Lazy summer and hazy portents

Russia: President Vladimir V. Putin consolidates control amid rumors, protests and hints of violence to come.

July 12, 2004|By Douglas Birch | Douglas Birch,SUN FOREIGN STAFF

MOSCOW - Welcome to Russia's lazy days of summer.

So far, July has brought a run on banks and angry protests outside parliament. The government is trying to squeeze billions out of one of the world's oil giants, and network news executives canceled the last television programs to offer a platform for Kremlin critics.

There is talk in some newspapers of possible war between Russia and the former Soviet republic of Georgia. "The two peoples are racing towards armed conflict like two avalanches," Komsomolskaya Pravda ominously warned.

Yet office workers sneak away to their dachas. Young people loiter in Moscow parks, guzzling beer and chatting on cell phones. Ladies in headscarves pour kvass, made of fermented stale black bread, from green-and-gold tanks.

Few Russians seem to be paying any attention to the crises.

That's because, analysts here say, these crises aren't what they appear to be. Most are the predictable and manageable result of President Vladimir V. Putin's pursuit of two cherished goals: the enactment of sweeping economic reforms, and the straitjacketing of political foes.

"Nothing unexpected is happening," said Lilya Shevtsova, an analyst at the Carnegie Moscow Center. "Putin has consolidated power and he has all levers and power in his hands. Nothing endangers his rule."

Yevgeny Kiselyov, editor-in-chief of Moskovskie Novosti, agreed that there isn't any crisis. But he thinks matters might boil over, if only because so many pots are starting to bubble at the same time.

Some longstanding struggles, such as that between the Kremlin and Yukos Oil, are reaching their end.

The deadline for Yukos to pay $3.4 billion in back taxes for 2001 passed at midnight Wednesday. The company employs 105,000 people and pumps about one-fifth of the nation's total output - 1.72 million barrels a day.

Bailiffs froze several bank accounts of a Yukos subsidiary on Thursday, which could interfere with the parent company's oil production.

Analysts say the Kremlin's hand is also behind the long lines outside banks and at ATMs. In May, regulators yanked the license of a medium-size bank, Sodbiznesbank, accusing it of money laundering and other regulatory violations. The closure triggered the collapse of another bank controlled by some of the same owners.

Many of Russia's estimated 1,300 banks are small-scale operations that a newspaper columnist here acidly called "laundrettes." These institutions, critics say, serve as piggybanks for criminal groups or places to hide corporate assets from tax authorities.

The Russian Central Bank accused Sodbiznesbank, for example, of processing $1 billion in "suspicious transactions" last year. It allegedly handled ransom payments in connection with the kidnapping and murder last year of two executives with a truck manufacturing firm, KamAZ. Sodbiznesbank executives have denied the charge.

When Sodbiznesbank failed in May, small depositors saw their savings evaporate, since regulators didn't act quickly enough to seize assets. Russia has no government deposit insurance program.

Rumors spread of a blacklist of banks the Kremlin wanted to close. That prompted many Russians to withdraw their money from banks and put it where they traditionally have - stuffed into socks, stuck between the pages of books and rolled up in hollow broom handles.

On Tuesday, the wave of withdrawals spread to Guta Bank, Russia's 22nd-largest, forcing it to close the doors of 76 branches nationwide. By Wednesday, industry heavyweight Alpha Bank was staggering. As of Thursday, there were even lines out the door of a Moscow branch of the New York-based financial giant, Citibank.

Kiselyov blamed the government's preference for using overwhelming force rather than finesse to resolve problems. "They took very harsh, very strict measures against Sodbiznesbank," he said. "And here are the consequences, because it started a chain-reaction of mistrust."

Putin has been slowly, but surely, restricting his critics' access to the news media since before he was first elected in 1990. So it was no surprise this week when the NTV television network decided to cancel several of its best public affairs programs, which offered a rare national platform for voices of dissent.

Those shows include Friday night's primetime Freedom of Speech, a political talk show with the cerebral Savik Shuster as host, as well as two other news programs and Red Arrow, the only surviving program of political satire on Russian television.

News programming on other stations, especially the state-owned Rossyia, feature lengthy reports on Putin meeting world leaders, accepting bouquets from schoolgirls or browbeating cringing bureaucrats.

The state-owned gas monopoly Gazprom named Rossyia's former chief of news programming as general director of NTV Monday. The program cancellations came within 48 hours.

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