Seven largest businesses determine the political future of Russia, including by nominating their candidates for presidency, claim the experts of the Center for Current Politics (CPKR).

CPKR director calls the corporations the true power in the country.

Meanwhile, other watchers believe that such approach is simplifying.

CPKR includes Gazprom, Rosneft, Russia Bank, Rosoboronexport, Russian Railways, Basic Element and Roman Abramovich’s group into the list of what the Center calls the power clans.

“The clans have two important distinct features – ability to lobby directly in the president’s office and availability of vast economic assets” – explained CPKR Director Konstantin Simonov to BBCRussian.com.

Corporations are the power

The political scientist believes that the key fact is access to Vladimir Putin.

Analyst with Alfa-Capital Tom Adzhed disagrees that there are just seven “power clans.”

The expert added to the list the companies of Vladimir Potanin and Viktor Vekselberg, as well as Alfa-Group – that if not have direct influence on the president, “at least have connections and influence in the government” – he said in an interview to BBCRussian.com.

Simonov, on the other hand explained why some large corporations, despite impressive capital, are not in his book of leaders. From the CPKR’s point of view, they “lack political shield and ability to communicate with the head of state face-to-face.”

Recent CPKR’s analytical paper claims that many of the power clans’ leaders are friends of Mr. Putin – Dmitry Medvedev and Aleksey Miller (Gazprom chiefs), Vladimir Yakunin (RZD) and Sergei Chemezov (ROE). The president has also friends in Rosneft and in the Russia Bank.

Derispaska and Abramovich have won the president’s trust and gained a significant administrative resource thank to participation in state’s strategic projects, explain CPKR experts. The former helped prepare Sochi for the winter Olympics, the latter – boosted the once backward Chukotka region of Russia.

These groups have the ability to influence on the political processes in Russia, including presidential elections.

Simonov added that there is no reverse influence from government bodies on the economic policies of the “power clans.” “Corporations are the power” – he said.

Aleksander Shatilov, the deputy director general of the Centre for current politics in Russia, tells us about the center’s report “Leading Russian corporations and the executive power”.  

-Which basic features can you mention in the report?

-The report analyzes interrelations between business and authorities during 7 years of Vladimir Putun`s presidency.  In this case it explores business-influence of these or that corporations from the point of view of their interaction with governmental authorities and central elite groups in Russia. On one side they are considered as structures related to elite groups, on the other side, as sources of those groups in sense of realizing their own projects. In this case we mean elections in 2007-2008.

-Which common tendencies of late can you educe?

-The first point is that during 2000-2007 state business recaptured initiative from the private business in the home economy. This process was followed by distribution of the most attractive and profitable assets by new elite groups, that we usually refer to “siloviki” and “liberals”, even though these terms are ranging in various analytical branches. Nomenclative-political groups of this kind dominate in Russian economy and they properly control main assets of the Russian Federation. First of all this takes place in fuel and energy complex, metallurgy, aircraft and motor-car industry, energy and so on. They are disturbed among themselves in this case.

The second point is that after the business-fronde of Khodorkovsky and a little earlier of Berezovsky and Gusinsky, the private sector has lost its autonomy realizing political and economical projects. Now it must upbuild its initiatives related to the executive power. That`s why the most significant source of the gross business is state support and protection of the authoritative elite groups. Direct cooperation with Vladimir Putin is the most optimal form of survival.

-What is the way gross business influence political life of the country?

-If to speak about forthcoming elections, I should notice that they have lately withdrawn such non-core non-economical assets as mass media, associated non-governmental organizations – that is the way to affect political parties and organizations. In this context they were made to mind their profile activity and to abandon their commercial interests. The authorities managed to suppress any mechanisms of fronde in business. The shining example of the fact that business prefers to cooperate with authorities rather than resist, is a failure of the Economic forum in London, which Russian businessmen ignored because of fear to be out with power.

The next moment is that gross corporations has refused making informational raider wars.  Due to the fact that companies  are afraid of assents ”from above”, they prefer to solve problems wit the help of state bodies and basic elite groups.

