VZCZCXRO3202
PP RUEHDBU
DE RUEHMO #5066/01 2911545
ZNY CCCCC ZZH
P 181545Z OCT 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4720
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005066 

SIPDIS 

E.O. 12958: DECL: 10/17/2017 TAGS: PGOV PINR KDEM SOCI RS

Classified By: Ambassador William J. Burns. Reasons: 1.4 (b,d). 

Summary  

¶1. (C) Federal Narcotics Service (FNS) Chief Cherkesov's October 9 article in the national daily Kommersant lifted the veil on long-simmering rivalries in Putin's inner circle, catalyzed much media comment, and fulfilled the predictions of those who thought that elite interests would collide in a more visible way as the President's term in office drew to an end. Observers here agree that the proximate cause of Cherkesov's article was Putin's failure to respond to the arrest of several of his FSKN colleagues, but there is little sense of whether the in-fighting will remain visible or disappear from view. Observers think it very unlikely that Putin will lose control of elite rivalries, but as always it's hard to determine how much the President is instigating and managing conflicts in order to maintain a divided, weakened inner circle, and how much he is refereeing a sport that has rules of its own. End summary. 

Cherkesov Article Energizes Kremlin Watchers

¶2. (C) As has been widely reported, long-simmering rivalries in Putin's inner circle surfaced dramatically on October 9 in a newspaper article by head of the Federal Narcotics Service's (FSKN) Chairman Viktor Cherkesov. Cherkesov complained, in the national daily newspaper Kommersant, about those siloviki who had become businessmen instead of soldiers for the state and he lifted the lid on the power struggle among the Kremlin-centered elite. He also credited the intelligence agencies for having steered Russia through the difficult 1990s, and argued that circumstances dictate that they remain at the wheel for the foreseeable future. 

¶3. (C) Cherkesov's decision to go public was not unprecedented --in a December 2004 Komsomolskaya Pravda article he had described the siloviki as a bulwark against chaos - but the timing of his October 9 editorial, which was published following the dramatic detention of four of his subordinates and in the middle of Russia's delicate succession process, prompted a flood of media and think tank commentary. 

¶4. (C) Most commentators chose to view Cherkesov's article through the lens of his ongoing conflict with Presidential Administration Deputy Sechin and FSB Chief Patrushev. They saw the arrest that preceded its publication as revenge for the FSKN Chief's role in the "Three Whales" furniture stores and Chinese goods corruption probes, as well as the ouster, in summer 2006, of then-Prosecutor General Ustinov, all of which undercut the FSB. Some also collaterally believed that the arrests were intended to trim the sails of Cherkesov, who they guessed would either be appointed to the vacant post of Secretary of the Security Council, put in charge of a consolidated, multi-ministry criminal investigative agency to be created after the new year, or replace Patrushev at the FSB. 

¶5. (C) Commentators noted that one of the key players in the detention of four of Cherkesov's subordinates was the recently-established Investigative Committee, which was in part created, they believe, to circumscribe the authority of the Cherkesov-friendly Prosecutor General Yuriy Chayka, whose office previously was responsible for both criminal investigations, indictments, and prosecutions (reftel). 

¶6. (C) Against the background of that struggle, Cherkesov's Kommersant piece was seen as an appeal to Putin and a challenge to his opponents. The Investigative Committee saw it as an attack, and immediately issued a statement that it would "continue fighting corruption" wherever it was found. Chayka's office has gone to court in an effort to neutralize the Committee's campaign by arguing that there are no grounds for continuing to detain close Cherkesov colleague Aleksandr Bulbov. A hearing is scheduled on October 31. 

Putin's Faction Management 

¶7. (C) It had been long predicted that Kremlin clan rivalries would heat up as the succession date approached. In the absence of political institutions, the glue of the system created by Putin is his personalized power and the loyalty of those he has appointed to key positions. Putin has attempted to preserve that power by keeping those jockeying for continued influence off balance. His strategy has been to further reduce the transparency of the process, continue to appoint Petersburgers of proven loyalty to key positions, make liberal use of the element of surprise, and indicate, more and more unmistakably, that he will be a force to contend with for the foreseeable future. 

¶8. (C) Although Putin appears to be succeeding in his efforts to preserve the delicate balance of interests among the competing elites, the Cherkesov article suggests that the system is nevertheless under strain, and it is no longer clear whether Putin is managing or refereeing the transition. In the Cherkesov case, there appears to be evidence to support both interpretations. XXXXXXXXXXXX reported that Putin had stage-managed Cherkesov's efforts in the "Three Whales" case to weaken Sechin and Patrushev. Per XXXXXXXXXXXX, Putin had called aide Viktor Ivanov into the key "Three Whales" meeting with Cherkesov, then arranged to have Sechin "run into" Cherkesov and Ivanov as they were leaving Putin's office, allowing Sechin, through Ivanov, to connect the dots. 

¶9. (C) On the other hand, there have been signs that Putin is not as omniscient as XXXXXXXXXXXX suggests. There have been persistent press reports that two FSB generals dismissed last year by Putin in connection with the Cherkesov-fostered Chinese goods scandal have remained at their desks, in open defiance of the President's orders. Putin has made no known attempt to discipline Patrushev or the generals for their behavior. On the contrary, Putin was reported to have visited FSB headquarters the evening before Cherkesov's article appeared.

¶10. (C) Analyst XXXXXXXXXXXX termed Cherkesov's article "damaging to Putin," as it offers to the public evidence of a rift in the President's team, official confirmation that Russia is not a law-governed state, and proof that a war for resources is under way. XXXXXXXXXXXX, on the other hand, saw in the article evidence only that Putin was fostering fighting among the Kremlin factions in order to weaken them. XXXXXXXXXXXX was one of many who judged the affair too murky to analyze accurately, but agreed that there appeared to be clashes. XXXXXXXXXXXX seconded XXXXXXXXXXXX suggestion that it was the publicity, not the fact of the dispute that damaged Putin the most. Yabloko Chairman Yavlinskiy thought that the article probably made Putin "uneasy" but did not represent a threat to stability. 

¶11. (C) Some trace an upsurge in fighting among the siloviki to Putin's appointment of Zubkov as Prime Minister. As former Chairman of the Committee on Financial Monitoring with a reputation for integrity, harshness, and unswerving loyalty to Putin, Zubkov is ideally positioned to begin a purge under the guise of an anti-corruption campaign. The prospect of a housecleaning may have made the elites nervous. On the other hand, one of the reasons Putin may have chosen Zubkov, a man not associated with any of the Kremlin factions, was in order not to disturb the delicate balance among the competing clans. 

Comment 

¶12. (C) Observers expected that in-fighting of the kind seen over the last week would become more visible as Putin's term of office wound down. The failure to create institutions able to regulate the transition process has painted the President into a corner and frustrated, so far, his efforts to create a system of governance that could survive his departure. One commentator likened succession to transferring a spider web from the branch of one tree to another. Putin seems to have realized the impossibility of that task and has resigned himself to the delicate job of transitioning constitutionally to a new position while at times restraining, at times encouraging, the worst impulses of the fractious clans who surround him. 
Burns