The Battle for Moscows Billions Power and Money

The Battle for Moscow's Billions Power and Money in the Russian Capital Under Mayor Sergey Sobyanin Donald N. Jensen Kennan Institute February 4, 2011

The Many Faces of Moscow “Moscow at night glitters as never before. The Russian capital…is vibrantly alive, almost pulsating with energy…. Mayor Yuri Luzhkov has seen to it that virtually every building façade, every urban surface, is well-scrubbed or freshly painted – and brightly lit. Very brightly. Hundreds, perhaps thousands, of spotlights and streetlights have been installed by Luzhkov’s government to display the new Moscow to best effect. And the sight is indeed impressive. In its central districts, Moscow can be compared to the downtowns of the great cities of Europe – something that could never be said truthfully before, at least not since 1913. ” -Blair Ruble Mid-1990 s

The Many Faces of Moscow (cont’d) • Westernized: Moscow-Siti • Desacralized symbolic Soviet spaces: skating rink near Lenin mausoleum; • Russified: refurbished statues of Aleksandr II; Peter the Great • Diversified: new lifestyles, housing, ethnocultural diversity

Moscow: the Economic Powerhouse • Gross regional product: $340 bln (24% of Russia’s GDP) • 40% of Russia’s foreign investments

Moscow the Economic Powerhouse: August 2010 budget draft calls for 1. 3 trillion rubles ($43 bln) of spending in 2011 • Sample figures: • Social Benefits: 592 bln. R • Road construction: 38 bln. R • Metro construction: 26 bln. R

Moscow Is By Far the Richest Region in Russia

Downside: the Unheavenly City? • • Pervasive corruption High crime rate Pollution Deteriorating roads Traffic congestion Deteriorating public transport High cost of living (eg, utilities and housing)

Transportation bottlenecks: 3. 6 Million Cars for 10. 5 Million People

Macro-Issues (Colton) • Service and Responsiveness • Scale • Accessibility • Coherence and Accountability • Regional cooperation • Local-central diplomacy • Strategic planning • An expanded policy reportoire

Outline • • Moscow, the Economic Powerhouse Moscow, Inc. Why Luzhkov Was Ousted? How is Sobyanin doing? – – – – Deluzhkovization Battling crime and corruption Redistribution of property Public satisfaction Transport Social payments Tolerance of public protest Challenges: Ethnic riots, Oppposition Demonstratios, Domodedovo bombing • Prospects: the Meaning of Moscow

Luzhkov’s Moscow: Keys to prosperity Takeover of city’s Soviet-era assets Supermayoral system of governing Luzhkov’s charismatic leadership City Hall’s extensive involvement in business Massive inflow of resources from Russia’s regions and foreign investment • Highly criminalized political and business climate • Federal subsidies • Luzhkov’s alliance with Yeltsin, then Putin • • •

Luzhkov’s Moscow: A semiautonomous political -economic system embedded within the Russian Federation • Money-power nexus • Relatively consolidated • In Putin era, federal patrimonialism as in important ways come to resemble that in Moscow, rather than vice versa

Moscow, Inc. The mayor and his proteges act as owners of the city as well as its political leaders: • Extensive participation of the city in business • The involvement of Moscow businesses and financing city programs and the commercial use of Moscow city funds • An opaque budget process marked by extensive use of off budget funds as well as federal subsidies. • Russian Finance Minister Kudrin recently claimed that one quarter of Moscow’s government decrees were secret, including decrees allocating land in central Moscow.

City of Moscow Owns: • • 356 State Unitary Enterprises 337 blocs of shares in ventures and companies including: – Agricultural holdings – ZIL automotive metallurgy plants in Smolensk – Building projects in: • Abkhazia and South Ossetia • Crimea, Ukraine • Other foreign countries, from Mongolia to Venezuela As of 2008 Moscow received 0. 15% of its budget revenue from these enterprises. During the economic crisis, this revenue shrank by 90%. The city poured 100 times that much money into supporting the enterprises Mosmedynagroprom holding in Kaluga Oblast (experimental corn, purebred cattle)

Moscow, Inc. (cont’d) • The AFK Sistema conglomerate, headed by Luzhkov crony Vladimir Yevtushenkov, embodied the fomer mayor’s blend of politics and business. Sistema operates consumer service businesses in telecommunications, microelectronics, insurance, home construction, oil, the media and banking. Sistema’s firms draw loans and business from the city government and generated funds for Luzhkov’s projects.

