Chubais the Survivor vs. Sechin the Cancer

chubais041008.pngQuo vadis, Anatoly Chubais? It is with morbid fascination that I observe the tenacity and staying power of this politician’s career, somehow surviving, sometimes laying low, and then thriving yet again throughout all the dramatic reversals of fortunes and seismic shifts in Russia’s political landscape in recent years. Although he hails from Belarus and cut his teeth as an economic adviser in the administration of St. Petersburg Mayor Anatoly Sobchak alongside Vladimir Putin and Dmitry Medvedev, he also was for a short period a co-leader of the Union of Right Forces, Boris Nemtsov’s liberal political party. Chubais has always displayed a very rare ability to survive, even after bruising confrontations with a variety of opponents, ranging from Boris Berezovsky, Gennady Zyuganov, and even Vladimir Putin himself (he was one of the first to publicly demand that the president explain what was happening to Mikhail Khodorkovsky after the arrest on live TV). But if Chubais is Russia’s ultimate political survivor, then the latest opponent he has in his sights, Igor Sechin, chairman of Rosneft and the highest ranking silovik hawk, must be the country’s #1 cancer … and a very dangerous man to pick a fight with. Has Anatoly used up his nine lives?

The latest indication that a war is brewing between Chubais and Sechin is Rosneft’s failing attempt to disrupt the long-awaited massive privatization process of Russia’s electric utilities, overseen by none other than the CEO of Unified Energy System (UES), Chubais himself. According to a report in the Moscow Times, the former chief of the presidential administration fiercely attacked Rosneft yesterday, accusing the company of “anti-government activities” and disrupting the country’s electricity reforms, referring to a lawsuit filed by Sechin’s company against the reorganization of generation company TGK-11.The plan being overseen by UES is not like the 1990s. They are seeking to raise upwards of $33 billion by inviting private utility operators and portfolios the chance to invest in selling “heat and light to one of the world’s coldest and darkest countries.” Chubais himself is looking forward to “retirement” (hard for us to believe) when UES ceases to exist on July 1.But Rosneft’s affiliate company, Neft-Aktiv, which represented the state in many of the controversial auctions of seized Yukos assets, is vigorously fighting privatization in six different lawsuits. “Rosneft is acting against the decisions of the government,” Chubais said. “If Rosneft continues with this stance, the construction and modernization of TGK-11’s stations could be jeopardized because it will not raise enough money in time from the sale. … Rosneft’s financial claims are ridiculous in monetary terms. … They concern about 1 percent of the TGK-11 investment program.”The irony for Chubais must exquisite. Sechin is operating with powerful impunity (just look at what is happening to TNK-BP) from the very office from which Chubais himself once built his influence, and now after having organized the loans-for-shares privatizations, his 1997 epiphany to hold proper auctions (which infuriated Berezovsky), he now has the experience of seeing the state corporate bureaucrats assume the entitlement to assets never imagined even by the worst oligarchs.However, this is not the first time that Chubais has clashed with the siloviki. Back in January, both he and the embattled Finance Minister Alexei Kudrin issued a surprisingly unprecedented warning to the hawkish elements of the Kremlin (meaning Sechin) that their hard line foreign policy and frequent saber rattling was damaging to Russia’s investment prospects. According to the Financial Times, during an investment conference Chubais speculated about the damages of needless confrontation: “Maybe we should ask ourselves a simple question: How much does our external policy cost Russia? We might be able to pay the price in a good world economic situation, but can we continue to pay the price now?“The FT opined that these bold comments “appeared to reflect deepening divisions within the government as competing factions jostle for position in advance of presidential elections in March.“According to a recklessly speculative Stratfor piece from May 2007, Chubais was at one point seen as an opponent to Gazprom’s enlargement and role in the electricity sector, and was not quite as staunchly opposed to Rosneft’s growth. However the article does note that Sechin strongly dislikes Chubais, and would likely head toward a future clash (which this week has proven true). Stratfor seems to have overlooked the fact that Chubais is married to Vladislav Surkov’s sister, and with these latest moves, seems to be gravitating into the Medvedev/Surkov/Gazprom camp to help purge the siloviki from the government.Aside from sharing Medvedev’s tastes in rock-n-roll music, Surkov is seen as a central member of the next president’s cabinet. Don’t believe the hype about their disagreements over sovereign democracy.Although this development runs counter to years of speculation that Chubais and Surkov represent radically different schools of thought – as per Robert Sidelsky’s argument – there is still the possibility that these political chameleons are preparing to change the color of their skin. Just today, Medvedev secured another major victory in court to have the tax authority stripped of some of its powers to nationalize assets – one of the siloviki’s favorite instruments of theft. There is remarkably similar rhetoric in Medvedev’s denunciation of legal nihilism to Chubais’s defense of the privatization of UES.Even before taking office, Sechin has been moving aggressively to entrench his positions to weaken the president-elect, shaking the hornet’s nest with TNK-BP, even leading Medvedev to plant a mole in Rosneft. Medvedev himself has acknowledged the Sechin threat to the stability of his presidency, and the continuation of Kremlin infighting even after he is appointed: “As for those fears, they of course exist and will continue to exist. Any new arrangement of power will show its workability only after some time. People are going to test it for its durability. That is obvious. I am sure that there are some people who are going to interpret this arrangement in their own way and who will look for holes in it.“It would be foolish to guess whose team Chubais is playing on at this point, but we can clearly see that in his efforts to keep Sechin and Rosneft at arm’s length during the UES privatization, he is not without some powerful friends. Let’s see if he can pull off another miracle of political survival.