 I should say that professional institutions are also loosing their value due to reduction of private business in Russian politics and economy. Both gross business and medium- and small sized concerns. This is related to RUIE (Russian Union of Industrialists and Entrepreneurs), “Business Russia”, “OPORA”. These structures are becoming less and less significant in decision making process.

-Does gross business influence Russian foreign policy?

-Gross state companies, dominating in Russian economy (I mean “Gazprom” and “Rosneft`”), are the most significant instruments of Russian foreign-policy expansion. We may watch mutually profitable process of authorities and business cooperation. On one side business demonstrates its loyalty towards power and gets not only internal preferences but also lobbying of their interests “above”. Often and often leading Russian officials up to president of Russia lobby interests of the Russian corporations when going abroad. First of all I mean state companies such as “Gazprom” and “Rosneft`”. Even though authorities ventured lobbying interests of “Severstal” and so on. That`s why I should mention that the Russian power doesn`t seek to crackdown in order to avoid being accused of racket, pressure and so son. Vise versa it offers constructive partnership based on following mutual interests.

-Will such relations between power and business remain after president change?

-Taking into account current trends the whole stats-quo will remain, because Vladimir Putin will remain his authority  after 2008. Currently he actualizes a strategy of balance support inside both political and business elites. That1s why a certain elite group will hardly win in full. Political and economy space will be hardly distributed as well, because Vladimir Putin is building up a system of checks and balances. Any principal changes will also hardly take place. Business will intensively drift into Russian foreign-policy strategies. Russian and Western relations are suffering a conflict period (primarily, with the USA). In this context business will play a more significant role in advancing both economic and political interests of Russia.

-Do the representatives of gross business prepare for the upcoming elections?

-In case we concern perspectives of the electoral campaign in 2007-2008, gross corporations currently need to insure against post-electoral risks. And they advance a number of strategies that will help them to get over 2007-2008 years. I may mention five of them.

Firstly, this is stake on one of the most perspective elite groups, when a corporation invests in a group and is going to share both defeat and win. In this context I mean personnel groups inside the Russian establishment, that is “siloviki” and “liberals”, that in turn are divided into smaller contradicting groups. Political parties play a role of mechanisms with which elite groups advance their political projects.

Besides, somebody tries to divest abroad by acquiring foreign business. They do this to protect their assets in case of emergency. It is not only in Europe and the USA, but also in Asia, Africa and Latin America.

Further, one may watch a tendency to mass IPO, that can also be connected with the willing to converse assets into cash.

The next strategy is less real in current conditions. It is based on constructing a common business with leading foreign firms so that to insure, because in case of changes no one will attend to. But lately such initiatives has been blocked from “above”  so that to prevent from loosing control of business-structures. 

And finally, the fifth strategy is diversification of risks, assistance to all competing groups, or neutral position, oriented on Vladimir Putin personally. Again such neutral players will suffer pressure of elite groups in order to find their position.

The increase of the presidential term is fairly explained by a must of stability enforcement within transition. Though Russia is passing out this period it still needs stability. The question of five or seven years is rather contradictive. For instance, France has overviewed its Constitution and changed the term to five years. In the post soviet space five years are fixed in the Armenian constitution. The main aspect is that presidential power should be longer than parliamentary.

If to speak about the four-year term, that is a copy from the USA, one should copy all American legislation. Civil society preceded state in the USA. That determined the process of state institutions shaping in that country.

The European practice testifies the tendency of increasing the real presidential term. French presidents –Chirac and Mitterand-led the country  per 14 years and this was effective both for political system of France and for its economy. Russian political system is similar to the French one, and I suppose that it might accept its experience in point of view of presidential term.

Vitaly Ivanov, the vice-president of the Centre for Current politics in Russia: 

-It is evident that our country needs stability, succession and a clear reforming line. The presidential term of 7 years corresponds to this. Along with that we shouldn`t look back Europe. This question is our internal business only.

