Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Businessweek Archives

A Catastrophe Casts A Pall Over Putin

International Outlook

A Catastrophe Casts a Pall over Putin

The Kursk submarine disaster has abruptly ended the honeymoon Russian President Vladimir V. Putin was enjoying with the public. Before the Kursk sank, ordinary Russians regarded Putin as a can-do leader. But now begins a furious battle between Putin and his opponents over who gets the blame for the disaster. If Putin wins, he will dodge responsibility for the calamity--and may even turn the Kursk affair to his advantage as he seeks to outmaneuver rivals and push for reform in the hidebound military. If he fails, then Putin's authority may suffer a telling blow that diminishes his ability to govern.

Putin is moving fast. In a nationwide televised address on Aug. 23, he admitted to a "great feeling of responsibility and guilt" for the Kursk sinking. But then, Putin indirectly blamed Russia's oligarchs for the disaster, charging them with siphoning off billions from the government and economy that could have gone to keep the military in fighting trim. "They should have sold their villas in France and Spain," he said.GLOATING FOES. Putin needs to counterattack, since the criticism from the media and intelligentsia has been coming thick and fast. In acting slowly to seek foreign assistance, delaying his trip to the scene of the disaster, and allowing the military to play down the news, Putin lost control of an event--and something of his moral standing. Babushkas have cursed him, and the nongovernment press has been ferocious. "Whose Honor is Drowning in the Barents Sea?" asked a page one headline over a picture of Putin in the Moscow daily Kommersant, which is owned by oligarch Boris Berezovsky, a top Putin enemy.

Prominent politicians are riled too. "The behavior of our President is immoral," said Duma Deputy Boris Nemtsov, leader of a liberal faction that supports Putin's economic program. When legislators return from vacation in September, a weakened Putin could find himself facing fresh challenges on Kremlin priorities, including a bill to regulate political parties and another to establish private property rights to own land.

The investigation will be another political hot spot. The Kremlin has established a commission headed by Deputy Prime Minister Ilya Klebanov and including Defense Ministry officials. But with the government's actions at issue, that's a far cry from the independent probe the catastrophe demands. The State Duma is launching an inquiry, but it lacks the authority to pry answers from the Navy. Meanwhile, the Kremlin is whispering that the military kept critical information from Putin. If the matter festers, Putin may be forced to fire top military officials to show he is in charge. Another possibility: the appointment, for the first time, of a civilian defense minister.

Although Putin's standing has been tarnished, that of the West has been enhanced. Norwegian divers risked their lives to open the hatch of the Kursk--with a British rescue vessel on standby. The Russian military may now find it more difficult to manipulate public suspicion of foreigners, which it has long done to justify its pet weapons programs. Indeed, doves in the liberal Yakova party say national security lies not in a big defense sector but in greater cooperation with NATO allies. The military would balk at this. But Putin may now be able to overcome military opposition to his plans to shift funding from nuclear rocket forces to the ordinary needs of the army, navy, and air force. The tragedy of the Kursk is over. The political life of the Kursk has just begun.By Paul Starobin in Moscow; Edited by Christopher PowerReturn to top

Indonesia's New Lineup

Indonesia has a promising new Cabinet, thanks to a compromise deal between President Abdurrahman Wahid and Vice-President Megawati Sukarnoputri. The coalition government had been paralyzed by the mid-August resignation of Indonesia's economic policy czar, who was one of Megawati's allies, as the two leaders battled over his successor. They came to terms in a surprisingly quick meeting on Aug. 23. The result: Respected economist Rizal Ramli will replace Kwik Kian Gie in formulating the country's economic policy. Kwik, during 10 months in office, had scared businessmen with threats of jail and frightened away foreign investors by warning of instability. Investors are hoping Ramli, who recently cleaned house when he took over the notoriously corrupt National Logistics Agency, will give new credibility to the office.

Another of Wahid's appointments comes with a clean reputation as well. Priyadi Prapto Suharso, an executive of a state bank, replaces a Suharto-era stalwart as finance minister. Priyadi's career had been previously stymied by his refusal to take bribes in exchange for signing off on sweetheart loans during former President Suharto's three decades in power. While the new lineup was welcomed by analysts and investors as a good first step, it will probably still take years for Indonesia to regain investor confidence. The government needs to attract capital from abroad if it is to carry out its plan to privatize large industries and sell off seized collateral and rehabilitated loans.By Michael Shari in SingaporeReturn to top

blog comments powered by Disqus