In Russia, a 'creeping coup'?

In a no-confidence vote Wednesday, some see a coming showdown between the Kremlin and the oligarchs.

An unlikely coalition of liberal and communist legislators is set to launch a no-confidence vote against the Kremlin-appointed government of Prime Minister Mikhail Kasyanov Wednesday. It is the first twitch of parliamentary rebellion since President Vladimir Putin came to office more than three years ago.

Most experts say the no-confidence measure, which the state Duma's pro-Kremlin majority is expected to reject, is just the first shot in a fast-approaching election campaign and is aimed at gaining cheap points for the two main opposition parties, the Communists and the liberal Yabloko group. Between them, the two control about a quarter of the Duma's 450 seats.

"This is a perfectly normal political game," says Vyacheslav Nikonov, director of the independent Politika think tank in Moscow. "The opposition wants the country to notice them, and they'll probably get their wish."

But there is a darker view. A group of leading experts suggests that the parliamentary challenge is a prelude to a move by Russia's rich and powerful "oligarchs" to unseat Mr. Putin and install a government more friendly to big business.

"The country is on the verge of a creeping oligarchic coup," warns a report issued by the nongovernmental Council for National Strategy (CNS) and signed by 23 well-known experts from across the political spectrum. Issued last week, it argues that: "either the oligarchs will try to remove Vladimir Putin from power in the near future, or the regime, in the person of Putin, will begin to squeeze the oligarchs again, using all the repressive power of government."

About a dozen megatycoons control an estimated 70 percent of Russia's economy. While most grew rich through banking and ownership of Russia's vast natural resources, they have since branched out, investing in telecommunications, manufacturing, and media.

The CNS report says the tycoons are chafing under Russia's strong presidential system - in which a Kremlin-appointed government decides all economic policy - and would like to install an all-powerful parliament in its place.

"The oligarchs have great power and resources, but no legitimacy," says Sergei Markov, head of the Kremlin-connected Center for Political Studies and one of the CNS report's authors. "They fear Putin's vast authority, because he could easily destroy them. What they want is a strong parliament, because in the context of our very weak society such a body could be easily controlled through lobbying and corruption."

Winston Churchill once remarked that observing Russian politics was "like watching two dogs fighting under a carpet." In his recent state-of-the-nation address, Mr. Putin appeared to be making a concession to an unrevealed enemy, saying that, after the next elections, he might accept a government made up of winning parliamentary parties rather than Kremlin appointees.

Russia will hold parliamentary elections in December, followed by a presidential vote in March 2004. Though Putin's approval rating hovers around 70 percent, the pro-Kremlin United Russia Party has been plummeting in the polls. According to a June survey by the independent Public Opinion Foundation, 23 percent of Russians said they would vote for the Communists, followed by 21 percent for United Russia. Six percent favored Yabloko.

The suggestion of an "oligarchic coup" has stirred a storm of debate in an otherwise placid Russian political season. Some experts believe the CNS group is a cat's-paw for the Kremlin, which may want an excuse to launch a preelection crackdown on the super-rich. Others claim the oligarchs themselves could have funded the report as a warning to Putin not to act against their interests. But even those who doubt any imminent political explosion agree that tensions are growing between the Kremlin, which has called for reforms to diversify the economy and promote small business, and the oligarchs, whose monopolist practices tend to squelch competition and maintain the country's dependence on resource exports.

"The oligarchy is a serious threat to the further development of the country," says Dmitri Oreshkin, director of Merkator, an independent political think tank. "Unfortunately, oligarchy is the only functioning economic system in this country, and it's hard to know how to struggle against it."

Russia's economy is expected to grow 4.6 percent this year, up from 4.3 percent in 2002. The Moscow stock exchange is booming, Central Bank reserves are at an all-time post-Soviet high, and the ruble has been stable for almost three years. But 40 million Russians still live below the poverty line, and critics say the relative economic boom is an illusion created by high global prices for Russia's main export, petroleum. In his recent address Putin described Russia's economic progress as "very, very slow" and called for doubling economic output within 10 years.

A Kremlin-authored tax code, which passed its first reading in the Duma Monday, would slash sales taxes to stimulate small and medium businesses while sharply increasing duties on the oligarchy's main exports, oil and gas.

"Putin is very concerned about economic growth, and he understands the present course has no prospects," says Alexei Podberyozkin, head of Spiritual Heritage, a moderate nationalist group. "The oligarchs want to preserve the existing system of exporting natural resources and concentrating their finances in off-shore companies. There is some basis for intrigues here."

The CNS report claims that at least one oligarch, Mikhail Khodorkovsky, owner of Russia's third-largest oil company, Yukos, has been pumping funds into both the Communists and Yabloko. Yabloko acknowledges receiving donations from Yukos. But both Mr. Khodorkovsky and the Communists deny any connection with each other.

"The (no confidence vote) is meant to stir up society as parliamentary elections approach," says political analyst Mark Urnov, who was a member of the CNS group but disagrees with the report's conclusions. He says a clash between the Kremlin and the big tycoons would be disastrous for Russia. "The state must enter into an honest dialogue with business for the sake of the country's modernization."

Ten years ago Russia was shaken to its roots by a struggle over exactly the same issue. Hundreds died in October 1993 Moscow street fighting as President Boris Yeltsin's troops confronted supporters of a left-wing parliament that possessed sweeping constitutional powers and used them to thwart the Kremlin's program of market reforms. Mr. Yeltsin won, and used his victory to author a new constitution that awarded the lion's share of authority to the Kremlin. Ironically, Yeltsin's subsequent years of rule, marked by free-for-all privatizations, rampant corruption, and political unaccountability, boosted most of the present-day oligarchs into their positions of fabulous wealth.

"Times have changed," says Mr. Markov. "Back in 1993 big businessmen wanted a strong president to pry open the economy and provide the ways for them to accumulate wealth. Now they fear a strong president, and yearn for more checks and balances in the system."