Analysts of the Centre for current politics in Russia think that there are seven nomenclature-political groups (NPG) in our country. All of them have powerful financial and political ascendancy, but they are entirely loyal to the Kremlin. While Vladimir Putin didn’t appoint a successor, groups are hardly competing, joining hands in situational unions. They even may nominate successors for presidency.

The authors of the report “Leading Russian corporations and authorities: technologies of cooperation” mention seven groups of ascendancy: “Gazprom”, “Rosneft`”, shareholders of bank “Russia”, federal state unitary enterprise “Rosoboronexport”, RAO “RZD”, “BAZEL” and a group by Roman Abramovich. “State nomenclative alliances replaced financial and industrial groups”, Mikhail Vinogradov, the director general of the Centre for current politics, explains. The leading economist of “Troyka Dialog” Evgeny Gavrilenkov agrees with the notion “NPG”, but he amazes at the absence of “Alfa group”.  “Alfa” and “Lukoil” haven’t become cores of NPG. They rather build in the forces existed, but Abramovich and Deripaska have their representatives in state bodies, Vinogradov explains.

“Gazprom” is managed by “juristical” group (Dmitry Medvedev and Alexey Miller). It is said in the report that the group cooperates with the general prosecutor Yury Chaika and its has strong ties with the Federal antimonopoly service. But the most powerful source of the group is its long-standing acquaintance with president. The group controls largest media asset: holding “Gazprom-media”. Minister of natural wealth Yury Trutnev is also close to the “juristical” group.

The leader of the main competitor of the “juristical” group, so called “siloviki”, or “Rosneft`” group is the deputy administration chief Igor Sechin. Its significant representative is the director of the federal security service Nikolay Patrushev. The heads of the federal customs service and tax service are also close to this group. It has administrative source rather than media assets. Its disadvantage is that it lacks lobby in the State Duma.

A group of shareholders of the bank “Russia”, where a lot of Putun`s friends work, is based on two companies: the very bank “Russia” and “Surgutneftegaz”. The “Russians” competed for the latest one with “siloviki”. The “Russians” consolidated media assets: TRC “Peterburg”, Ren-TV – and financial: “Sogaz” has bought from “Gazprom” more than 75% of the company “Leader” and 3% of ‘Gazprom”.

The group “RZD” is close to the “Russians”, but its leader Vladimir Yakunin has his own interests, connected with the railway service development in Russia and abroad. Advantages of the group are its leader`s kinship to the president and electorate mobilization: those working in RZD are more than 1,3 million. If to bear in mind their family members, one may quintuple, Natalya Akafeeva, a press secretary says.

The group “Rosoboronexport” possesses large electoral sources: there are 2,7 million working in the Russian engineering. Its leader Sergey Chemezov, who is not only a friend of president, but he also has private people in all profile departments and bodies (Ministry of Industry and Energy, Ministry of Defense, Joint Staff). Its disadvantage is traditional conflict with a Minister of Defense, either he is Sergey Ivanov or Anatoly Serdukov, CCPR reports.

“It is yet difficult to analyze the situation – not enough information, but one thing clear is that the Valentina Matviyenko’s administrating style does not really provoke to assassination: during her stay as the governor there have been only local conflicts that she has always tried to reduce as fast as possible” – said Director General of the Center for Current Politics in Russia Mikhail Vinogradov, commenting the news about the planning murder attempt on St. Petersburg Governor Valentina Matviyenko.

“In St. Petersburg attitude to Matviyenko is very variable” – noted Vinogradov adding that such out-of-politics event will likely raise a public reaction and turn the headlight at Matviyenko. “I believe this has been an attempt to cast light on Matviyenko or even a start of her spinning for the presidential race.” It is too early to judge, who has launched this – the governor’s good-wishers or her evil-wishers” – the expert said. According to him, such news do not usually add political points.

“I haven’t seen Matviyenko trying to support or spin this subject: - Vinogradov noted. “There is no specific information regarding the attempt and we know that the less information there is the bigger is the field for speculations.”