Moscow, Inc. (cont’d) • Inteko, the firm owned by Luzhkov’s wife, Yelena Baturina – named by Fortune in 2010 as the world’s third richest woman – is one of the most power business empires in Moscow • Baturina’s brother, Viktor Baturin, sued Inteko for $120 million in 2007 alleging wrongful dismissal

Supermayoralism Powerful elected mayor and apparatus Weak city Duma Tight Luzhkov team Neighborhood institutions (prefect, subprefect), largely act as transmission belts for City Hall orders • Fawning local media • •

Luzhkov’s Friends, Enemies , Inventions, Medals

Luzhkov’s “Team” of closest advisors • • Yuriy Roslyak Valeriy Shantsev Vladimir Resin City Duma Speaker Vladimir Platonov

Relations with Federal Authorities • Kremlin has allowed Moscow significant autonomy, (exemption from federal privatization in exchange for Luzhkov’s loyalty and mainenance of political stability • Bolstered by Luzhkov’s alliance with Yeltsin, then Putin; Luzhkov was a key Yeltsin ally in ‘ 91, ‘ 93, ’ 96 crises; relations with Putin were correct, but not close (Luzhkov made a presidential run in 1999) • Moscow receives lucrative subsidies and privileges • Moscow depends on revenue sharing from federal center • Moscow is largest contributor to national budget

Luzhkov’s Foreign Policy • To ensure Moscow has sufficient fuel, food, and other supplies, Luzhkov has placed a high priority on cultivating good relations with other Russian regions and other countries • Economic cooperation agreements with most of Russia’s 88 units • City loans to other regions • Direct ties with Ukraine, Lithuania, other CIS countries, Latvia, and the separatist regions of Transdnestria, and Abkhazia

Law Enforcement in Moscow • The courts, the Procuracy, the FSB, the MVD, are formally subordinated to the federal authorites • In practice, the city has say over their budget, personnel and operations • Moscow subsidizes police officers salaries • More than 100, 000 federal armed troops are also are based near Moscow • The city has provided material support to many of these troops,

Corruption • Central to governing city. It has “…has stopped being a problem and become a system. ” (Nemtsov) • Interlocking network of politicians, businesses, media holdings, law enforcement personnel, answerable to City Hall. Bribery, protection, graft is widespread

High Costs of Road-Building in Moscow: A Sign of Corruption? • • Figures from August 2010. An officer of Mostotrest contracting company cites high costs from the “Kafkaesque paperwork associated with transfers of ownership to City Hall” and the need to move the underground “tangle of pipes, power lines and telephone lines, most of which have different owners …”

Moscow real estate • Favored construction companies—especially Baturina’s Inteko, Su-155 and others– received preferential treatment: permissions, municipal orders. • Kickbacks in the permissions process can reach 50 -70 percent of housing costs • Municipal orders accounted for almost half of the living space under construction in 2007 (yellow windows in the diagram).

Criminalized Law Enforcement Position Cost Police general in Moscow Approx. $1 million • Position Police chief of an administrative district in • Cost Moscow $100, 000 -$1 million or powerful business connections • Police general in Moscow • Approx. $1 million Chief of prosperous precinct in • Police Major-General. Tsaritsyno in Moscow Oblast Moscow • $500, 000 • Police chief of an administrative district in Moscow • $100, 000 -$1 Precinct captainmillion or powerful business connections • Chief of prosperous Tsaritsyno precinct in Moscow • $500, 000 • Precinct captain • $50, 000 -$100, 000 to be put at the head of the Criminal police waiting list forchief, the postprecinct level, central Criminal police chief, precinct level, central or or • southern Moscow • $25, 000 -$30, 000 • Precinct criminal investigation chief in prosperous part criminal of city Precinct investigation chief in • $10, 000 -$15, 000 prosperous partorder of city • Chief of public section, precinct level • $15, 000 -$30, 000 $50, 000 -$100, 000 to be put at the head of the waiting list for the post $25, 000 -$30, 000 $10, 000 -$15, 000 Chief of public order section, precinct level $15, 000 -$30, 000

