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Oligarchs Bow To Putin's New Deal

President Vladimir Putin on Friday offered the nation's leading executives a new deal that few are likely to refuse: share your wealth or risk losing it.

The state, Putin told nearly 800 business leaders from across the nation, will work to strengthen property rights and reduce bureaucracy, but businesses must "fully recognize their social duties" by sharing their wealth and helping to reduce poverty. The meeting, organized by RSPP, the nation's biggest business lobby, was first requested in the hours after the Oct. 25 arrest at gunpoint of Yukos founder Mikhail Khodorkovsky. At the time, RSPP said that Russia would face a potentially calamitous crisis of confidence in the economy if Putin didn't meet with top executives to clarify his position on the legal assault on Yukos. Putin flatly rejected the offer. Since then, however, Khodorkovsky has been denied bail, Deputy Prime Minister Alexei Kudrin has trumpeted "the end of the oligarchy," unrelenting prosecutors have publicly warned all businessmen to toe the line, and the leading pro-business voice in the Kremlin, Alexander Voloshin, has been replaced. The result has been that the once-heated rhetoric coming from the so-called union of oligarchs has given way to cowed deference. In fact, neither Putin nor executives mentioned Khodorkovsky or Yukos by name during the union's annual congress Friday. Metals-to-banking tycoon Vladimir Potanin explained the RSPP's decision to not press Putin publicly about Khodorkovsky, who still sits on the union's governing council, this way: "There is a level of detail into which you can go with the president, and one into which you had better not go."

Indeed, one by one, nearly all of the nation's leading business figures in the last few weeks have declined to come to Khodorkovsky's defense. One exception is Unified Energy Systems chief Anatoly Chubais, who has been called the father of the oligarchs for overseeing the rigged privatization auctions that formed the basis for most of their fortunes.

Conspicuously absent from Friday's congress, Chubais chose instead to attend, together with Prime Minister Mikhail Kasyanov, the grand opening of the second unit of a hydropower plant in the Siberian town of Nizhnevartovsk. Both men have railed against the way prosecutors have handled the investigations into Yukos and its top shareholders, with Kasyanov suggesting Friday that the Justice Ministry should take over control of the nominally independent General Prosecutor's Office. He also said he had ordered the Natural Resources Ministry's to end its aggressive review of Yukos' drilling rights, which he called "intolerable."

Political analysts said Kasyanov is unlikely to keep his post if Putin wins reelection in March, as expected, while Chubais is the only major business figure campaigning for a political party, the Khodorkovsky-funded Union of Right Forces, in the State Duma race. So much has the pitched rhetoric been toned down that Putin first addressed RSPP members as colleagues, but by the end of the session they were "friends," according to union chief Arkady Volsky.

And despite his staunch defense of the attack on Yukos, Putin seemed anxious to contain tensions with the business community, insisting yet again that it did not presage a "deprivatization" campaign. Analysts say the attack on Khodorkovsky was a reaction to his bid for greater political power at a time when Putin is determined to consolidate his own power base and wipe out any alternative sources of influence. Combined, the political power grab by Putin and the prospect of property being returned to the state led many to speculate Russia was returning to its Soviet past.

In Friday's address, however, Putin dismissed such fears, saying that a new level of cooperation between business and the state is needed.

In laying out the new deal, Putin agreed with businesses that security forces should not be used in settling business disputes, but he said businesses were acting in a similarly negative fashion.

Volsky said RSPP got the picture -- business will take on the responsibility for wage hikes and other social issues while the state conducts full-scale tax reform and insures property rights are upheld.

(The Moscow Times 17.xi.03)

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