Russian mass media reported on the prevention of the assassination attempt on the St. Petersburg governor on May 18. On May 19, FSB’s Public Relations Center spread the video footage showing the arrest of two suspects on May 16 and seizure of 500 grams of explosive materials from them and two F1 grenades. The arrest was a result of a joint operation with the Interior Ministry. FSB has launched legal proceedings on Article 30 (preparations for crime), Article 222 (illegal purchase of arms) and Article 277 (murder attempt on a state or public official).

Last Thursday Vladimir Milovidov, who changed the PM aide seat for the position of federal financial markets service chief, went on duty. There is no intrigue around how he will start his new job. According to himself, the new chief of FFMS does not intend to reform the service. The intrigue is elsewhere, however – who will replace Milovidov in the PM’s team. There is still no answer to this question. Rumor has it that the position of the aide who has been traditionally dealing with mass media relations might be abolished.

Officially, Milovidov had been consulting the premier minister on economy and finances. In this job he made use of the experience gained when he was first deputy chief of the Federal Commission for the Securities Market (FCSM) – the predecessor of FFMS. However, he was the PM’s personal secretary as well. Mikhail Fradkov’s theses on economic subjects were all prepared by Milovidov. Besides, he was responsible for relations with press and had to inform the press on the premier’s views on the basic socio-economic issues.

This seemed an especially important job two years ago when Fradkov took control of the budget and started competing against Aleksey Kudrin, who had thought this to be his domain. Back then Vladimir Milovidov for the first time assume the role of the “chief’s shadow adviser” on PR and performed professionally.

The new appointment was not unexpected for Milovidov. He admitted to RBK Daily that the proposition to become the chief of FFMS had been made several months ago and he immediately agreed. What is surprising is that no substitute for him has been found yet in the government. There are even no rumors regarding this. In the mean time, if Fradkov has economic experts in his team alright then how is he going to deal with the mass media?

A high-rank source in the government told RBK that the premier, who had never been focused too much on PR, could have decided to do without it at all. In his turn, Milovidov himself reminded to the RBK reporter that the whole issue was in the premier’s authority. It is possible that this position will be canceled. The timing seems right: the 3-year budget draft has been prepared, other tasks seem to have lesser scale and do not demand close interaction with the mass media.

“Fradkov is not interested in mass media spinning at all, which is due to the type of person he is” – comments President of the Center for Current Politics in Russia Konstantin Simonov. Besides, now it is time very scarce time left for his cabinet to live.

Last Saturday the new party called The Great Russia held its first gathering. Unofficial leader of the brand new party is the former leader of the Homeland Party Dmitry Rogozin, who has returned to the big politics after a year long hiatus.

After this the dreams of those, who wanted reunion of the famous trinity – Sergei Glazyev, Sergei Baburin and Dmitry Rogozin that once triumphantly marched into the State Duma under the Homeland flags – crashed to the ground. 

After the Rogozin’s departure from the party in March 2006 and the bad performance of the Baburin’s People’ Will Party in the regional election it seemed that the two would very soon find each other and make a project together. Especially against the background of the increasing interest to the so-called “people’s-patriotic” rhetoric that both Rogozin and Baburin adhere to. The Homeland Bloc had two ideological platforms: social (Glazyev) and “people’s-patriotic” (Rogozin, Baburin). The Just Russia Party lost the latter platform in the course of the merger processes and focused exclusively on the social rhetoric. The vacant niche had to be filled especially that it promised good political dividends.

It did not make itself wait. However, instead of a joint project several small concepts emerged.

First, Sergei Baburin, who had probably been finally disappointed with the People’s Will and its historical illusions, resolved to do rebranding and reorganized the party into the People’s Union, adding a number of public organizations to it and changing the general vector towards national, orthodox and people’s-patriotic ideas. Rogozin, who heads the Congress of Russian Communes, announced establishment of The Great Russia Party on its basis with roughly the same ideas. And even the communists, despite their international views, suddenly pointed at the “Russian issue” during the recent plenum. During the press conference in Krasnoyark BK reporter asked KPRF leader Gennady Zyuganov why the switch to subject suddenly happened. Zyuganov responded saying “I have published the work entitled “On the Russians and Russia” – that deals with the modern situation in the country. The “Russian subject” and the “Russian problem” will be the central in the nearest time” – he added.