Moscow Police On the Take: Who paid whom for protection in 2007 Payer or Purpose of Bribe Who receives it Average amount, 30 R/dollar Trading stall (palatka) Patrol officers and precinct duty officers $17/day Old lady selling dill Patrol officers and precinct duty officers $3 -$7/day Guarding a prostitutes’ hangout Patrol officers and precinct duty officers $50/night Providing krysha (protection) for prostitutes Moscow police official at the administrative district (UVD) level $5000 -$10000/month per hangout Stores, companies, cafes, small restaurants Local detective (field investigator) [not specified] Sellers of counterfeit CDs, vodka, Chinese counterfeit Economic Crimes Department officers [not specified] Large trading houses, farmers’ markets, large enterprises Precinct (OVD) or administrative district (UVD)-level police officials [not specified]

Prices of Favors in the Law Enforcement System Payer or Purpose of Bribe Who Receives It Amount (30 Rubles/$) Police officer-- to receive credit for meeting quotas of crimes solved Superior $67 Credit for traffic inspector for return of stolen vehicles Station Duty Officer $100 -200 Person stopped without registration Patrol officer $10 -$17 Big businessman seeking to have criminal accusation dropped Law enforcement officials $1. 5 million To avoid arrest (minor case) Local detective (field investigator) $1000 -$10, 000 To get a case dropped once arrested Local detective (field investigator) $25, 000 -$30, 000 To get a case dropped once underway Law enforcement officials $100, 000 -$150, 000 To get a case dropped if someone has ordered it Law enforcement officials Much more, if at all possible Patrol officer, to get assigned to a lucrative route (market, train station) Superior $17

Organized Crime Organized crime is pervasive: • It plays a political role as lobbyist and partner in governing the city. • City hall manages oc rather than fights it • In recent years evolved from burglary, robbery and protection racket to acquisition of real estate, manufacturng firms and business

Criminal Map of Moscow (Komsomolskaya pravda September 2009) • Solntsevo Group • Slavyanskiy Group (Usoyan) • Tbilisi Crime Clan (Oniani) • Izmaylovo Group • Shushanashvili’s Georgian Gang • Azerbaijani Gang • Taganka-Chinese Gang • Golyanov Group

Glossary of Criminal Organizations • • • • • • Solntsevo Group Territory of Mozhayskiy and Khoroshevskiy highways, Perovo, Shchukino, Ramenki, Dinamo, Cheremushki, area surrounding Southern and Prague subway stations, Balashikha, Odintsovo, and several large firms in downtown Moscow -- Solntsevo gang's sphere of influence. Approximate size: More than 1, 000 soldiers, not counting brigade leaders and underlings. Specialization: real estate, protection of firms on "its own territory, " and money laundering, including proceeds from drug trafficking. Sphere of interests -- hotel business and all waste disposal firms in the capital. Area surrounding Belarus subway station -- Tbilisi crime clan. Approximate size -- about 3, 000 members. Leader -- "Thief-in-Law" Ded Khasan (Aslan Usoyan) Base -- in Sochi. Specialization: Interest in oil, hotel, trade, gambling business; banking, metal sales, travel industry, motor vehicle sales, and money laundering. Tbilisi clan Central District -- Tbilisi crime clan. Size -- over 3, 000 members. Leader -- "Thief-in-Law" Tariel Oniani, aka Taro. Base -- in Spain. Specialization: gambling, banking, real estate, drugs, arms trade, and money laundering. Izmailovo Northern District -- Izmaylovo gang. Size -- over 1, 000 members. Leader -- "Thief-in-Law" Aksen (Aksenov). Base -- in Moscow. Specialization -- protection of local businesses and some banks, trade, insurance, and extortion. Protection of jitney lines. Loyal to Ded Khasan (Aslan Usoyan) and Yaponchik (Vyacheslav Ivankov). • • • • • • Georgian gang of Lasha Shushanashvili, loyal to Tariel Oniani Altufyevskiy Rayon, Lianozovo, areas surrounding Polezhayev and Oktyabrskoye Pole subway stations, and Mnevnikov region -Georgian gang of Lasha Shushanashvili. Loyal to crime boss Taro. Specialization: Medium business, trade, theft of items left in vehicles. Azerbaijani gang Nagatino, Maryina Roshcha, Tekstilshchiki, Lyublino, Brateyevo -Azerbaijani gang, no acknowledged leader. Specialization: control of Moscow's outdoor markets. Protection of businessmen in "trust territory" and protection racket. Lasha Shushanashvili Altufyevskiy Rayon and areas surrounding Polezhayev and Oktyabrskoye Pole subway stations -- Lasha Shushanashvili's gang. Specializing in real estate. Owns trade firms. Taganka--Chinese gang Taganka -- controlled by Chinese gang. Leaders constantly changing. Specialization: contraband consumer goods, equipment sales, drugs. Golyanov group Izmaylovo, Tushino -- Golyanov gang. Leader -- "Thief-in-Law" Pasha. Specialization: Theft of items left in vehicles, burglary, and small business in trade sector. Controls outdoor markets and local businesses. Georgian gang Area surrounding Moscow Oil Refinery -- Georgian gang. Specialization: banks, oil and hotel business, and protection of local enterprises and businesses. Slavyanskiy group Part of Central District -- Slavyanskiy crime clan. Based in United States. Specializing in vehicle sales and contraband, interest in banking, gambling, and information technology. Affiliated with Ded Khasan (Aslan Usoyan).

