Russia’s oligarch wars: Face-off

Date: 08/11/03

The fight between Yukos and the Kremlin is far from over

BY STEPPING down as chief executive of Yukos, Mikhail Khodorkovsky has freed his company to do what it does best: extract oil. A ministerial threat that Yukos might lose operating rights in some oilfields has dampened things. But the new Yukos boss, Simon Kukes, is just what nervous investors want, and he is an American citizen to boot. As it happens, both men have a murky history. But throughout the four-month-long prosecutors' campaign against Yukos that ended with Mr Khodorkovsky's arrest, Mr Kukes professed total detachment.

President Vladimir Putin, who was this week in Rome for a summit with European leaders (who largely glossed over both Yukos and Chechnya), has engaged in his own damage limitation. He continues to pretend that Yukos's troubles had nothing to do with Mr Khodorkovsky's meddling in politics. But he has said several times that there will be no mass review of the suspect privatisations of the 1990s. He disavowed the threat to oilfield operating rights. And he even seemed to rebuke prosecutors for going after Yukos with such force; they, in turn, released some of the company's shares that they had frozen a few days earlier.

The Kremlin constellations are shifting. The resignation of Alexander Voloshin, chief of staff, robs Mr Putin of his ablest power-broker, and business of its most powerful ally. That was a victory for the security-services faction, or siloviki - though Mr Putin tempered it by replacing Mr Voloshin with Dmitry Medvedev, his deputy, seen as a neutral “reformist”. But Alexei Kudrin, the reformist finance minister, surprisingly welcomed Mr Voloshin's departure and made sharp comments about Yukos. He may be positioning himself to take over from Mikhail Kasyanov, prime minister and another business ally, whose resignation has, like Mr Voloshin's, been rumoured for months.

Business interests seem ready to resist, however. Anatoly Chubais, the head of the state electricity company, UES, who was the most outspoken critic of Mr Khodorkovsky's arrest, has reportedly invited Mr Voloshin in as UES's chairman full-time. (He had been chairman before, but in a more titular role.) The rest of Russia's business elite have remained fairly silent, but the newspapers they control have devoted much space to dire warnings about Russia's descent into authoritarianism.

Meanwhile, Yukos's lawyers are preparing a long charge sheet against the prosecutors. And the contacts Mr Khodorkovsky has cultivated abroad are paying off in a wave of outraged newspaper articles and even a Senate statement by John McCain, urging the American government to be tougher on Mr Putin. Jail, it seems, has hardened Mr Khodorkovsky's resolve.