However, deputy head of the political science and political management department of the RAGS college Oleg Shabalov informed BK that the “people’s-patriotic” subject in the modern politics is gradually moving to the background. In the foreground we see the social issues, which is supported by the steering of the majority of parties to the left.” Professor Shabrov also noted that “it is hard to imagine an independent “patriotic” faction in the new State Duma and neither The Great Russia nor the People’s Union have chances to jump the 7% barrier in the upcoming election.” 

Vice President of the Center for Current Politics in Russia Vitaly Ivanov agreed with that saying that “separately, none of these parties will become real players in the political field in 2007.”

The Russian Economic Forum (REF) may soon move. Several high brass officials from the cabinet and the presidential administration of Russia that had planned to take part in the forum in London April 22-24 refused to go. According to Kommersant the instruction “not to make another Courchevel of London” was sent down from the Kremlin. The presidential administration decided that if officials and entrepreneurs are willing to communicate, they can do it well at home – for example, in St. Petersburg.

Political experts believe that the Kremlin’s  daggers at the UK are linked with the recent statements made by Boris Berezovsky in a Guardina publication and the London’s refusal to discuss Russia’s request to extradite the exile entrepreneur. Oil to the flames was poured by the “inadequate” reaction of the West to the events around the Dissenters’ March in Moscow and in St. Petersburg. The boycott of the REF is the Kremlin’s response to the London’s unfriendly stance – said professor of the International Independent Ecology and Political Sciences University Sergei Chernyakhovskiy. – I think that we should more demarches.”

According to Chernyakhovskiy, Russian entrepreneurs are in the most awkward situation. “Many fear that their trip to London will be looked down at in the Kremlin and will cancel the plans not to act disloyal” – the scientist continues.

Director of the Center for Current Politics in Russia Konstantin Simonov believes that the recommendation not to take part in the REF is linked with the increase of the St. Petersburg Economic Forum. “Probably now that the relations with the West have escalated, the Kremlin is choosing to show off, saying “better you come to us than we come to you.” According to the expert, Russian private-owned companies will attend the REF but state-run firms will not come.

Another reason why Russian officials do not wish to take part in the forum could be the preparations for the president’s annual state of the nation address. Yesterday, the Kremlin’s press service informed that the president would speak in front of the parliamentarians on April 25. Possibly, the presidential administration is afraid of a leak: the text and the subjects of the message are traditionally kept secret.

First Deputy Chief of the Political Technologies Center Boris Makarenko agrees with that. “To all appearances, the Russian executives were recommended not to take part in the London forum and the message that is due to happen next week is a weighty argument in favor of that” – the expert said. At the same time, Makarenko noted that the REF in Lond “has many aspects – business, foreign economic policy, social” and the forum in St. Petersburg is inferior from this standpoint.

The first St. Petersburg Economic Forum was held in 1997 under the aegis of the Inter-Parliamentary Assembly of States – CIS members. The forum is usually attended by heads of the largest Russian and foreign companies, banks and financial institutions, investors, politicians, and public figures. A month ago First Vice-Premier Dmitry Medvedev announced that the cabinet would try “its best to turn the St. Petersburg Forum into a popular modern economic platform that will be comparable to the Davos Forum.”

April 19 2007, during the conference of the Military Industry Commission, the group’s Deputy Chairman Vladislav Putilin announced that following the introduction of 3-year federal budget Russia would proceed to 3-year defense order.

Raining cash 

According to Putilin, in March 2007, the Commission introduced the 3-year transition draft in the cabinet’s budget adjustment committee. At that, the deputy chairman noted that the number of long-term state contracts is increasing. More to that, full-cycle contracts for three years are becoming traditional now. “Respective decisions have been made, they are trudging hard, along with the development of legal platform and breaking of stereotypes of the relations between customers and the industry” – Putilin said. 

