Longtime Moscow Mayor Yuri Luzhkov was fired on Sept. 28 by Russian President Dmitri Medvedev after an 18-year tenure as the mayor of Russia’s capital. The presidential decree firing Luzhkov cited Medvedev’s “loss of trust” in the mayor as the reason for the dismissal, words usually reserved by the Russian government for the most egregious offenses. Luzhkov has also been removed from his leadership position in the United Russia party, the ruling party in Russia that he helped found and run.
In power since 1992, Luzhkov was one of the last remaining relevant Yeltsin-era political figures in Russia. His ouster, however, has been in the works for several years and is a product of a consensus at the top of Russia’s political leadership. According to STRATFOR sources in Moscow and contrary to initial reports from the mainstream media, Russian President Dmitri Medvedev, who has led the public criticism of Luzhkov in recent months, and Russian Prime Minister Vladimir Putin are in agreement on the firing. Luzhkov’s sacking is a sign that the Kremlin does not believe it must depend on a single man to control organised crime in the city. But concerns remain that Luzhkov’s wife, a construction magnate in Russia, will be able to strike back at the Kremlin by delaying projects needed for the 2014 Winter Olympics in Sochi.
One of Putin’s first efforts to consolidate the Kremlin’s control over Russia in the early 2000s was going after the Yeltsin-era oligarchs and regional governors who had amassed inordinate power after the fall of the Soviet Union when the central government was weak. But as Putin took on various independent governors one by one, it was the region home to the Kremlin — Moscow itself — that remained out of Putin’s reach. This is not only because Luzhkov recognised early on that Putin would not be the kind of weak central leader Russia had become accustomed to in the 1990s — despite himself harboring designs in the 1990s to replace Boris Yeltsin — but also because he had built his own fiefdom in Moscow that was impossible to dislodge.
The key factor of Luzhkov’s control of Moscow — and one that is rarely mentioned openly in Russia — is his alleged link to the Moscow Mob, the most powerful Russian organised crime syndicate. Luzhkov’s alleged association with the Moscow Mob is neither one of direct control nor of criminal association, and he is not involved with the operations of the Moscow Mob himself; rather, he is widely perceived to be the group’s political handler. Luzhkov has held on to an alleged “shadow portfolio” of overseeing the political aspects of the Moscow Mob’s operations. This means that he has been a central figure in synchronizing the day-to-day operations of Moscow’s underworld — particularly via his wife’s business interests in the largely organised crime-controlled construction business — with the interests of the state. Because the Moscow Mob is such an important part of Russia’s ubiquitous shadow economy — and therefore state power — and because of Luzhkov’s uncanny ability to influence the syndicate, he has been essentially untouchable. He has also made himself useful to the Kremlin by delivering votes in Moscow for candidates loyal to the Kremlin.
The alleged business associations with the Moscow Mob have brought massive political and financial success to Luzhkov and his wife, Elena Baturina, Russia’s only female oligarch and according to Forbes the third-richest self-made woman in the world. However, over the last decade Putin has sought to consolidate control over all levers of power in Russia, including organised crime. As such, Luzhkov’s personal control of the Moscow Mob had become a liability rather than a benefit, since it concentrates an important part of Russia’s economy in the hands of a single man — or rather a single couple.
The Kremlin had therefore decided in late 2009 and early 2010 to depersonalize the alleged connection between Luzhkov and the Moscow Mob and instead create a sort of permanent institutional “shadow portfolio” within the Moscow mayoralty that would function as a political handler for organised crime as Luzhkov allegedly did, essentially preserving the state’s links to the Moscow Mob but ditching Luzhkov. Firing Luzhkov was the linchpin of the plan.
Commentators and media reports have speculated that Putin’s reticence to speak out over the Medvedev-Luzhkov feud is a sign of an emerging split between Medvedev and Putin. This is far from reality. Putin has long hoped to get rid of Luzhkov but has been concerned about a loss of control over Moscow’s organised crime or that Luzhkov would use his alleged ties to organised crime to retaliate. Furthermore, Luzhkov’s high profile and political loyalty was also an impediment to the ousting in the past, although his ability to deliver Moscow votes for pro-Kremlin parties has slipped markedly in recent years.
On the day of the firing, Putin even expressed his support for the method of ousting Luzhkov via presidential decree, saying he himself had passed the law allowing the president to install or remove a subordinate official and that Medvedev acted in strict according with the law. Medvedev’s leading role in the feud is useful for Putin to distance himself from the political fray of taking on Luzhkov. It was also designed to build up Medvedev’s credibility as a strong leader who can stand on his own. This is an important element of the Kremlin’s ongoing efforts to create a perception that Medvedev and Putin are independent political actors and potential ideological opposites — if not opponents — to illustrate Russia’s emergence as an advanced and mature democracy.
The fact that Medvedev and Putin are comfortable with Luzhkov’s sacking illustrates the extent to which the Kremlin believes it no longer has to depend on a single man to control Moscow’s powerful organised criminal elements and that it can instead create institutional controls to guarantee loyalty to the state in the future. But one issue outside of the Kremlin’s control may still remain — the 2014 Sochi Olympics and Luzhkov’s role in the project.
The Sochi Olympics are widely seen as Moscow’s coming out party. But construction is behind schedule and the Kremlin could face serious global embarrassment if it does not complete all the projects on time. Luzhkov and his wife are in charge of the entire Sochi construction effort and it remains to be seen whether Luzhkov will retaliate against the Kremlin by delaying or otherwise hindering the Olympic construction effort.
*This report is reprinted with permission of STRATFOR. It may not be reprinted by any other party without express permission of STRATFOR.
For more reports, visit www.stratfor.com
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