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. Last Updated: 07/27/2016

Letting the Genies Out of the Bottle

Rumors swirled through Moscow last Thursday that Prime Minister Mikhail Kasyanov and presidential administration chief of staff Alexander Voloshin had gotten the sack. Everyone began frantically calling their friends and trusted contacts: "I'm getting calls from inside the Kremlin -- true blue chekists to a man." "The same day Putin became prime minister! He promised not to touch the Family for four years, and he fired them four years later to the day."

Russian financial markets took the rumor seriously. "We heard the rumor about seven in the evening and we sold some shares on the New York Exchange," the head of a major brokerage firm told me. "Is it true? We didn't stop to think. The market doesn't stop to think, it reacts to rumors."

The following day, many decided that the rumors had been less a political ploy than a calculated attempt to humiliate.

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But that's not very likely. The rumors started when the president was overseas and Kasyanov and Voloshin were on vacation. Viktor Ivanov was left to mind the store. Ivanov heads the wing of the administration associated with the siloviki, top brass in the security services, law enforcement and the armed forces. Kasyanov and Voloshin are usually linked to the administration's other wing, associated with the Yeltsin-era Family.

And that's the most interesting thing. The political machine in Russia today has two wings, the siloviki and the oligarchs.

The president would clearly prefer to fly with both wings. The siloviki, on the other hand, have decided to escalate their conflict with the oligarchs, judging by the deliberate rumors about Voloshin's dismissal and the ongoing Yukos affair.

All of this begs the question: To what extent is Vladimir Putin in control of the situation? And can anyone now rein in the siloviki?

Consider a far less glamorous story that took place last week in St. Petersburg. Police searched the offices of forestry giant Ilim Pulp for evidence of forgery. Unlike Yukos, Ilim Pulp had never run afoul of the siloviki. The company's main competitor is aluminum tycoon Oleg Deripaska's industrial holding Base Element. Deripaska has never given up his attempt to take control of the Kotlas and Bratsk pulp and paper mills, which belong to Ilim Pulp.

So the obvious conclusion is that Deripaska was behind last week's search of Ilim Pulp's headquarters.

But there is good reason to assume that Deripaska has already soured on the takeover bid, which has done so much to damage his reputation as a corporate Napoleon. There's no doubt that Zakhar Smushkin, the owner of Ilim Pulp, grievously offended Deripaska when he refused to allow his company to be swallowed up, and for this he will never be forgiven. But why would Deripaska reply with a nasty little attack that his opponent can easily parry with a couple hundred thousand in cash?

Now put yourself in the prosecutor's shoes. The whole country has watched Yukos get gutted in Moscow. The prosecutors in St. Petersburg took this to heart. It didn't take long for them to come up with some criminal charges and a search order. Searches are a particularly profitable operation. If one side won't pay, the other will. And sometimes both sides pay, one to make sure that the search takes place, and the other to make sure that it's a mere formality.

The great thing about that commodity known as the state is that it can be sold twice. The first time you can sell, say, an order to launch a criminal investigation. Then you sell the order to call it off. The state is like a magic coin. Every time you spend it, it winds up back in your pocket.

The siloviki are like genies let out of the bottle, first by the oligarchs, then by the president. Both tried to make the genies serve their own ends. And now they're astonished to see that they have triggered an uncontrollable chain reaction.

Yulia Latynina is a columnist for Novaya Gazeta.