The Oligarchs (80 page)

Luzhkov considered running at a time when a great power vacuum opened up in Russian politics. Yeltsin was in ill health, his authority badly eroded by the economic crisis, and he had not handpicked a successor. The oligarchs, especially Berezovsky, were worried that the spoils they had won, the fantastic wealth and property, could be taken away. They worried that Luzhkov might saunter right into the Kremlin in the next election, given the lack of other alternatives, and impose his Moscow model on Russia. They did not like Luzhkov's model, in which he was the boss and they were the supplicants. But the Kremlin—Yeltsin, his staff, and the oligarchs who were close to them—did not know what to do about the power vacuum. The months after the ruble crash found them insecure, paranoid, and at sea.

Luzhkov had weaknesses too. Running for president in Russia required a certain all-out competitive character, such as Yeltsin, who was a politician down to his very core and thought about power and politics
all the time.
Luzhkov was not this sort of politician. He saw himself as a
khozyain
who, to succeed, for tactical advantage, had to engage in politics. Luzhkov had tailored a system in Moscow to serve his own ends, a political machine that did not tolerate competition to his rule. He was acclaimed at the polls and praised in the newspapers. There is no doubt he was a genuinely popular figure, but his was a very protected life. Jumping into the national political scene meant that Luzhkov was stepping outside Moscow, leaving the playing field he controlled for new and uncertain territory.

Luzhkov attempted to make the leap, but his steps were plagued with difficulty from the very beginning. If he had thought about it, Luzhkov might have sought Yeltsin's blessing or at least tried to steer clear of the erratic president and his inner circle. Instead, Luzhkov immediately pointed his guns at Yeltsin and opened fire, criticizing Yeltsin as unfit to remain president. When Yeltsin was reported by the
Kremlin to be suffering from bronchitis at his country residence outside Moscow in October, Luzhkov said, “A short ailment is one thing, but if the man cannot work and fulfill his duties, then it is necessary to find the will and courage to say so.” Luzhkov and Yeltsin had been allies in the past—Yeltsin had picked Luzhkov out of the sea of bureaucrats during the
perestroika
years in Moscow; Luzhkov was on Yeltsin's side in the 1993 confrontation with parliament; they had campaigned together in 1996. But now Luzhkov was plunging headlong into conflict not only with Yeltsin personally but with the president's coterie, a group that included Berezovsky. It was a battle that would be far more destructive than Luzhkov realized. In a climate of uncertainty, the early months of 1999 brought a series of events that frightened Yeltsin's inner circle, including Berezovsky. The result was that Luzhkov was put on the Kremlin enemies list. The people around Yeltsin decided to destroy Luzhkov's chances of becoming Yeltsin's successor.

In this period, Berezovsky was again thrown on the defensive, this time by Yevgeny Primakov, the prime minister. Primakov was an old warhorse of the late Soviet years. His economic policy in early 1999 was to hold the status quo, leading to a period of relative calm after the tumult of the crash. But Primakov was less reticent about Berezovsky. He actively went after the oligarch. After the Duma approved an amnesty freeing 94,000 prisoners, Primakov told a cabinet meeting on January 28, 1999, that “we are freeing up space for those who are about to be jailed—people who commit economic crimes.” Within days, prosecutors and gun-toting men in camouflage and black masks raided Berezovsky's companies in Moscow, the Sibneft headquarters and Aeroflot. The message was unmistakable: Berezovsky was a target.

At the Sibneft building, the masked men seized boxes of materials from a small company, Atoll, which was reportedly a Berezovsky security service. One of Luzhkov's most loyal newspapers, the popular broadsheet
Moskovsky Komsomolets,
said investigators believed Berezovsky used Atoll to spy on the Yeltsin family, including Yeltsin's daughter Dyachenko. Berezovsky believed that Primakov had personally ordered the investigations and arrest warrants against him. Sometime later, Berezovsky went to see Primakov, who denied that he had harassed the oligarch. In a moment of high tension and drama in Primakov's office, Berezovsky told me he took a document from his
coat pocket and confronted Primakov with evidence that he had personally ordered the probe. According to Berezovsky, the former prime minister, Chernomyrdin, was also present at this moment and was so stunned and embarrassed that he got up from the table and left the room in a hurry. Chernomyrdin's discomfit was understandable: Berezovsky had managed to obtain a copy of the prime minister's own secret order.
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While Primakov pursued Berezovsky from one side, a fresh scandal broke to further deepen the sense of paranoia in Yeltsin's circle. The new controversy involved the general prosecutor, Yuri Skuratov, who was probing Kremlin corruption. Some of the allegations pointed to payoffs made by a Swiss engineering company, Mabetex, which had carried out Kremlin remodeling work, to people in the tight-knit Yeltsin clan.

