One of Russia’s richest men, the owner of an oil company, has been arrested. There have been inevitable comparisons to Mikhail Khodorkovsky. This time the oligarch is Vladimir Yevtushenkov, owner of the giant Sistema conglomerate, now being held under house arrest; and one of the few Russian billionaires to have made his fortune before Vladimir Putin came to power. He is also one of the few remaining independent oligarchs, and whatever the government press releases are saying about his alleged financial machinations, it is difficult to get rid of the feeling that what we have here is another political trial – something we are now used to in Putin’s Russia, where courts and public prosecutors are mere instruments in the hands of the administration. The Prosecutor’s office has already announced that the Bashneft oil company, part of Yevtushenkov’s business empire, needs to be nationalised, just as Khodorkovsky’s Yukos company was a decade ago, when Vladimir Putin smiled enigmatically, as he is doing now, and said he had nothing to do with it. But do we believe him?
It is difficult to get rid of the feeling that what we have here is another political trial.
This scepticism is well founded: in Russia, big money and politics are the same thing, and Vladimir Yevtushenkov is still a political figure even though, at present, he probably can’t think further than his arrest. To understand how this happened, we need to go back into the distant past, at least 15 years, to the moment when Vladimir Putin had just come to power. Today, when many details have been forgotten, the events of late 1999 are remembered approximately like this: Boris Yeltsin, with the last remains of his popularity and health gone by the end of his second presidential term, appointed the young former KGB colonel Vladimir Putin as his successor; he stood down early in his favour and, with the help of a TV propaganda campaign and the Kremlin-controlled election machine, this little known politician became Russia’s Head of State.
Vladimir Yevtushenkov is one of the few Russian billionaires to have made his fortune before Vladimir Putin came to power.
The forgotten bits of the story
However, some crucial details have been left out of this accepted version of events. This 15-year-old episode was the last time (until now – who knows what may happen in the foreseeable future?) that Russia saw a deadly power struggle between two groupings of the political elite of the time. Vladimir Putin was the candidate of Yeltsin and his close circle, who were suffering a run of crushing political defeats. Nobody in Russia was under any illusion about the outgoing president’s unpopularity and state of health, and a large section of the administrative elite, especially in the regions, was seriously considering occupying the Kremlin and taking power into their own hands.
The leaders of this group included former prime minister Yevgeny Primakov, sacked a few months earlier, who was a member of the old Soviet political elite, popular among not only the supporters of a transition to a market economy but also among those who dreamed about a return to the Soviet system. Another prominent figure was Moscow’s mayor Yury Luzhkov, the country’s most popular regional head, and a role model for dozens of regional governors across Russia, who was also the unofficial leader of the gubernatorial corpus, many of whose members supported Primakov and Luzhkov, believing that neither Yeltsin nor, even less, his almost unknown protégé had any chance of holding onto power.
The ‘Unity’ Party, created just before the elections to support Putin, and the ‘Fatherland’ Party led by Primakov and Luzhkov, fought it out at the parliamentary elections at the end of 1999. These were probably the fairest elections ever to take place in post-Soviet Russia, the only time that two rival parties had roughly equal lobbying power. ‘Fatherland’ was favourite to win: it was, after all, the effective ruling party, given that the majority of governors, each of them in total charge of their region, belonged to it. ‘Unity’ only had the national TV channels on its side, but it turned out that this gave it a decisive advantage, and it won the election with a 10% majority. Putin’s path to the presidency was open; Primakov and Luzhkov laid down their arms and declined to contest the upcoming presidential election.
A year and a half later ‘Unity’ and ‘Fatherland’ merged to form United Russia.
It was clear, however, that this was not a war to the death, and that both sides needed one another. Putin had the support of both the voters and the power in the centre, but Luzhkov’s people controlled the regions, where neither Yeltsin nor Putin had enough support amongst the elite. It took time for an alliance between the erstwhile enemies to gel, but a year and a half later ‘Unity’ and ‘Fatherland’ merged to form a party that is still with us today. It is called United Russia, and it still has a majority in parliament and controls all of Russia’s regions, constituting the political wing of Putin’s Kremlin and the core of his political system.
