TIME Europe - 06.26.2000

 

TIME EUROPE
June 26, 2000 VOL. 155 NO. 25

The Big Chill

By ANDREW MEIER Moscow

Ever since Vladimir Putin entered the Kremlin, Russians have wondered whether he would keep his promise to reign in the oligarchs, the clique of financial barons-cum-political operators who rule the ripest swaths of Russia's economy under the ancient regime. Last week, they got their answer. No one, however, expected Putin to go this far, this fast.

As Putin feasted with King Juan Carlos in Madrid, Vladimir Gusinsky, the head of the Media-MOST holding company, Russia's largest independent media conglomerate, endured his first night in Moscow's dreaded Butyrka prison. Detained on suspicion of embezzling "at least $10 million" in state funds, Gusinsky would stay in jail for four days, before his sudden release late Friday evening.

The backlash was immediate. Even Gusinsky's enemies rose to his defense. His chief rival, tycoon Boris Berezovsky, himself still facing prosecutorial scrutiny, told Time he disapproved of the arrest. To Berezovsky, "That the state should fight its opponents is normal," but "the methods in this case were inappropriate." Another 17 of Russia's most prominent businessmen drafted an appeal to the prosecutor. "Until yesterday," they wrote, "we believed we lived in a democratic country; today we have serious doubts." Led by Anatoli Chubais, head of Russia's electricity monopoly, the letter's signatories comprised a rare alliance of oligarchs: Rem Vyakhirev, chairman of Gazprom, Russia's natural gas giant; bankers Pyotr Aven and Vladimir Potanin; and even oilman Mikhail Khodorkovsky, no great friend of Gusinsky. Washington was no less concerned. "There is a pattern here, and we have seen it for some time," said U.S. Deputy Secretary of State Strobe Talbott. "It has a look and feel to it that does not resonate rule of law. It resonates ... intimidation."

Putin at first pleaded ignorance. "If there is a political aspect to this case, I am unaware of it," he said in Madrid, the first stop on his European tour that included Germany and Moldova. The next day, he revealed a surprising familiarity with the details of Gusinsky's purported debts. The mogul, Putin claimed, had failed to repay loans, and his debts totaled $1.3 billion. Only when he had reached Berlin did Putin allow that Gusinsky's arrest had been "excessive." By week's end, however, Moscow's political cognoscenti and business élite spoke openly of an emergent repressive regime. And they were asking the sequel question: Who is ruling Russia?

After all, Gusinsky's arrest came just as Putin landed in Madrid. With Prime Minister Mikhail Kasyanov also out of town, only one figure of influence was in the Kremlin: Alexander Voloshin, 44, his elusive chief of the presidential staff — one of the prime movers in orchestrating Putin's rise and Yeltsin's early exit into a safe retirement. Voloshin has long harbored a grudge against Gusinsky — for siding with Moscow Mayor Yuri Luzhkov against the Kremlin and for having the temerity to broadcast dissent on Putin's war in Chechnya. One of Voloshin's former aides describes him as Putin's "gray cardinal," a master of "creating compromises and accommodations by sabotage and strong-arming."

Aleksei Venediktov, news director at Ekho Moskvy, Media-MOST's radio station, is convinced the move against Gusinsky was in retaliation for President Bill Clinton's participation on a call-in show during his recent Moscow visit. At the time, White House aides did not hide the aim of Clinton's appearance: to lend support to Gusinsky's embattled media in the aftermath of the raid on his headquarters last month, and to underscore the importance of a free press. Just days before Gusinsky's arrest, Venediktov met with Voloshin at the Kremlin. "He said that we were playing dangerously by taking an antistate position and hosting Clinton," Venediktov says. "He went so far as to warn that the Kremlin 'would be returning fire.'"

Russians tend to take the Byzantine ways of their lords for granted. But they still grasp for a plausible versiya, a version of events and motives. In the Gusinsky case, several theories swiftly emerged. "Old clans," suggested Mikhail Gorbachev, were settling scores and had misled the President. The security services, others posited, had been overly eager to please their former KGB comrade. Chubais ventured — with more hope than conviction — that Gusinsky's arrest was "a provocation" against Putin, that the mogul had been arrested in Putin's absence to compromise him. One commentator, a former senior KGB analyst, even weighed in for the paranoiacs: Gusinsky's arrest, claimed Nikolai Leonov, was part of an intricate plot by U.S. Secretary of State Madeleine Albright to demonize Putin. But whichever the versiya, the chain of cause and effect led to a troubling conclusion: either Putin is a marionette controlled by hidden puppeteers, or he is a cynical operator determined to squelch his enemies.

Whichever of the two, the arrest of Gusinsky was, as Putin himself noted, a "dubious gift." Putin's European tour, intended to lure foreign investors, immediately descended into desperate damage control. As Gusinsky's top lieutenant, Igor Malashenko, quipped, his boss's arrest sent a very different message: "Come to Russia, and your investment will be safe — behind bars".

With reporting by Yuri Zarakhovich/Moscow