Former Putin Ally Kasyanov Warns West of Medvedev's Modernization Drive

The U.S. and European Union should be “more principled” in dealing with Russia and not fall for President Dmitry Medvedev’s talk of modernization, said Mikhail Kasyanov, who served as prime minister during Vladimir Putin’s presidency.

Western governments wish to see a split between Medvedev and his mentor Putin because of a desire to repair relations, Kasyanov said in an interview in Moscow yesterday. Putin, who handpicked Medvedev as his successor, became prime minister after the 2008 elections.

“The West sees in Medvedev a source of modernization and change,” Kasyanov, 52, said. “But nothing will happen because there’s no gap between him and Putin.”

Medvedev, aiming to attract foreign technology and capital to Russia, is on a three-day trip to Silicon Valley and Washington. The blogging, tweeting 44-year-old meets Barack Obama in the White House today as part of a “reset” of relations between the two countries declared by the U.S. president last year.

“Nothing can happen in this country unless it first comes from Putin’s mouth,” Kasyanov said. “Putin has not once used the word ‘modernization.’”

Kasyanov Probed

Kasyanov, a former finance minister, ran the government during Putin’s first four-year term as president. Putin fired him less than a month before the 2004 presidential elections amid reports that Kasyanov was plotting to take over the presidency if a revote was called because of insufficient voter turnout. Putin won reelection with 71 percent of the vote and 64 percent voter turnout, according to official results.

In July 2005, Russia’s chief prosecutor opened a criminal investigation into Kasyanov and threatened to charge him with fraud and abuse of trust. Kasyanov, who had said he may run for president in 2008, was suspected of buying a $100 million country home and 11 hectares of land from the government at a fraction of its value while premier. He denied any wrongdoing and charges were never brought.

Kasyanov on May 24 this year testified on behalf of OAO Yukos Oil Co. owner Mikhail Khodorkovsky and his former business partner Platon Lebedev, Interfax reported. The two men, already in jail for tax evasion and fraud, are now on trial in Moscow for stealing 350 million tons of oil from Yukos.

Kasyanov told the Moscow court he’d confronted Putin over the arrest of Khodorkovsky in 2003 and said Yukos, which sold oil to its units below market prices, was following a common practice used by all Russian crude producers, Interfax said.

Retake Presidency

Now the head of a consulting firm, Kasyanov was disqualified from running as an opposition candidate in the 2008 presidential elections on a technicality.

“We won’t participate in any legalization of Putin’s next term, as we understand it will be an imitation of an election,” Kasyanov said about parliamentary elections next year and a presidential vote in 2012. “I have no doubt that Putin has already decided to take back the presidency.”

Putin, 57, relinquished the presidency to Medvedev in 2008 because the constitution prohibits three consecutive terms. In his first year in office, Medvedev pushed through a constitutional change extending the presidential term to six years from four, fueling speculation Putin was planning to return for another 12 years in 2012. Both Putin and Medvedev have kept open the option of running again.

‘No Fight’

Kasyanov skewered the notion that liberals and hardliners are battling for influence behind the Kremlin walls.

“There is no fight among clans because they don’t exist,” he said. “There is the head of the ‘power vertical,’ Vladimir Putin, and he calls the shots.”

After the 2004 elections, Putin tried to find a new job for his former premier, offering him leadership of the Security Council, the city of Moscow or a new transnational bank, Kasyanov wrote in his 2009 book “Without Putin.”

Kasyanov said he was already disillusioned by Putin’s legal assault on Yukos andKhodorkovsky starting in 2003. He definitively decided to leave government after Putin used the September 2004 terrorist attack on a school in Beslan to abolish gubernatorial elections and restrict non- governmental organizations and the political opposition.

“For three-and-a-half years I believed we were doing the right thing, that we both were dedicated to building democracy and a normal market economy, a normal European country,” said Kasyanov. “The real Putin isn’t a Soviet-era official evolving into a builder of democracy but a secret KGB agent who didn’t change his approach.”

Western governments shouldn’t close their eyes to human rights violations in Russia and insist that the country live up to its own constitution, said Kasyanov.

“We’d like to see a more principled stance,” he said.

To contact the reporter on this story: Lucian Kim in Moscow at lkim3@bloomberg.net

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