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. Last Updated: 07/27/2016

Berezovsky: Oligarchs of the World Unite

LONDON -- Boris Berezovsky, who orchestrated the unification of business moguls behind President Boris Yeltsin to ensure his re-election in 1996, is calling on them to join forces once again -- this time in opposition to President Vladimir Putin -- or risk consequences fatal for their business.

Berezovsky said last week's arrest of key Yukos shareholder Platon Lebedev on charges of theft of state property in 1994 was a clear sign Putin was reneging on the pact he made with the oligarchs shortly after he came to power not to re-examine the murky privatization deals of the past.

"The main aim of the oligarchy is to protect the wealth they gained in the '90s. With this act against Yukos, Putin has shown he is no longer the guarantor of their interests," Berezovsky said in an interview Monday in his swish Mayfair offices. He is living in exile in London while fighting extradition to Moscow to face fraud charges he says are politically motivated.

He called on the business elite, in particular Yukos CEO Mikhail Khodorkovsky, not to back down from their "political responsibility." He said they must fight for their interests in the face of what he described as growing pressure from a "new super elite" in Putin's Kremlin that is hungry for a slice of Russia's resource pie.

"Khodorkovsky can't afford to play for the short term" and pull out of politics, he said. "Otherwise, they will destroy his company. Right now the Kremlin does not have the strength to take the company away from Khodorkovsky. But after the election they will divide it up. Khodorkovsky has to understand that he and the other oligarchs must consolidate."

Berezovsky said the potential for attack on the business interests of the oligarchs meant that a joining of forces against Putin was inevitable. "We [the oligarchs] already have great experience in working together. I am open for any action to help elect a different president."

Berezovsky said he was conducting talks with a number of candidates already active in politics who had agreed to run against Putin in 2004. He said he would unveil the identity of his opposition candidate in September.

During an interview in April, Berezovsky had been quick to deny any chance of working with Khodorkovsky to form a political opposition to the Kremlin. "I have no relations with Khodorkovsky," he said. Why not? "Because I think that Khodorkovsky is frightened of these relations. He is frightened for his business."

On Monday, he slammed Khodorkovsky for his attempts in recent days to play down his involvement in politics. "A business the size of Yukos cannot stay out of politics," he said.

In an interview published in Tuesday's Financial Times, Khodorkovsky said he had no political agenda and would be happy to confine himself to business until at least 2007.

The recent attack on Khodorkovsky's business has been seen as the Kremlin's response to his political maneuverings, which have come as he has gone into conflict with state-owned energy companies. Khodorkovsky told the FT that he thought a move into politics would be damaging for his business.

Berezovsky, however, said that unless the oligarchs act now, they could face a bigger threat in the future from Putin and a super elite of "bureaucrats" strengthened by a new election mandate and no longer dependent on support from the oligarchs.

"When Putin came into power, the people who did not take part in the process [Russia's privatization of the '90s] woke up. These are the new super elite. They were late in the dividing up of the pie and now they are trying to get a piece."

Khodorkovsky has already had several run-ins with the new chieftains of this super elite.

Emboldened by the president's support, Putin-appointed heads of state companies Rosneft and Gazprom have joined forces to bid for licenses to develop vast oil and gas fields in east Siberia, potentially encroaching on Yukos' interests there.

Khodorkovsky, meanwhile, has been angling to move in on their monopolies. He has been at the forefront of the oil tycoons eyeing growing debt and declining production at Gazprom as opening the way for a potential breakup of the state-controlled company.

He also has been at the vanguard of calls to allow privately owned oil pipelines to be constructed -- a direct hit at the state's control of oil policy.

In the first open indication of tension between Khodorkovsky and the Kremlin, he raised questions in a televised meeting with Putin in February about the legality of Rosneft's acquisition of Severnaya Neft, an oil company previously owned by Senator Andrei Vavilov with vast reserves of some 120 million tons.

Rosneft is seen to be backed by Putin's Kremlin aides Igor Sechin and Viktor Ivanov.

At that meeting, Putin fired back with a suggestion that the Kremlin could look again at how the oil majors acquired their assets in the firesale privatizations of the mid-1990s.

In an interview in March, Khodorkovsky said he feared the expansion drive of Rosneft and Gazprom was a sign "the Kremlin is trying to check once again whether state companies can be more effective than private ones."

In January, at the height of his calls for a relaxation of Transneft's monopoly hold on the pipeline system, he had lashed out at the Putin administration for the rising power of bureaucrats, which he claimed was leading to Saudi Arabia-style rule in Russia and stifling growth.

The recent announcement of the merger deal between Yukos and Sibneft to create the world's fifth-biggest oil major was seen by some as also being aimed at building a powerhouse capable of standing up to Gazprom, Rosneft and the Kremlin.

Berezovsky said on Monday he doubted this deal would still go through. "The merger was the last straw for the Kremlin," he said. "It strengthened Khodorkovsky to an extent that the Kremlin did not approve of.

"Now there is no certainty this deal will be completed," he said. The Anti-Monopoly Ministry has been stalling on giving its crucial approval to the deal.

At the heart of this high-risk standoff is the fact that private property rights in Russia are still shaky. Under Russian law, the results of privatizations can be re-examined during a 10-year period after the original sell-off, meaning that Russia's billionaire business barons still face the prospect of losing the assets they won in rigged auctions in the mid-1990s. But at the beginning of his term in power, Putin promised he would not revisit past privatizations as long as the oligarchs stayed out of politics.

Berezovsky slammed that promise, however, as hypocrisy aimed at stamping out political opposition and taking control over the economy.

"This is not possible. There is not one country in the world where private capital does not have influence over government," he said. "The heads of Exxon, Shell, BP all have some sway over politics. The former head of Halliburton, Dick Cheney, is vice president of the United States."

He dismissed suggestions the Yukos standoff was the result of infighting at the Kremlin.

"Forget all the talk about the good tsar and the bad boyars. All this has been done personally by Putin. He told me personally he wanted to take away ORT, and it was the same with NTV and TVS."

He said Putin's attempts to create a "vertical of power" could push elites that have been weakened by this to try to block his re-election.

"The results of elections in Russia are not determined by the people, but by the elite," he said. He said Putin's moves to reduce the political influence and budget funding of governors had eaten away support for the president among the regional elite. Berezovosky said he was already in talks with governors about finding a replacement for Putin.

Moving against Putin, however, could be virtually impossible with all the national television channels now under the control of the Kremlin. Berezovsky's control over ORT, now Channel One, had been key to the presidential candidates he backed in previous elections.

Berezovsky, however, has just handed over his license for broadcasting on channel 6 to the state-controlled founders of the new Sport television station.

He said he gave it away. "In the current situation, it is not possible to broadcast independently from the state on this channel.

"It is therefore not interesting to me as a business. But when I return to Russia I will fight to have this business returned to me," he said.

Vedomosti on Tuesday cited political observers speculating that Berezovsky may have gotten something, if not money, in return for the TV license, perhaps a softening of legal cases against him or his associates.