Luzhkov’s friends with underworld ties Iosif Kobzon, the Russian Frank Sinatra

Luzhkov’s last chance to boast: Moscow Day, September 4, 2010 Highway projects Clinic Sports complexes “Worker and Peasant” statue museum • Music school • “Informational Intellect Center and Gimnazia” • •

Why was Luzhkov Fired? • Long rumored, causing widespread anxiety among Moscow elite • Medvedev: “lost trust” • The Kremlin wanted to further centralize political power, • Part of a broader trend toward replacing entrenched regional heads (18 fired in 2010) • Federal authorities wanted unfettered access to Moscow’s riches. • Luzhkov’s independence; his act had become tiresome • Repeated disputes with federal center over Moscow fires last summer, road construction, and corruption, and the Khimki forest • Putin: “Maybe it was for unsportsmanlike behavior. ”

Anti-Luzhkov Campaign • Dismissal preceded by ugly smear campaign on state tv which “revealed” massive corruption, traffic paralysis, and other problems obvious to anyone who has ever visited Moscow • Luzhkov hit back: he wrote an open letter to Medvedevaccusing him of organizing a witch hunt and being “undemocratic” • Sensing the end was near, many Luzhkov cronies embedded themselves in the Olympic construction mess, and were blamed by some for construction cost overruns and delays

Who Fired Luzhkov: Putin or Medvedev? • Putin said it was Medvedev’s decision and he made it because he and Luzhkov did not get along} • Ultimately Putin’s decision, not Medvedev’s

Selecting a new mayor

Meeting Mr Sobyanin • Disproves speculation about growing political clout of Medvedev. He is a Putin man. • Shows no indication he is anything but loyal to the federal center. Tight lipped bureaucrat rather than populist politician • His career track is closely linked to oil and gas sector, especially to Lukoil and TNK-BP

Sergey Semenovich Sobyanin • • • Born 21 June 1958, Khanty-Mansi Autonomous Okrug 1980 s Komsomol work in Chelyabinsk, local administration in Kogalym 1990 s: Regional posts in Khanty-Mansi Autonomous Okrug 1996 -2000: Federation Council member 2001 -2005: Tyumen Oblast governor 2001 -2003: Board chair of TNK fuel company 2004: The first governor to support Putin’s plan to end gubernatorial elections Dec. 2005: Head of Putin’s Presidential Administration 2006: Board chair of TVEL nuclear fuel company May 2008: Head of Putin’s government administration 2009 -: Chair of Channel 1 Oct 22 2010: Inaugurated Moscow Mayor • Considered an ally of Vladimir Bogdanov (Surgutneftegaz) and Roman Abramovich • Received support from Putin and siloviki in the Tyumen governor’s race • Not tied with “Petersburg group” or particular silovik groups, though some see a tie with Prosecutor Chayka • “Kogalym Group” unites him with ex-Transneft head Semen Vaynshtok, ex-Energy Minister Aleksandr Gavrin • His aide Anastasiya Rakova followed him from Tyumen and is now Deputy Mayor, staff member, and mayor’s representative to the City Duma

