Page 2 of 2 Russia's new premier has
bite By John Helmer
minister, Victor
Chernomyrdin. Zubkov displays none of the
nervousness or jokes for approval that
characterized other, weaker predecessors such as
Yegor Gaidar (the US favorite), Sergei Kirienko
and Sergei Stepashin.
Until this week, the
consensus among political observers in Moscow was
that Putin had already chosen Ivanov as the next
president. On trips to India and, most recently,
to the Asia-Pacific
Economic Cooperation summit
in Australia, Ivanov has conveyed an assurance
that those who have talked with him have
interpreted as confirmation of the succession.
The alternative scenario was that Putin
would select an unknown, possibly an aging figure,
whom he could count on to retire within a year or
two, thus allowing Putin to return for a fresh
term as president. The Russian constitution limits
the president to two consecutive terms. The
break-a-leg presidential plan allowed Putin to
step down, as required by the law, and then step
back.
Ivanov has had a titanium knee
replacement, and sometimes can be seen to walk
stiffly. But he's too young to become Putin's
fall-guy. Zubkov is older, but not less vigorous.
"No one is going to install someone as
president with a disability," suggested a
Kremlin-connected businessman. "Of all the
agreements and understandings, this would not be
one. No, Putin will not risk being so blatant with
the next president. Let's not forget, Putin sees
things for what they are, as he fancies himself as
a new avatar of Andropov. And behind all this
cold-war rhetoric, which is good for grabbing
votes, he knows the corruption and financial ills.
He chose someone who has no affiliations to any
oligarch."
Moscow's investment bankers
have most at stake in the future of the
corporations still controlled by oligarchs such as
Oleg Deripaska and Victor Vekselberg. These two
now face a more uncertain market response to their
attempt to sell shares in United Company Rusal,
their aluminum giant, which has been planning a
$30 billion initial public offering (IPO) in
London this year.
Bankers advising Rusal
have revealed that they had been negotiating with
the Fradkov government for a letter of assurance
to new shareholders that there would be no
re-nationalization of Rusal after the IPO.
Zubkov's appointment, and the ministerial
reshuffle he has started, will now oblige Rusal's
bankers to start from scratch. As a September 2004
report by the Tax Ministry revealed, Deripaska's
Rusal has paid less tax than any other Russian
metals producer.
Roland Nash, strategist
for Renaissance Capital, an influential
Western-owned investment bank in Moscow, reports
the wishful thinking that has swept the money
markets. "Our first reaction to this particular
premier is that, while he is now among the
front-runners, we do not see him as the likely
successor. More likely, we see him as another
means of cementing some stability during the
period of power transfer, a prime minister who
will serve under both the current and the next
president."
Nash concedes that the future
has suddenly darkened for oligarchs such as
Deripaska, Vekselberg and the two men who control
Russia's most important mining companies, world
leaders Norilsk Nickel and Polyus Gold, Vladimir
Potanin and Mikhail Prokhorov. According to Nash,
"Within the financial-monitoring service, and
during the clash with the oligarchs, [Zubkov] will
have had access to a great deal of information
against many of the vested interests within the
Russian power elite."
The bankers are also
hoping that Zubkov's rise to the presidency may be
tripped up by the December election results. "The
experience of Yeltsin, Brezhnev, [Konstantin]
Chernenko and Andropov," said Nash, "has left
Russians wary of an older president. Moreover,
having garnered only 8% in the election race for
the governorship of Leningrad oblast [in
1999], Zubkov does not have the track record of a
winner."
Alfa Bank, controlled by oligarch
Mikhail Fridman, issued a similar piece of wishful
thinking. A report issued by Alfa Bank analysts
says: "A new government was expected; Zubkov
wasn't. While Zubkov has a reputation of being
personally close to President Putin, at this point
we think it unlikely that he will emerge as the
eventual nominee of Putin's support party, United
Russia. His purpose is more likely to put the
government in safe hands while the eventual
candidate is fully vetted and placed in position."
Alfa strategist Ronald Smith said, "If
Zubkov proves to be anything more than a
placeholder, the most likely policy change, given
his background, would be an intensified campaign
on corruption and/or tax evasion. While such an
outcome could prove beneficial for the economy
over time, in the near term the most obvious
outcomes would be quite negative for specific
companies and businessmen who might fall afoul of
new policies, particularly in the natural-resource
extraction industries" (oil and gas, gold, etc).
For the world's biggest mining companies,
and for business people and politicians in Asia
who have begun to think of the oligarchs as
co-investors and friends, this is advice to look
behind the smile - Zubkov's teeth are sharp.
John Helmer has been a
Moscow-based correspondent since 1989,
specializing in the coverage of Russian business.
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