Demise of `Last Mohican' Cements Medvedev Win Over Local Bosses

Yury Luzhkov’s ouster after 18 years as mayor of Moscow completes Russia’s purge of independent regional leaders begun during Vladimir Putin’s presidency.

President Dmitry Medvedev, 45, fired Luzhkov yesterday following a power struggle that played out in the national media after the 74-year-old mayor criticized Medvedev’s decision to suspend construction of a Moscow-to-St. Petersburg highway.

“The attacks on Medvedev didn’t just hurt the president but the federal authorities,” said Nikolai Petrov, an analyst at the Carnegie Moscow Center. “If the decision hadn’t been taken to fire him, the damage would have been even bigger.”

Luzhkov, dubbed “the last Mohican” by state news service RIA Novosti, is the final regional strongman to leave the national stage, as Medvedev brings in a team of younger leaders who lack their own power bases. Putin, 57, who sparred with Luzhkov before the 2000 presidential election, began strengthening federal control when he canceled direct election of regional leaders, including the Moscow mayor, six years ago.

Other regional chiefs have quit under pressure from the Kremlin since Medvedev came to power in 2008. Murtaza Rakhimov, 76, resigned in July after 20 years as president of the oil-rich region of Bashkortostan. That followed the January retirement of Mintimer Shaimiyev, 73, who had been president of Tatarstan for more than two decades, and last year’s departure of Eduard Rossel, 72, governor of Sverdlovsk for 18 years.

Billionaire Wife

The drive to oust Luzhkov began on Sept. 10, when Kremlin- controlled television stations began airing a series of documentaries that accused the mayor of corruption and favoritism toward his wife, billionaire developer Yelena Baturina, charges both have denied.

Luzhkov may fight his ouster in court, Interfax reported, citing the ex-mayor’s friend Iosif Kobzon, a member of parliament and singer. Kobzon spent several hours with Luzhkov yesterday after Medvedev fired him, the news service said. Luzhkov’s spokesman, Sergei Tsoi, didn’t answer his mobile phone today.

Moscow’s image as a smoggy, traffic-clogged city run by the same man for two decades clashed with Medvedev’s call to turn the capital into an international center for finance and technology, said Gleb Pavlovsky, head of the Moscow-based Effective Policy Foundation, which has advised the Kremlin.

Construction Boom

“Moscow sabotaged modernization,” Pavlovsky said. “Moscow didn’t have to modernize because the money flowed anyway. It sounded funny to talk about a global financial center.”

As mayor, Luzhkov oversaw a budget of more than 1 trillion rubles ($32.8 billion) and a city that accounts for almost a quarter of the national economy. He helped stifle discontent by funding social programs and oversaw a construction boom that transformed Moscow with highways and high-rise buildings. He also got rich.

Luzhkov declared that Baturina earned 30.9 billion rubles ($1 billion) last year, according to documents posted on the municipal government’s website in May. Baturina, 47, is the only woman on Forbes magazine’s Russian billionaire list.

Baturina said last week there was no conflict of interest between her husband’s position and ZAO Inteco, her development company. Inteco won only one city contract and was forced to abandon it because local authorities didn’t meet their obligations, she told the Moscow-based magazine The New Times.

Presidential Ambitions

“I have no idea what preferential treatment I’m supposedly getting,” Baturina said.

After giving up his own presidential ambitions a decade ago, Luzhkov consistently delivered large majorities for Putin’s United Russia party, including 71.5 percent of the city’s vote for Medvedev in 2008.

Luzhkov would have continued producing electoral results, said Stanislav Belkovsky, head of the Institute for National Strategy in Moscow. The issue for the Kremlin was that Luzhkov’s fifth term would have ended next summer, so his replacement wouldn’t have had enough time to prepare for parliamentary and presidential elections in December and March, Belkovsky said.

“The new mayor will work to preserve the basic economic structure, not dismantle it,” Belkovsky said. “The goal will be to control the money flows, as the elite didn’t think it was fair that a man of the past controlled them.”

Stalinism

A former chemical engineer, Luzhkov came to power in 1992 under the late President Boris Yeltsin. At the time, Putin was a bureaucrat in the St. Petersburg mayor’s office, and Medvedev a law instructor at St. Petersburg State University. Medvedev joined the Kremlin staff when Putin succeeded Yeltsin in 2000; Putin chose Medvedev as his successor in 2008 because of a constitutional ban on three consecutive presidential terms.

The ex-mayor questioned Medvedev’s commitment to democracy and warned of a return to Stalinist dictatorship in a letter published by The New Times today. Luzhkov made an ultimatum to Medvedev to remove him or disavow the state media campaign against him in the letter, which he delivered to the presidential administration on Sept. 27.

Putin said yesterday that while Luzhkov did a lot to develop Moscow, it was “utterly obvious” that his relationship with Medvedev didn’t work out. He and Medvedev will discuss possible candidates to replace Luzhkov, the prime minister said.

Possible Successors

National media have focused on a handful of possible successors, including Deputy Prime Minister Sergei Sobyanin and Emergency Situations Minister Sergei Shoigu. Alexander Khloponin, the Kremlin’s envoy to the North Caucasus region, said today he’d be prepared to become mayor if nominated, Interfax reported.

It doesn’t matter who becomes the next mayor so long as two criteria are fulfilled, Belkovsky said. Luzhkov’s successor must be tied to the federal administration and be ready to redistribute the property and financial flows, he said.

“It would make sense to create a technocratic system of management in Moscow, to find a sort of city manager,” said Pavlovsky. “Changes are inevitable, but nobody wants any revolutions in Moscow.”

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

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net

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