Sobyanin-Tyumen Group • Semyon Vaynshtok (Former head of Transneft • Aleksandr Gavrin (Former Fuel and Energy Minister) • Irina Rubinchik (Sobyanin’s wife; headed various regional projects when Sobyanin was governor; reportedly related to Vaynshtok or Gavrin) • Oleg Chemezov (former deputy to Sobyanin in Tyumen, then vice president of TNK/BP) • Laura Sokratova (Gavrin’s wife)

Sobyanin Agenda • • • Development of transport system Health care Education Social support Housing Development of communal-engineering infrastructure Energy conservation Environmental protection Scientific development and innovation

First 100 Days Sobyanin Soaring? • Suspended several construction projects, including $49 billion 4 th Ring Road • Towed many cars • Further centralized power by demoting many district prefects to below cabinet rank; many have been replaced • Sacked many City hall bureaucrats • At Davos, promised to transform Moscow unto a businessfriendly financial center free of corruption and red tape • A November poll (VTs. IOM), found that 63% of Musovites appproved his work

Sobyanin Stumbling? • Late December Levada poll found that 46% of residents said Sobyanin left a “neutral” impression on them; 23% positive • Opposition to his crackdown on kiosks • Neither poll captures raising of communal service charges by 10% on January 1 • Criticized for lack of planning and competency (kiosk campaign) • Many dismissals may be for show. Resin and Kuzmin, construction barons, remain • Many projects which threaten historical sites continue

Deluzhkovization: Symbolic • Plans to remove a Peter the Great statue commissioned by Luzhkov and widely despised by Muscovites

Deluzhkovization: Symbolic • Peter the Great to Sobyanin: “What are we going to do with the statue? ” (Yelkin, 10/30/10)

Deluzhkovization: Cadres • Sobyanin has been systematically replacing officials in City Hall and neighborhoods • Some holdovers remain, however, including Deputy Mayors Vladimir Resin and Ludmila Shvetsova. • These may be those deemed “irreplaceable” or part of a deal between the Mayor’s office and the feds • Unclear whether Resin and Shvetsova still retain real power

Cadres decide everything: Changes in Moscow city government as of October 26, 2010 • The caps show Luzhkov-era holdouts; the eagles show new cadres

Sobyanin and his team, February 2011 More deputy mayors (11 versus 8). Mayor’s office includes people from: Business (Golodets, Sharonov) Federal agencies (Lyamov, Rakova, Sergunina) Regions (Khusnullin—was in Tatarstan) Proportion of Luzhkov-era cadres has sunk to 40% (Shvetsova, Biryukov, Resin and Shukshin). • More women (4 versus 2) • • •

Luzhkov-era holdouts Vladimir Resin, chief of Metro construction commission

Robert Moses

Lyudmila Ivanovna Shvetsova • 1970 s-1993: Komsomol and Supreme Soviet posts • 1994 -2000: Headed Moscow government's committee of public and interregional relations • 2001: Moscow deputy mayor • Was considered a top candidate to replace Luzhkov. • Oversees departments of housing policy and housing stock, social protection, family and youth policy, culture, and public relations. • Health and education reforms will now be handled by her new colleague Olga

Yuriy Vitalyevich Roslyak, former Deputy Mayor for Economics • Since 1970 s: engineering and construction work in Moscow. • Since 1980 s: Moscow administration. • First Deputy Premier of Moscow/ First Deputy Mayor since 1995. • Was considered part of Luzhkov’s inner circle. • Represents Moscow in the Federation Council (Senate) since Dec 22, 2010. • This post provides immunity. • Member of Senate Committee on Economic Policy, Entrepreneurship and Property.

The Kremlin has taken the fist steps to break up Luzhkov’s empire • Criminal bribery prosecution reopened against Deputy Mayor Ryabinin • Initial inquiries have been made into Luzhkov and Baturina business activities • Federal auditors, working with Mayor Sobyanin, have reportedly come up with evidence of “systemic problems” in Moscow authorities actions regarding financial contracts and violations concerning more than $7 billion in investment in city transport in past three years. • Interdistrict tax inspectorate deputy chief Tatiana Demenok was arrested for accepting a 90, 000 R bribe • Medvedev has directed Sobyanin to eradicate all administrative decisions that encourage corruption along with secret Luzhkov-era “personal decrees” that violate the law