The taming of the governors
Putin’s image has always been that of an inflexible and authoritarian ruler, but in fact over the years he has been building a compromise political system by very quietly winning over the former Luzhkov-Primakov elite one by one. Yury Luzhkov himself was only put out to grass in 2010 – until then Putin felt it unwise to go head to head with this most influential of regional potentates, who enjoyed the loyalty and support of financial and industrial empires independent of the Kremlin. One of these was Sistema, whose owner Vladimir Yevtushenkov was married to Yury Luzhkov’s sister-in-law (the former mayor’s wife Yelena Baturina was also, until her husband’s dismissal, an influential oligarch in her own right).
Since coming to power, Putin has attempted to tame Russia's regional governors such as Moscow's Yuri Luzhkov.
In other cases, Putin was simply forced to buy the loyalty of strong regional leaders during his first years in power: the presidents of Tatarstan and Bashkiria, Mintimer Shaimiev and Murtaz Rakhimov, for example, former key figures in the Luzhkov bloc, were given full control of the oil industry in their respective regions by the Kremlin. And throughout the years when Moscow was restructuring the oil business in favour of the Kremlin-controlled Rosneft, no one touched Tatneft or Bashneft. The latter, Bashkiria’s oil monopoly, was privatised by its president’s son Ural Rakhimov, at present the subject of an international arrest warrant, though not so that the company can be seized from him – he sold it to Yevtushenkov’s Sistema five years ago. Formally, Sistema still owns Bashnet, but it is evidently just a matter of time before it is taken away from him. Mikhail Khodorkovsky, who went through all this 11 years ago, has advised Yevtusenkov, in an online interview, ‘just give them everything, and they’ll let you go. You’re not young any more, and you don’t have any political ambitions.’
In other cases, Putin was simply forced to buy the loyalty of strong regional leaders during his first years in power.
Here Khodorkovsky is effectively formulating the difference between himself and Yevtushenkov. The ex-owner of Yukos made no deals with the courts, spent ten years in prison, and has done all he can to turn himself from a billionaire oligarch into a political, or at least public figure, who is spending what is left of his money not on developing new business interests but on supporting civil society. It is difficult to see Yevtushenkov taking on this kind of role: this is a man, a billionaire until 2014, who has constantly had to demonstrate his personal loyalty and willingness to meet the demands made by Vladimir Putin. A few years ago there were lots of stories in the media about Yevtushenkov, whose assets included telecommunications companies and electronics factories, trying to produce, on Putin’s orders, a Russian smartphone that would be better than the newly unveiled iPhone4. It was all rather pathetic, but the President was evidently happy – he had given someone an impossible task, and that someone had cheerfully run off to do it. No, this isn’t another Khodorkovsky.
Indeed, the main lesson of the Yevtushenkov case is that loyalty may no longer be enough to save you. Two or three years ago, Putin could still live with the fact that not every multi-billion fortune in Russia belonged to his Ozero dacha co-operative cronies or his colleagues at St Petersburg city hall from the 1990s. But now, at a time of political mobilisation, when the Ukraine crisis might at any moment result in the triumph of isolationism in Russia, and an inevitable tightening of belts, to have an outsider controlling even a relatively minor oil company is an unthinkable luxury. This is why Yevtushenkov can wave goodbye to Bashneft: he’ll confess to everything, pay all his outstanding tax bills and then perhaps be allowed to get away with a suspended sentence. There is, of course, another option open to him – to escape from house arrest, leave the country and make bold anti-Putin statements in London. But he’d be better off listening to Khodorkovsky’s advice.
First image: CC dyor
Second Image: via Presidential Press and Information Office