Skuratov, a colorless figure, had broad powers, yet he was singularly ineffective as chief law enforcement officer in Russia's years of crazy capitalism. He had not brought any major figures to account for corruption or solved any of the highly publicized contract killings. Moreover, Skuratov had personal problems. He had been secretly set up with some prostitutes and videotaped. The tape was being used to blackmail him.

On the same day as the raids against Sibneft, Yeltsin abruptly asked Skuratov to quit. A copy of the tape was leaked to state television. At first Skuratov agreed to quit but then changed his mind and decided to fight. In a desperate attempt to save himself, Skuratov began to publicize his half-finished investigations, including the probe into Kremlin building contracts. Skuratov was a contradictory and maddening figure whose hints of corruption were never followed by concrete prosecutions. Still, the mere mention of Skuratov and his investigation into Mabetex was enough to panic the Kremlin team.

The Skuratov affair, the raids on Berezovsky firms, the fallout from the ruble crash, Primakov's vow to put the tycoons in jail, and the launch of Luzhkov's presidential campaign all came in the same few months. In retrospect, a chain of events was set in motion. Skuratov threw out the dirt on the Kremlin family, alarming Yeltsin's inner circle. Luzhkov picked up on the allegations, saying the prosecutor should be allowed to continue his investigations, which antagonized Yeltsin and his aides. Then, fighting back, Berezovsky and the Kremlin set out to wreck Luzhkov.
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The Skuratov affair was followed by an arrest warrant issued by the prosecutor's office on April 5 for Berezovsky on grounds that he had misused cash from Aeroflot foreign ticket sales. Berezovsky's reply was that he “never worked a day at Aeroflot.” This was literally true, but beside the point. Berezovsky never needed to work at Aeroflot to rake off the company's foreign currency earnings. The announcement was a major blow to Berezovsky, who was in France at the time. The raids, investigations, and arrest warrants were unprecedented for a man who had so often—and so effortlessly—strolled through the corridors of power. Berezovsky also lost his post as executive secretary of the Commonwealth of Independent States on March 4.

Spring was a time of trouble for the Yeltsin inner circle. Skuratov threatened new disclosures. Berezovsky faced arrest. Then in May the Communists in the Duma tried to impeach Yeltsin. The impeachment failed, but there were rumors that the Kremlin, or its corporate allies, paid $30,000 each for votes to support the ailing president.

Luzhkov opposed Yeltsin's impeachment, but he became more vocal in his attacks on the Yeltsin camp. Russia was not being run by Yeltsin, Luzhkov declared, but by a cabal, a “regime” in the Kremlin. His use of this word “regime” over and over again particularly riled the Yeltsin circle. Luzhkov singled out Berezovsky as part of the “regime,” along with Alexander Voloshin, a bearded, balding one-time railway worker and economist who had worked with Berezovsky during the All-Russian Automobile Alliance project. Voloshin, who entered the Kremlin as an economics specialist, rose to become Yeltsin's chief of staff, succeeding Valentin Yumashev. Voloshin was a figure in the shadows who relished hardball tactics. Like Berezovsky, he was determined not to let Luzhkov become the next president of Russia. Berezovsky knew that if Luzhkov came to power, the tycoons could be at risk of having their property taken away. The rules of the game would be changed, and they would no longer run the country.

Berezovsky began to ponder how to attack Luzhkov. One of Berezovsky's most effective spear carriers was Sergei Dorenko, the television commentator who had participated in the bankers' war. With a husky voice, manly good looks, and a mischievous sense of showmanship, Dorenko was the television personality that politicians loved to hate. To a Westerner, Dorenko's television style might seem crude, unpolished, even down-market, but time and again Dorenko scored in
Russia as a television ringmaster who gleefully put the politicians in their place.

Berezovsky thought Dorenko was a magnificent talent. He told me that he first recalled seeing Dorenko on television after his Mercedes had been blown up. He was watching television and Dorenko was using a snide tone, saying another moneybags was hit by a bomb today, too bad. Berezovsky was not offended and called his secretary immediately. “Would you please find Dorenko?” he asked. “It seems to me he is a very talented guy.” He added, “I have never taken the content seriously. But the form that he creates, I take very seriously; I like it.”

