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. Last Updated: 07/27/2016

NEWS ANALYSIS: 'Family' Beats Out Rivals in Cabinet

Despite President Vladimir Putin's moves to strengthen state power, this week's flurry of government appointments made it clear that the clique of Kremlin insiders known as "the family" has triumphed over its rival oligarchs, retaining its strong influence over both the White House and the president.

Prime Minister Mikhail Kasyanov and a majority of his key ministers have ties to "the family" and are likely to service their interests, analysts said Friday.

"This is an absolute victory for ['the family']," said Andrei Ryabov, domestic politics analyst with the Moscow Carnegie Center.

"Their influence has never been stronger, even in Yeltsin's time."

"The family" - an amorphous and often-changing group nominally led by tycoon Boris Berezovsky and including aluminum and oil magnate Roman Abramovich and banker Alexander Mamut - came to dominate policy-making during the latter years of President Boris Yeltsin's rule.

Their influence is set to become even stronger with the expected reappointment of Alexander Voloshin as Kremlin chief of staff, said both Ryabov and Yevgeny Volk, political analyst at the Heritage Foundation.

Berezovsky put forward Voloshin last year, after two previous Kremlin chiefs of staff had made major blunders during vital political battles. Voloshin reportedly helped found the All-Russia Automobile Alliance, or AVVA - along with Berezovsky's LogoVAZ car dealership and carmaker AvtoVAZ - a consortium that sold $50 million in shares but paid out almost nothing in return.

His ruthlessly efficient performance in the Kremlin post enabled Voloshin to expand his influence to such an extent that he now ranks as a leading "family" member, Volk and Ryabov both said.

A Twisted Arm

Voloshin reportedly played a crucial role in one of the most important appointments this week, that of Prosecutor General Vladimir Ustinov, confirmed Wednesday by the Federation Council.

The president submitted Ustinov's candidacy to the upper chamber of parliament a day after it had been widely reported that he would appoint Dmitry Kozak - a St. Petersburg ally tapped to head the government administration when Putin was appointed prime minister last year. After endorsing Ustinov, several Federation Council members said Kozak was actually Putin's initial choice, but that "the oligarchs" had prevailed, Kommersant reported Thursday.

Both Segodnya and web newspaper reported that Voloshin had personally intervened to change the president's decision. According to several reports in local media, Kremlin officials were so rushed drafting Ustinov's nomination they forgot to properly fill out Putin's official request to the upper chamber.

Kozak has already been sacked as government chief of staff to be replaced by Kasyanov prot?g? Igor Shuvalov. He is reportedly set to become supervisor of the president's seven regional representatives. The president announced Wednesday the creation of seven "super-regions," for which he would appoint representatives.

Although that plan is aimed at strengthening the federal government's capacity to deal with the regions, previous attempts to strengthen the vertical power structure fell flat under Yeltsin.

Putin's losing battle shows that he "had his arm twisted by 'the family,'" said Volk.

A Disturbing Pattern

Despite his image as a strong, decisive leader, Putin has "had his arm twisted" in similarly embarrassing fashion several times since Yeltsin plucked him from obscurity last August, naming him as prime minister and designated presidential successor.

Within days of his triumphant win in the March 26 presidential vote, Putin suddenly forced Deputy Prime Minister Valentina Matviyenko to drop out of the race for St. Petersburg governor. A month earlier, the president had encouraged her to run against incumbent Governor Vladimir Yakovlev.

Putin - who had publicly blamed the governor for driving former St. Petersburg leader Anatoly Sobchak to a lethal heart attack - even held a quasi-clandestine meeting with his alleged political enemy Yakovlev at St. Petersburg's Pulkovo Airport after the presidential plane was "diverted" there on a Moscow-Murmansk flight due to bad weather.

The presidential change of heart came a day after Yakovlev had flown to Moscow to meet with Voloshin - a meeting from which the governor emerged beaming triumphantly.

Meanwhile, for much of his time as prime minister Putin had great difficulty reining in Nikolai Aksyonenko, another member of "the family" who held the post of first deputy prime minister until being demoted back down to railways minister late last year. Even after his demotion, Aksyonenko has continued to run the extremely powerful government committee for operational questions, a kitchen cabinet able to bypass the prime minister on key issues.

Aksyonenko last September took advantage of Putin's absence in New Zealand to replace the head of Transneft - the lucrative monopoly operator of the national oil pipeline network - with a man reportedly hand-picked by Aksyonenko and Sibneft director Abramovich. When asked about the incident - which involved chainsaw-wielding troops forcing their way in to Transneft headquarters to evict the old boss - Putin just shrugged, saying "Aksyonenko's always signing things."

Aksyonenko was reappointed as railways minister in the new Cabinet. Other "family" allies who kept their seats this week included Interior Minister Vladimir Rushailo, Justice Minister Yury Chaika and Atomic Energy Minister Yevgeny Adamov, said Ryabov.

The only "family man" yet to officially retain his government post is acting Fuel and Energy Minister Viktor Kalyuzhny. However, Putin reportedly told Kasyanov earlier this week that Kalyuzhny - who accompanied the president Thursday and Friday on his trip to Central Asia - will be appointed energy minister.

Against the Tide

The flood of "family" appointees has been balanced by members of other "clans," although analysts said Friday the balance of power remains with Berezovsky and his allies.

The government includes some of Putin's own men, such as Federal Security Service chief Nikolai Patrushev, also reappointed this week. Similarly, deputy prime ministers Matviyenko, Viktor Khristenko and Ilya Klebanov remain. This trio joined the government under Kasyanov's predecessors, but have already pledged their loyalty to Putin.

Matviyenko, Klebanov and Putin prot?g? Leonid Reiman, retained as telecommunications minister, hail from the president's home town, St. Petersburg.

New Finance Minister Alexei Kudrin and Economic Strategy Minister German Gref also hail from the northern capital, but they are more solidly associated with right-wing liberal Anatoly Chubais, chief executive of Unified Energy Systems, said Nikolai Petrov, an analyst at the Moscow Carnegie Center.

Paradoxically enough, Gref's appointment serves to illustrate how strong "the family's" influence is on the White House and Kremlin, said Ryabov. Once tipped to become deputy prime minister - personally tapped by Putin to shape the nation's long-term economic development - Gref barely grabbed a ministerial post after being publicly criticized by Berezovsky.

Moscow Mayor Yury Luzhkov's decline as a power broker was underlined by the fact that his clan received just one post in the new Cabinet - that of tax minister, which went to city tax chief Gennady Bukayev.

The handful of appointments from rival groups is insufficient to counter-balance "the family's" stranglehold on most of the key posts in the government and the bureaucracy, said both Volk and Ryabov.

Vladimir Pribylovsky, an analyst at the Panorama think tank, said it is unclear why Putin "is unable or unwilling to break away from 'the family'" now that he has become full-fledged president.

The Prosecutor General's Office resumed the criminal investigation into the activities of the Atoll security service, Interfax reported Friday.

Detectives from the Interior Ministry first raided Atoll offices in 1998, unearthing alleged evidence of eavesdropping on the retinue of Yeltsin, including his daughter Tatyana Dyachenko. The probe on Atoll had been put on ice earlier this year, but, according to Interfax, federal prosecutors now say they have acquired new information on the company's activities.

The head of the security company, Sergei Sokolov, testified to investigators that he had been acting on the orders of Berezovsky. Berezovsky has repeatedly denied any links to Atoll.