Sidorov on the Luzhkov Fiasco

Dmitri Sidorov, Washington correspondent for Kommersant, has a great new blog on the Forbes website. Here’s his post on the Luzhkov fiasco:

President Dmitry Medvedev’s awkward attempts to fire Moscow Mayor Yuri Luzhkov during the past two weeks look pathetic, and serve as yet another indication of his very limited authorities when it comes to running the country. In reality, no one except for the Kremlin inner circle knows what triggered a scandal. However, my sources in Moscow insist that economic dispute between Medvedev and Luzhkov teams led to the Russian president’s rage.

The famous “Russia, Inc” expression — referring to the way of governance the Kremlin uses to run the vast lands of the Russian Federation — is partially correct, but only partially. Here I would argue that it should be changed to the “Russia Holding, Inc.” This way it will be easier to explain many battles that take place within and around the Vladimir Putin-controlled holding Company. See, for example, the recent dust-up between President-at-large Medvedev and Mayor of Moscow Luzhkov.

The “Russia Holding, Inc.” is not only a well known corrupt enterprise where the amount of annual kickbacks are attributed to a half of the state budget, but an actual group of companies united under the strict Kremlin code of business conduct.

The various governors of the Russian regions may run their own enterprises, or could be patrons of a few that are working hard to make their life a bit better. The very same applies to the president-appointed envoys to the same regions who are controlling the governors. Something like the “prefects” of Louis XIV’s France. The envoys have a choice: they can work hand in hand with the governors or they can have their own agenda when it comes to regional business. This entices the envoys to move their posteriors so as to clear the way – if they are in a cooperative mood.

The mayors of the Russian cities and towns do mimic their senior comrades’ behavior, and so do the police and KGB (FSB) heads of different levels. More or less the same system existed in Tsarist Russia. Vladimir Putin cannot in this way be called an inventor; he has simply resurrected the old well oiled machine of governance of past centuries.

The same way this system serves the governors and those down the ladder is the way it works for Medvedev and Luzhkov. They are parts of the “Russia Holding, Inc.” with quite limited responsibilities and authorities: read, virtual “Medvedev Limited” and “Luzhkov Limited Liability Partners.”

As it often happens that there are business disputes or misunderstandings or conflicts between different companies, so is it in “Russia Holding, Inc.” — especially when one bureaucrat’s interests crosses the path of another’s. In civilized countries where the rule of law is not a Cinderella enslaved by her wicked stepmother, disputes are resolved in courts, and government officials are indeed prohibited to conduct business while assuming public positions.

Imagine President Obama suing Mayor Bloomberg over a construction project his company took over! In such a case, New York City and the Nation would be heading for new elections, at very least.

In fact, Medvedev had a clear and clean chance to fire Luzhkov for whatever the latter had done to show his disrespect to the so-called chief. This is the current Russian system based on the dictatorial law that Vladimir Putin pushed through the puppet-like Russian parliament in the mid-2000s. It allows the Russian president to fire or hire governors of the regions, and mayors of the cities, effectively and entirely removing the chance to elect this or that individual from the Russian electorate.

Medvedev decided not to do this, unlike Putin who never hesitated to fire and hire during his presidency. Actually, Medvedev was unable to do so, no matter how much he might have dreamed about Luzhkov’s speedy retirement. Medvedev’s TV campaign unleashed at Luzkov demonstrates that.

The prime time airing of the quickly made documentaries about Luzhkov and his billionaire wife, construction mogul Elena Baturina, were appealing to one person among the vast Russian audience: Vladimir Putin. The CEO of the “Russia Holding Inc.”, Putin should have been convinced that the time had come to put an end to Yuri Luzhkov’s 18-year mayorship.

Medvedev followed the path many Russian oligarchs went through when decided to make public disputes with their colleagues. This is one of the best ways for the interested Western audiences to find out what is going on in the “Russia Holding, Inc.” The moguls’ asset battles turned into media campaigns were and are as well aimed to inform Putin about on-going fights while at the same time leaking compromising information on competitors.