Dorenko remembered that they met much later. When Berezovsky wanted to see him, Dorenko at first refused. “I said I was busy,” Dorenko told me. Berezovsky persisted. He showed up and waited in Dorenko's outer office. And waited. This was Berezovsky's trademark style: he was always willing to wait, never too humble. It was summer and there was sliced watermelon in the office. “My assistants were asking me what to do with Berezovsky; he sits there and doesn't go away.” Dorenko added, “And I said I didn't know. I said, ‘Give him some watermelon.' He sat there for forty minutes eating watermelon and then went away.” Later they agreed to meet over lunch at a Japanese restaurant and found that there was a chemistry between them. Within an hour that day, Berezovsky signed up Dorenko for his ORT television channel.

Dorenko's particular style of television was what the Russians called an “author's program,” which is a mixture of video footage of news events and commentary. The format gives the anchor wide latitude to express himself. NTV's Yevgeny Kiselyov had a similar show, the popular
Itogi
on Sunday evenings, but Kiselyov was a high-brow presence. Dorenko was different—blunt, sarcastic, flamboyant.

Berezovsky was at work behind the scenes, trying to ease out Primakov. On May 12, 1999, Yeltsin fired Primakov. Yeltsin appeared to be increasingly remote and eccentric. He may have been jealous of Primakov's popularity or persuaded that Primakov could not cope with the economy. Yeltsin replaced Primakov with Sergei Stepashin, a one-time interior minister with the demeanor of a loyal police captain. He was as obedient as a man could be but not strong-willed. One of Stepashin's first acts was to announce that he would not prosecute Berezovsky.

Stepashin had hardly settled in when the Kremlin began discussing his dismissal. Berezovsky later recalled that Stepashin was viewed as “weak” by the Kremlin inner circle.
²⁶
Stepashin was a legal expert, but he seemed paralyzed when it came to politics. Every day, support was draining away from Yeltsin and toward Luzhkov. The Kremlin circle decided they had to find someone else. They had to solve the problem of “continuity of power.” On August 10, Yeltsin fired Stepashin, the fourth premier Yeltsin had dumped in a year and a half. In Stepashin's place, Yeltsin appointed Vladimir Putin, a spry man with cold eyes and sandy hair who was the little-known chief of the Federal Security Service. Putin was initially viewed as a caretaker, but he became much, much more.

That summer the political vacuum, the palpable lack of leadership, settled on Moscow like a fog. Berezovsky, no longer being hounded by Primakov, was anxious to play kingmaker once more. He came to Dorenko and proposed a new program tailored to Dorenko, a pure author's delight:
The Sergei Dorenko Show.

Then came another bolt of alarming news for the Kremlin circle. Two of Berezovsky's arch foes, Luzhkov and Primakov, were teaming up, announcing a political alliance, and setting their sights on the Kremlin. They were attracting support from key governors and mayors around the country, and when they made the announcement, it was clear they were becoming a force to be reckoned with. They had what is called momentum in American politics—a sense of inevitability hung over them. They were not very charismatic, but that didn't matter. What counted was a perception that they would be heirs to the Kremlin. There wasn't another obvious successor to Yeltsin. Luzhkov knew they were in trouble for just that reason. He sensed that the Kremlin staff was already gunning for them. There was “powerful pressure and opposition to formation of our bloc,” he said. “But we are not afraid of it. We are strong.”
²⁷

The Kremlin inner circle was distressed. Three days after the Luzhkov-Primakov press conference, several Western journalists and I were invited to the Kremlin to speak to Voloshin, Yeltsin's chief of staff. It was a rare opportunity to hear directly from the Yeltsin “family,” the embattled Kremlin circle that included Berezovsky, Voloshin, Dyachenko, and Yumashev. Voloshin, dressed casually on a Saturday, spoke very softly in a room of gleaming white marble. He was surprisingly candid. He made it clear that the Kremlin could not tolerate the
thought of Primakov and Luzhkov becoming Yeltsin's successors. Primakov was a wily old Soviet spy, he said. Luzhkov brought no more sympathy. “His surrounding is semicriminal,” he said. “It is not a secret to anyone. The whole of Russia is talking about it.” But he admitted that Luzhkov had achieved some results. “Of course Moscow could afford to build a lot of things, for example, the Ring Road. Luzhkov is known as a builder. He built a lot. Some economists calculated that the money that was spent on the road would be enough to pave it with silver—three or five centimeters thick!”