Russia's liberal parties fear losing seats in Kremlin

MOSCOW -- With the resignation of his veteran chief of staff, President Vladimir Putin bade farewell to the old Kremlin elite that engineered his meteoric rise to power and played a pivotal role in setting his policy during the last four years.

Alexander Voloshin's departure, which closely followed the jailing of Russia's richest tycoon, stirred broad fears that Putin's fellow ex-KGB officers are crowding out Kremlin liberals and laying the groundwork for a redistribution of property that was privatized after the 1991 collapse of the Soviet Union.

Voloshin was seen as the main advocate for Russia's business barons. He had staunchly opposed an official probe against Russia's largest oil company, Yukos, which culminated Oct. 25 in the jailing of its billionaire head, Mikhail Khodorkovsky, and the subsequent freeze of Yukos assets.

Voloshin -- who reportedly advised Khodorkovsky not to flee abroad -- resigned right after the tycoon's arrest. Putin's decision to release him of his duties was announced only Thursday.

The architect of Russia's privatization program, Anatoly Chubais, said Voloshin's dismissal was a "bad and extremely serious" signal of a possible government departure from fundamental democratic values and economic freedoms.

Russian media widely reported an unwritten pact between Putin and Russian tycoons, reached shortly after the March 2000 presidential election, in which the president promised not to revisit privatization on condition the business moguls stayed out of politics.

'Tightening police controls'

Khodorkovsky's funding of opposition parties in parliament was widely believed to be an important reason behind the probe against Yukos and his jailing on charges of fraud, tax evasion and forgery. Some of the charges concerned privatization deals of the early 1990s, spooking investors who feared that other big companies might be next in the line of fire.

Boris Nemtsov, the leader of the Union of Right Forces, one of two liberal parties Khodorkovsky funded, said that Voloshin's departure signaled a possible "rejection of economic progress, curtailing of democratic freedoms and tightening police controls over the society."

While troubling foreign investors and Russian liberals, the attack on Khodorkovsky was welcomed by many ordinary Russians who despise the tycoons for winning quick fortunes in dubious privatization auctions of the 1990s. Analysts said the crackdown on Yukos could further strengthen Putin's popularity.

Putin himself has repeatedly declared that the Yukos probe did not herald a broad revision of privatized industries. Yet Cabinet officials -- including Prime Minister Mikhail Kasyanov, a Voloshin ally -- say it sets a bad precedent.

Speaking to a business conference last week, Deputy Economics Minister Arkady Dvorkovich grimly warned investors in privatized industries that they may have to pay for the mistakes and abuses that characterized privatization in the Yeltsin years.

"We must think not about tomorrow, but about what happened the day before tomorrow or several years before," Dvorkovich said, according to the daily Gazeta.

With Putin poised to win easy re-election in about five months, many observers saw Voloshin's dismissal as a sign that the president has finally grown confident that his ex-KGB lieutenants can run the administration without the holdovers from Yeltsin's time.

"It was clear that Putin was going to reshuffle his team before the presidential election," said Nikolai Petrov, a political analyst with the Carnegie Endowment. "He doesn't want to win another victory with Voloshin."

Named by Yeltsin as Kremlin chief of staff in March 1999, Voloshin played a key role in managing Putin's ascent from an obscure security chief to the head of state in just over four months.

Preferring to work behind the scenes, Voloshin was a smooth operator -- shaping Putin's course throughout his presidency, reining in feisty local governors, forming a pro-presidential parliamentary majority and routing the Kremlin's political foes.

He also played a prominent part in what critics describe as Putin's efforts to muzzle the press. Media owners Vladimir Gusinsky and Boris Berezovsky, who dared to defy the Kremlin, had to surrender control over their television networks and flee abroad.

Unlike them, Khodorkovsky said he had coordinated his political activities with the Kremlin, and openly blamed the Yukos crackdown on infighting within the presidential administration.

With Voloshin out, other business barons will obediently follow orders from ex-KGB officials in the Kremlin, predicted Sergei Kovalyov, a human rights activist jailed during Soviet times for dissidence.

"Business has been taught a clear lesson," Kovalyov told The Associated Press. "They showed them who is the boss."

The new appointments in the Kremlin appeared to indicate that Putin doesn't want, at least nominally, to place his ex-KGB lieutenants on top. He promoted Voloshin's deputy, Dmitry Medvedev, to succeed him and gave wider duties to another two of his deputies. All three are thought to be part of a dovish Kremlin wing as opposed to the ex-KGB hawks.

But Carnegie's Petrov said that the trio lacks Voloshin's political skills and would likely be sidelined by ex-KGB officers in the Kremlin whose comrades have spread through the ranks of Russian officialdom "like a web."