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Putin's Power Play (Int'l Edition)

International -- European Business: Russia

Putin's Power Play (int'l edition)

Will his cure for balkanized rule be worse than the disease?

For four years, Governor Vladimir Yakovlev has ruled St. Petersburg with an iron grip. He has signed off on every key decision in Russia's second largest city, from business investment projects to the hiring and firing of local political officials. And he's done it all with scant regard for the wishes of the Kremlin in Moscow.

Now those days are over. With one stroke of the pen, Russian President Vladimir V. Putin has altered the power equation. On May 13, Putin issued a decree to put his own man in charge of a powerful new federal unit responsible for administering Northwestern Russia, St. Petersburg included. Putin's choice: Victor V. Cherkesov, deputy director of the Federal Security Service, the successor to the KGB. "Cherkesov will quash Yakovlev," says Duma Deputy Yuly Rybakov from St. Petersburg. Yakovlev is a longtime rival of Putin, from the days when they both worked in St. Petersburg.ELECTION VOW. Fulfilling an election promise, Putin is moving swiftly to assert the Kremlin's political and financial control over Russia's vast provinces. The Cherkesov appointment is just one step. He will join six other officials as superbosses, responsible for asserting Moscow's will over regional governors in a scheme that carves the nation into seven federal districts. In an even bolder move, Putin is also calling on the Duma to pass laws giving him the right to fire the governors and to dissolve regional legislatures. And he wants to be able to strip governors of their legal immunity from prosecution. None of the proposals appear to violate the Russian constitution, but that is ultimately a matter for the courts to determine.

Putin is grappling with a real problem. Since the Soviet Union's collapse, many regions have become fiefdoms of their governors, who are popularly elected but often exceed their legal authority. Boris Yeltsin, Putin's predecessor, failed to discipline lawless governors. In fact, he bestowed favors on regional leaders who pledged their support.

The governors have bucked Moscow on almost every front. As many as 40% of all regional laws violate federal legislation or the Russian constitution, according to Fond Politika, a think tank in Moscow. For example, Bashkortostan, a republic just west of the Ural Mountains, has enacted a constitution that gives it powers on a par with those of a sovereign state, such as the right to participate in international alliances.

Regional administrations collect federal taxes, but some, such as Kalmykia, have refused to ship proceeds to Moscow. Governors routinely misspend federal funds intended for wages of federal workers, and electricity payments for municipal institutions such as hospitals. Some governors, such as Yevgeny Nazdratenko in the Primorye region in the Far East, have dictated court decisions. To combat that problem, Putin plans to provide full federal funding for courts. That will free judges and law-enforcement officials from dependence on governors to finance their operations. "There must be a single way of understanding legislation everywhere throughout the Russian Federation," Putin said in a Kremlin ceremony to unveil his plan to governors on May 22.

But the new President's cure may be worse than the disease. Putin seems to be erecting an edifice of concentrated political authority emanating from Moscow. The danger is that healthy political and economic initiatives launched from the grass roots will be trampled by bureaucrats answerable only to the Kremlin. At a time when many Western nations are relaxing federal strictures over their regions to foster bottom-up development, Russia is moving in the opposite direction. "This is an attempt to control everything from Moscow, a return to the doubtful practices of the Communist Party Central Committee," declared Ruslan Aushev, president of Ingushetiya, a Russian republic in the Caucasus, after Putin's decree. Moscow Mayor Yuri Luzhkov has also spoken out publicly against Putin's move.NERVOUS. The superbosses, in charge of organizing the work of all of the federal agencies in their districts, will have extensive powers to demand information from the governors. Two of the seven appointees are army commanders, a third is a senior police official from the Interior Ministry and two, including Cherkesov, are veterans of the KGB, like Putin himself. Only one, former Prime Minister Sergei Kiriyenko, tapped to supervise the Volga district, has well-established liberal credentials. The seventh representative, Leonid Drachevsky, was minister for the Commonwealth of Independent States.

The regional representatives may well play key roles in brokering business investment deals. In some regions, investors are nervous. In St. Petersburg, for example, Yakovlev is widely viewed as autocratic, but the business community has learned to work with him over the years. As a result, the volume of investment has grown from $140 million in 1996, when he was elected, to $350 million last year. "I don't think we need any new direction here, thank you," says Scott Antel, a St. Petersburg-based attorney who heads a U.S. Chamber of Commerce group that helps American investors adapt to the Russian environment.

But Putin's plan will be difficult to thwart in the face of his high public-approval ratings and command of the formidable resources of the Kremlin. Fearful of alienating Moscow, many local bosses, including such usually outspoken figures as Alexander Lebed, the former Army general who presides over the Krasnoyarsk region in Siberia, are declining requests for comment. The Duma, which has been broadly backing Putin's initiatives, is expected to approve his request for new laws.

So who's on the list of governors likely to be fired? The Kremlin is expected to make an example out of someone. Warnings have been delivered to relatively small-time bosses--the chiefs of Ingushetiya, Bashkortostan, and Amur. Or the Kremlin could train its sights on a big fish such as Yakovlev or Nazdratenko.

If Putin can really control Russia's regional governors, it will mark a remarkable change from the Yeltsin era. But it's also true that Russia, with its 11 time zones, does not easily lend itself to central control. Even during Soviet times, local Communist bosses found ways to evade edicts from Moscow. Russia has not gained its reputation for Byzantine governance for nothing. For now, many analysts are supporting Putin's plan as a way to deal with a nation afflicted by balkanized rule. "Strong federal power is the lesser evil," says Yury Korgunyuk, a Moscow political analyst. But strong centralized power has proven a curse for Russia in the past. The country is leaning in a dangerous direction.By Paul Starobin and Sabrina Tavernise in Moscow, with Kristina Shevory in St. PetersburgReturn to top

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