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. Last Updated: 07/27/2016

Chubais Picks Up New Title: 'Oligarch'




Yevgeny Kiselyov, the host of NTV's "Itogi" program, casually put the all-but-official seal on Anatoly Chubais' new career by deferentially referring to the electrical utility boss by an unaccustomed title: "oligarch."


With Kiselyov's anointing on Sunday, Chubais completed a remarkable transition. As government official, he helped create the oligarch phenomenon through his privatization program, which transferred vast wealth to the country's politically-connected business class.


But now, as unchallenged head of Russia's second-largest company, he no longer makes oligarchs. He is an oligarch.


At a shareholders meeting Friday, Chubais received what analysts believe is near-unshakable control over RAO Unified Energy Systems electricity monopoly.


At a shareholders meeting Friday, the government, which holds 52 percent of UES, ceded its right to hire and fire Chubais by going along with a measure to require a three-quarters majority of the shareholders to remove him f instead of a simple majority of the directors or shareholders.


That gives foreign shareholders, who own a combined 33 percent stake, a blocking vote should the Kremlin try to remove him. Chubais, a darling of foreign investors, thus got political insurance against a snap decision by President Boris Yeltsin to have him fired, which has happened four times in Chubais' career.


He moved to UES in April 1998 after a book royalty scandal cost him his finance minister portfolio and undermined him as deputy prime minister in charge of economics and finances. Earlier, he had served as the head of the Kremlin administration and head of the privatization program.


"Now whoever the prime minister is, no one can give the command [to remove Chubais]," said State Duma Deputy Pavel Bunich, who heads the Duma's privatization committee. "He is in a unique position. Not one chief executive of any company is in that position."


Even Rem Vyahkirev, head of the Gazprom natural gas monopoly, has to put up with talk that the government should revoke a trust agreement under which he manages a 37.5 percent stake that is part of the government's 38.4 percent share in the company.


Chubais also has insurance against a revenge attempt by his Communist enemies, who blame his privatization program for corruption and the excessive wealth of a few. They could only get rid of him by re-nationalizing UES, a possibility analysts call unlikely.


"Nothing threatens Chubais now," Bunich said.


"It's not important how you get control over a big company, whether you personally control it or control it through your people," said Andrei Ryabov, an analyst with the Carnegie Endowment. But having that control "is one of the main characteristics of the status of oligarch."


Along with Vyahkirev, other oligarchs would include people like Boris Berezovsky, who built a fortune selling cars, then branched out into opaque holdings in oil, media and the national airline, Aeroflot, though he denies some of those holdings. Others include Interros head Vladimir Potanin, who controls Norilsk Nickel and Rosbank; medial mogul Vladimir Gusinsky; LUKoil head Vagit Alekperov; and others.


Sunday's NTV television interview was a sort of coming-out party. Chubais said he didn't object when NTV news anchor Yevgeny Kiselyov called him "the strongest player on the political scene."


And when Kiselyov wished him success in his capacities of chief executive of the national electric company and "political oligarch," Chubais smiled like Mona Lisa.


Making Chubais an oligarch in his own right appears to be one element of the Kremlin's strategy for 1999 State Duma elections and the 2000 presidential election.


Analysts said, however, that while Berezovsky admitted to supporting Yeltsin to protect privatization-era gains from a communist comeback, Chubais is motivated at least to some extent by his free-market ideology.


"He doesn't bear any relation to the likes of Berezovsky," said Andrei Piontkovsky, head of the Center of Strategic Studies. "He has aims other than simple personal enrichment."


Chubais "is more oriented toward the national interests," said Ryabov of the Moscow Carnegie Center. "He thinks on a different scale. He has his own models of Russian politics and the Russian economy and he is working to realize them."


Chubais has a nominal partisan membership as a leader of the Right Cause movement together with free-market ideologist Yegor Gaidar and fellow "young reformer" Boris Nemtsov. But Right Cause ratings are dismal and, as UES head, Chubais has much stronger levers of power in his hands already.


UES may be wracked by debt (it receives payment for only a fraction of its deliveries, and only 20 percent of that in cash), but that is enough of a cash flow to merit the interests of Kremlin election strategists.


And in addition to his unchallenged control over the national power grid, whole cash-strapped regions of Russia that fail to pay their electric bills are literally in hock to Chubais.


An announcement Monday that Yeltsin's chief of staff, Alexander Voloshin, was elected to head the UES board of directors apparently complements the hands of both Chubais and the Kremlin.


Piontkovsky said the "Chubais-Voloshin tandem" could use UES influence and resources in a campaign to make Prime Minister Sergei Stepashin a winning presidential candidate.