As it turned out, Medvedev’s appeal was not convincing enough. On one hand we all know that Putin does not like to be pressured, especially by his subordinates. On another, he probably thinks of Luzhkov as an old and bulky armoire standing in a walk-in closet-like Manhattan apartment bestowed by a loving grandmother on her grandson. The piece of furniture is crying to be moved out, but a good number of drawers, price of removal, and emotional attachment does not permit so.

Putin, the ultimate referee within the “Russia Holding, Inc.”, decided to call it a night, and sent the two warring boxers home in the middle of the first round. Luzhkov went to lick his wounds and heal his bloody face and nose to his house in Austria, and Medvedev was probably ordered to be silent.

It will be Putin’s decision how to settle the fight where there should be no delayed second round. I think that the behind-the-scenes agreement will be reached where Medvedev will be satisfied with Luzhkov’s apologies combined with decision to retire later then sooner. For example, in 2012, before the so-called presidential elections in Russia take place.

8 responses to “Sidorov on the Luzhkov Fiasco

  1. @It will be Putin’s decision how to settle the fight where there should be no delayed second round.

    Putin recently congratulated the famous Russian beekeper Luzhkov (again on vacations) on the oh-so great work he’s doing, if this is any indication of anything.

    • It is. Luzhkov is Putin’s ally. Too much criminal ties keep them together, and not only them alone — there are a lot of thugs controlling much of business in Moscow connected with Luzhkov. And when I say “a lot” I actually mean it. Resignation of Luzhkov will hit Putin and Moscow thugs (them — especially) hard. Putin will loose quite a bit of authority and most of Moscow votes, and thugs will loose protection and a lot of money they are able to make (steal) with the help of Luzhkov.

      All this campaign against Luzhkov is a Medvedev’s initiative which is likely failed since Putin won’t allow to remove such a big ally. And even if he will, Luzhkov and his criminals would surely engage in campaign against the city in revenge.

      Medvedev is a toy which serves Putin as a cloak in order to pretend there’s a democracy in Russia, so that Putin is able to be in power “legally”, behind the scenes. But lately, it seems, his toy had gone sort of a little off the track by trying to fight corruption in Moscow. Medvedev’s order to stop the cutting down of Khimki forest, his interference in Rechnik township pulling down process (both are of Luzhkov thievish interests) and now this campaign against Luzhkov are an indications of that. But Medvedev had probably already been told to shut up.

  2. I wonder why it takes ten years of living outside of Russia, to get such a clear understanding of what the Russian power distribution really looks like…

  3. On the news media yesterday evening, on the radio, (one of the U.S. major networks), September 27, I heard: ‘Russian Federation President Dmitry Medvedev fires powerful Mayor of Moscow, Yuri Luzhkov, for his thinly veiled criticisms of himself’.
    So, now let”s see what Vladimir Putin does for his old pal Luzhkov?

  4. From the BBC news today, Putin is backing up the right of Medvedev to fire Luzhkov, because ‘he worked under Medvedev, so Medvedev has the right to fire him’. However, comments coming from residents of Moscow, range from much anger that their wonderful mayor, who has done so much good for their city has been treated so badly, to…good riddance to a big crook, to…why don’t we citizens count?…i.e. we are not allowed any vote or say in this & that is not right, etc. One angry Moscow commentor said, “This proves, democracy is now dead in Russia!”. Others threaten a big public demonstration/uproar, in support of Luzhkov.
    Lushkov himself, who just returned from his Austrian villa, is saying that he will not go quietly, and that he will fight this in court. Off the record Kremlin sources, said that Luzhkov has lost their confidence, and has to go.
    So, this pot of borscht, boils and bubbles.

  5. Borshch ( not borscht ! ) , is a Ukrainian dish , so keep it out
    of your filthy moscovite pot .

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