November 4, 2003	Tuesday	Ramazan 8, 1424

MOSCOW: The Russian Prime Minister, Mikhail Kasyanov, showed a deep split in the Kremlin last week by appearing to criticize openly its crackdown on big business interests, which has culminated in the seizure of shares in oil giant Yukos and the arrest of its chief executive.

Visiting the southern city of Nalchik, he told the Interfax news agency: “The arrest of shares of a private company that is traded on the market is a new phenomenon, the consequences of which are hard to define, since it’s a new form of influence.

“I will refrain from estimating (the consequences), but I am deeply concerned.”

Prosecutors admit that they had blundered in seizing 44 per cent of the shares in Yukos.

They were forced to unfreeze 4.5 per cent of the company’s shares, accepting that they “belong to private individuals having no relation to the criminal cases that are being investigated”.

The admission comes at a delicate time for the Kremlin, which has been trying desperately to reassure foreign investors of its lawful intentions.

Russian shares climbed an average of four per cent after President Vladimir Putin met international investors to assure them that the state was not intent on revising its ideas about private property.

He told them that Yukos would be maintained as a company and that the government was proposing to liberalize shares in the state-dominated gas company Gazprom and in a bank. Yukos shares climbed 10 per cent on the news.

But the prime minister’s abrasive comments will raise fears of a continuing purge of business-friendly Kremlin officials. Mr Kasyanov owes his position to the Yeltsin presidency and is considered part of the Family of officials behind the dubious privatizations of the 1990s.

The Family has been attacked by hardline supporters of President Putin, who want to rein in any independent business interest which may threaten their power.

Their first victim was Mr Putin’s chief of staff, Alexander Voloshin, whose departure was announced on Thursday.

Mr Kasyanov said this was a “private matter” of the president’s, but added forebodingly: “I hope the reshuffle in the presidential administration will not have an impact on its cooperation with the government (Kasyanov’s) office.”

The differences of opinion in the government on the Yukos affair is reflected in the gulf in attitudes in society towards the exorbitant wealth of the country’s tiny elite.

The liberal intelligentsia, fond of Mr Khodorkovsky’s transparent approach to business, democratic values and the financing of humanitarian projects, are appalled at what they see as a KGB-led clampdown on the more independent elements of Russia’s economy and democracy.

The business community has been outraged by the arrest of Mr Khodorkovsky, who is worth an estimated $11bn, equal to about an eighth of the state budget.

The business daily Vedomosti said: “The president should open his eyes and finally discover that prosecutors are destroying in one day what took years to create. Business can react to such a development only by shutting down”.

But the old and the poor, who see the oligarchs as “crooks” who gained their wealth from the privatization of state assets at curiously low prices, are less sympathetic.

It is to this massive constituency that the Kremlin’s recent moves are obviously playing.

Alexander Petrenko, 70, is one of the 38 million pensioners who live on about 2,600 roubles a month. After 45 years as a lecturer at Moscow universities, he remains consumed with loathing for Russia’s super-rich.

For him the arrest of Mr Khodorkovsky came too late. “We knew earlier that he is a crook,” he told the Guardian. “I am surprised he was arrested so late. And not just him, but the others too.”

He sees the 1990s privatizations as part of the reason why pensioners, who make up almost a third of Russia’s shrinking population, have been abandoned by the state. “The crooks are ruling this country, so they encourage stealing.”

An independently conducted poll of Muscovites showed that 19 per cent were surprised at the arrest and 18 per cent welcomed it. Another 18 per cent were “uneasy, concerned and outraged”.

Most Russians consider the privatizations to have been corrupt, but the majority of those opposed to the arrest of the head of Russia’s biggest oil company see the Kremlin as selectively applying the law to a political opponent.

Olesya, 22, an office manager, said: “I don’t like what the government has done. Before the court has even made a decision (Mr Khodorkovsky) has been declared guilty.”

She added: “On the other hand, if we really think these are thieves we have to do something about them. But this certainly is not the way. You shouldn’t make one person answer for crimes that many people committed.

“If our government wants to address this issue, it should arrest the lot of them. But who in Russia is not a thief? If you find a wallet, you keep it.”—Dawn/The Guardian News Service.