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Russia: The Race That Could Launch Lebed


International Outlook

RUSSIA: THE RACE THAT COULD LAUNCH LEBED

Movie actor Alain Delon is there. So is Moscow's Mayor, Yuri Luzkhov. The odd couple are campaigning for rival candidates in a close-run Apr. 26 race for the governorship of Russia's huge and resource-rich Krasnoyarsk region in Siberia. The French heartthrob backs Alexander I. Lebed, Russia's former national security chief, whom he met in Paris in 1996. Luzhkov is rooting for incumbent Valery M. Zubov.

The contest has brought out Russia's Moscow-based oligarchs in droves, too. Boris A. Berezovsky, a mogul with a penchant for political intrigue, is bankrolling Lebed. Berezovsky's archrival, Vladimir O. Potanin, head of Oneximbank's Interros holding company, favors Zubov. They and other moguls helped President Boris N. Yeltsin to win his narrow reelection in 1996.

Heavy hitters are flocking to the contest because it's a dress rehearsal for the 2000 presidential elections. If Lebed wins, he will get a seat in the Federation Council, Russia's upper house, access to cash from the region's aluminum and nickel resources, and the base he needs to build support in Russia's lower house, the State Duma. Thus, victory would give him a powerful launchpad for a run at the presidency. Failure would make him political roadkill. That's why Luzhkov, also a presidential hopeful, is championing Zubov.HUGE STAKES. The oligarchs are playing a devious game in Krasnoyarsk. Although Berezovsky is backing Lebed, for example, he says he doesn't want him to be President. Instead, he wants to stop Luzhkov from scooping up Russian nationalist voters, who also like Lebed, because he doesn't want the Moscow mayor in the Kremlin either. "We are playing a complex political game," admits Berezovsky.

But whatever the outcome, the moguls are here to stay in provincial politics. They have huge financial stakes in the regions--and want officials in place who can protect them or render services such as facilitating permits and government contracts. "They [work to] elect governors who can represent the interests of the local elite and business groups," says Sergei N. Samoilov, Yeltsin's liaison with the regions.

Krasnoyarsk is a case in point. The region is the home of Norilsk Nickel, the world's largest nickel producer, controlled by Oneximbank. Krasnoyarsk Aluminum, in the south, is the world's second-largest aluminum plant, controlled by Moscow's Rossisky Kredit bank. Meanwhile, Yuksi, a huge new company controlled by Berezovsky and fellow banking baron Mikhail Khodorkovsky, has licenses for oil and gas fields there.

When thwarted, the moguls wreak their revenge. Governor Mikhail Narolin was beaten in an Apr. 12 election in the Lipetsk region after Oneximbank gave heavy support to his opponents. Narolin had failed to help Oneximbank get board seats on the Novolipetsk Metallurgy Plant in which it has a big stake. "If the moguls can't get what they want, as in Lipetsk, they replace people," says Carnegie Moscow Center political analyst Nikolai Petrov.

Local business elites remain key players. The Krasnoyarsk Aluminum Factory, for example, originally invited Lebed to run for governor. But in small regions, Moscow-based giants can decide the outcome of elections. In one area where Gazprom is active, says Yeltsin aide Samoilov, company officials meet to discuss whether local leaders are helpful enough to keep. "The results are predetermined," he says.

Today's Russia is a long way from being a Western-style democracy. Business elites have growing clout in local elections. Yeltsin's administration supports the trend as the best way to attract foreign investors. But Yeltsin may soon find that the oligarchs can thumb their noses at him, too.By Patricia Kranz in Moscow


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