. Mr. Yeltsin twice removed him from his post, and when the upper house of the Russian legislature refused to confirm his ouster, the Kremlin played political hardball. Mr. Skuratov was ordered to the Kremlin where he was handed a videotape, apparently showing him frolicking with two prostitutes. The person who reportedly handed him the tape was none other than Mr. Putin himself.

If the above smacks of Cold War-era KGB blackmail tactics, then consider the source: Mr. Putin is an ex-KGB man and so is his defense minister, Sergei Ivanov. The man who headed the investigation into Mr. Skuratov, and who is currently overseeing the inquiry into Mr. Khordokovsky’s activities, Federal Security Service head Nikolai Patrushev, is ex-KGB as well, and the list goes on and on. Collectively, these men are known as the siloviki (“strong ones” in Russian) and it is they who have the real say in the Kremlin’s day-to-day machinations.

To be fair, Mr. Putin has provided a measure of stability and even progress in Russia. Moscow and St. Petersburg are far different and more modern cities than they were even as late as 1997. Prior to the last quarter, the Russian economy had been showing modest growth. Capital flight was down and foreign direct investment was up. So Mr. Putin must be doing some things right.

In the end, Mr. Putin’s recent meandering into authoritarianism may be just a sign he is paying too much attention to the siloviki with whom he has surrounded himself. Mr. Putin knows stability is the key to foreign investment in Russia and thus may have misjudged the impact of Mr. Khordokovsky’s arrest, although it remains to be seen whether the Bush administration will even bother to condemn the action. Regardless of the outcome of the Khordokovsky case, the message Mr. Putin may have been trying to send to potential rivals all along will ring loud and clear long after the dust has settled. That message is, “Do not rock the political boat — or face the consequences.”

Todd Nelson is a researcher at the Center for Strategic and International Studies’ report “Russian Organized Crime and Corruption: Putin’s Challenge.”

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