First Vice-Premier, Chairman of the Military Industry Commission Sergei Ivanov was speaking of long-term contracts as well: “It is important that from the next year on it is planned to sign 10-year contracts that stipulate fixed prices.” According to Ivanov, the defense industries should not fear fixed prices, all risks will be taken into account during the adjustment of the credit, insurance, and pricing rules.

The first vice-premier also pointed to the fact that “in the recent years huge funds have been allocated for technical re-equipment of enterprises and organizations in the military industry” via national programs and federal target projects. 

Putilin specified that the “overall amount of funds allocated for national defense will total in 2007 over 822 billion rubles.” Nevertheless, the defense industry is still suffering. In mid March, during All-Russia Conference on Defense Industry Development in Moscow the president of the Defense Industry Assistance League Alexander Brindikov reported that technological re-equipment alone needed 140 billion rubles a year. “The snapshot of investments does not make us happy. In 2006, technological re-equipment budget was 20.2% of all allocated funds, the share of funds to enterprises – 74.8%, credit – 5%” – Putilin explained. 

In all, the cabinet is expected to meet the defense industry halfway. Let us try to look into what benefits the transition to three-year planning will bring. 

Who will get drenched from the cash rain 

Center for Current Politics Expert Dmitry Abzalov believes that the transition to three-year planning of the defense budget is beneficial for the influence groups in the industry and for the industry itself. “This fortifies the status of Rosoboronexport headed by Sergei Chemezov because gives him insurances from the risks of the 2008 – the expert said. – On the other hand, tweaking key strategies through 2010 will have positive impact on Sergei Ivanov’s status as well because it is he now who is in charge of such strategic projects as OAK or OSK.”

On air of “City-FM” Evgenia Voiko, the foreign policy expert of the Centre for current politics in Russia, advanced her opinion about results of the presidential elections in France.

Results of the first ballot in France are summed up. Two candidates passed on the next ballot. They are a member of the dominative centre-right Public movement union Nicolas Sarkozy and a member of the opposite Socialist party Segolen Royal. These results are quite expected. The sensation of the Sunday elections was in another fact: an incredible number of voters took part in the ballot-about 85%.

Those candidates participating in the next elections uphold contra distinct views on economy. The socialist Royal is intended to increase social spending and to displace them on business. She offers to invent more than half a million of the work positions for the youth, to impose big-ticket social building and to restrict poor families` spending on the community charges.

Another winner, ex-minister of the Interior Nicolas Sarkozy places its stake on business. He proposes to reduce income taxes ant to allow the French to work more that 35 hours a week. Recently French economy has grown slower than most of the economically developed countries. The level of unemployment is 8-9%, where the highest percentage belongs to the youth.

We got in touch with the expert on foreign policy of the Centre for current politics Evgenia Voiko.

-Why did the French take part in the ballot on such a mass basis?

-It is worth mentioning that the electoral campaign was aggressively promoted. A great attention towards the campaign was paid both in France and on the international scene. Moreover, these elections mean the upcoming of new political elites, and this fact couldn’t but remain without attention.

-Did unrest in Paris suburbs and phantom of monsieur Le Pean play its role?

-Actually, they did. It was the best card of all the candidates in the current elections. All of them used nationalistic rhetoric and put their stake on the French identity.

-What will be the final result of the second ballot, to your mind?

-Sarkozy is likely to win. This is quite expected and predictable on the basis of electioneering and political profile of both the candidates.

-All the candidates are not standing for Russia. Which of them is more suitable for our country?

-Sarkozy. Due to his inclemency he is a successor of Jacques Chirac with whom Moscow managed to upbuild quite constructive cooperation. Besides, there is a reason to believe that Sarkozy is easier to arrange with than right advocate Royal. She insists on following human rights in Russia, where this problem is still actual. In addition to this Russian political elites didn’t succeed in communicating with women-politicians.