Russia: Behind the scenes in the Kremlin, a battle royal has been taking place for total control of the levers of power, reports Chris Stephen in Moscow.
Russia has got itself into a political crisis which has split the Kremlin, derailed Moscow's biggest-ever business merger and left many wondering just who runs the country. And it all began a week ago, with a press release.
On Thursday March 3rd, new snow blanketed Moscow, giving the city a late-winter sparkle. Muscovites hurried about their business, looking forward to the three-day holiday arranged around Women's Day.
The mood was matched inside the Kremlin, where officials were toasting the announcement, the day before, of the merger of gas behemoth Gazprom with oil giant Rosneft.
This deal was huge: state-owned Gazprom produces a quarter of the world's gas. With the addition of Rosneft, itself a giant, the Kremlin would have the kind of economic clout not known since the days of the Soviet Union.
That afternoon, out of the blue, came the jolt: computer screens in newsrooms, government offices and trading floors flashed with a blunt announcement from Rosneft. No way was the company going to be run by Gazprom, and Gazprom had been wrong to suggest anything of the sort. The Kremlin's plan for an energy giant to take on the world was suddenly in pieces.
The battle started last December, when Rosneft bought the production arm of Russia's biggest private oil company, Yukos, for $9 billion. The deal was hugely controversial. Yukos was the company of tycoon Mikhail Khodorkovsky, jailed on charges of tax evasion. Yukos was sold to pay back-taxes, but western analysts said that Rosneft had picked it up for about half its true value.
To critics, the operation smacked of the renationalisation of Yukos. But Russian president Vladimir Putin shrugged off the critics. He knew he was on the verge of completing an unprecedented centralisation of power.
In five years at the top, Putin's Kremlin has gained control of all national TV stations. It has also gained control of parliament, now dominated by United Russia, a party with just one policy - loyalty to the Kremlin. The government is also obedient - it is stuffed with technocrats who, like the parliament, simply follow orders. The final bastion of resistance, Russia's regional governors, disappeared with new rules under which, instead of being elected, they will be appointed by Putin personally.
And this month the cherry was to have been put on the cake. Rosneft had already swallowed Yukos and, when it in turn was swallowed by Gazprom, the Kremlin would have control of the country's economic as well as political levers.
In the West, critics label Putin as authoritarian, but he seems to regard Russia as being in a state of emergency. During the 1990s, conventional democracy brought corruption, chaos and poverty. Putin arrived in 2000, promising to clean things up, even if this meant grabbing the levers of power to get the job done. Russia's voters are pleased, re-electing him last year with a comfortable majority.
For the Kremlin, the notion of checks and balances in government smacks of weakness. Putin apparently saw nothing wrong in making his chief of staff, Dmitry Medvedev, the chairman of Gazprom, and giving the chairmanship of Rosneft to his deputy chief of staff, Igor Sechin. In fact, this was a recipe for trouble, and this month trouble duly arrived.
Medvedev and Sechin are longtime allies of Putin. When he moved to Moscow, he brought these men with him, part of a tight circle of confidants labelled the siloviki (strong men) because of their no-nonsense style.
Medvedev and Sechin are everything a president needs: talented, hard-working and ambitious. But that is the problem. Neither man is willing to be bossed around by the other. If Gazprom took control of Rosneft, Sechin would be powerless. When Gazprom suggested it, Rosneft fired back. For two days, the giants slugged it out, neither giving ground.
"It's a turf war between Kremlin factions," says Al Breach, chief strategist of Moscow brokerage UBS Brunswick. "The way a faction keeps control is to put their guy into a key position of power."
Normally, Putin could be expected to settle the issue, knocking heads together and fixing a deal. And, when everyone came back to work on March 8th, it seemed that this would happen.
But Rosneft suddenly announced that its boss, Sergei Bogdanchikov, had been on holiday at the time of the press release and had not seen it. The company announced that a director responsible for public relations had just resigned.
So the deal remains off. Rosneft has refused to come under Gazprom's wing and is now left in control of much of its oil production in one of the world's more bizarre mergers. And Putin, for once, seems unable to get a grip on the situation.
The reason appears to be that Putin, barred by the constitution from being elected a third time, is now seen as a "lame duck" president. As in the US, "lame ducks" matter less and less to their underlings, who know that the office will be up for grabs in 2008.
The decision to slash benefits to pensioners has seen Putin's poll ratings plummet to all-time lows, and he has been confronted with ongoing demonstrations across the country.
The result appears to be weakness and uncertainty at the very top of the power pyramid, brought out into the open by the very public spat over Gazprom and Rosneft.
Putin's plan for a single oil/gas giant seems to be over. What is unclear is whether the in-fighting will now continue on other fronts. "It is not only us who are confused, it's the people there themselves," says Ksenia Yudaeva, a political analyst for the Moscow Carnegie Centre. "Russia has, what, nine time zones? Do they think they can really run such a huge country without sharing the responsibility?"
Apparently they do. Russian politics is practised not by parties or parliament, but between secretive barons locked deep inside the Kremlin. "The way it's done here, it's not about institutions, it's more about politics, influence, jostling for position in what essentially is a court," says Al Breach.
The problem stretches further than the fight between oil and gas, which seems to have resolved itself into a messy draw.
President Putin took the helm in 2000, making a simple promise to the Russian people: he would take charge.
The "Putin Project" of running the entire country himself was not without successes: the stability he imposed with an iron rule has seen economic growth, and pensioners and teachers no longer go unpaid.
But such a centralised system demands that those at the very top speak with one voice. If that unity has broken down, the "Putin Project" faces a very rocky and uncertain future.