Public transportation reform? • Prosecutor Chayka calls for criminal charges against Metro head Dmitriy Gayev • Says he has 100 mln. R in illegal income • Accounting Chamber finds 230 mln of the 500 mln. R spent on city transportation in 2008 -2010 were misspent • Gayev’s son directs a subsidiary of Sitroniks IT company that makes swipeable metro cards • Gayev’s daughter sells souvenirs with his face on them • Fired Feb 3 2011

Selling off the Bank of Moscow • • • Moscow City owns 47% City keeps $3. 5 bln in accounts there. Founder and Luzhkov friend Andrey Borodin is consolidating his assets— said to control 44% of the bank’s shares. The Audit Chamber started, then cut short, an investigation of the bank. Experts say it would be complex to remove city accounts from Bank Moskvy Who might buy shares— VTB? Alfa (Kremlin-friendly? )

Closing Casinos • • • Most casinos were closed July 1, 2009 under a 2006 decree January 15: Sobyanin visits a warehouse with confiscated gambling equipment, watches as it is sawed apart. Between 6 December 2010 and 13 January 2011, Moscow law enforcement closed: 239 “lottery clubs, ” 8 illegal casinos and poker clubs 33 computer clubs hosting online gambling • 7500 gambling apparatuses have been confiscated. • There remain 111 “non-working lottery clubs to which law enforcement and district authorities have no access. ”

Whither Inteko ? • Baturina’s brother reopened a lawsuit against Inteko • Baturina discussed sale of assets to Vasily Anisimov of Coalco. • Suleiman Kerimov reportedly also Inteko purchase • Baturina has agreed to sell her stake in Moskva-Citi to Magnitogorsk Iron and Steel Works. • Sold 98. 12 % of Russky Zemelny Bank to six Cypressregistered companies (5. 4 billion rubles)

Whither Moskva-Siti (Moscow International Business Center), a $12 bln construction project? • The first zone in Russia to combine business activity, living space and entertainment in one single development • First conceived by the Moscow government in 1992 • Will include a central City Hall and City Duma • Sobyanin said it was a “mistake” • Putin visited, praised VTB • Sobyanin changes the committee overseeing Moskva-siti • Resin remains head of commission

Sobyanin Budget: More spending Projections Luzhkov draft of August, (approved by city Duma Sept 29 2010) Sobyanin-era budget approved Dec. 8 2010 Revenue 1. 29 trln. R 1. 24 trln. R Spending 1. 19 trln. R 1. 38 trln. R Deficit 100 bln. R 146 bln. R Social Benefits 592 bln. R 722 bln. R Income from sale of city assets 900 mln. R 13, 9 bln. R (may rise depending on Bank Moskvy and Vnukovo sales) Road/transport construction • Road construction: 38 bln. R • Metro construction: 26 bln. R Reserve for road and public transportation construction: 123 bln. R Other Assumes 11% growth in salaries • City police: 29 bln. R (including 14 bln for Moscow salary supplements) • “Un-allocated estimates for targeted investment program” : 91 bln. R

Keeping the public happy • Solving transportation problems • Reducing corruption • Retaining social benefits (pensions, Moscow supplements) • Keeping city services running • Managing public protest

Moscow Metro Development Plan: 79 km of new lines and 43 stations by 2015 (Luzhkov’s plan called for 60 new stations) • Resin commission gets a 60% increase in subway construction funding, up to $50 bln • Sobyanin also proposed public-private partnerships to fund construction

Sobyanin clarifies his kiosk cleanup campaign • Jan 18 2011: Sobyanin specifies that kiosks should sell goods that are really needed; that they should be connected to legitimate electric lines, not from trolleybus lines; that they be “esthetically attractive, ” that they not hinder pedestrians, and that prefects should prepare maps of planned locations of kiosks by February and put them on the internet for public discussion.

Tests for Sobyanin • Moscow ethnic riots in December • December 31 opposition demonstrations • Domodedovo airport bombing

Manezh Square riot, December 11, 2010: “Russia for the Russians!”

Moscow police responded carefully • Moscow Police tried and failed to protect a cluster of young men from the Caucasus who were beaten by the crowd. • “Beat the Khach!” yelled voices from the crowd. • “I didn’t think a person could look like that—like rubber. Blows flew about his body, his head, his face…”

Sobyanin tolerates limited opposition protests • “Legal demonstrations will be facilitated, but unsanctioned demonstrations will be strictly suppressed. ” • (Sobyanin, announcing approval of 31 December protest led by humanrights activist Ludmila Alekseyeva for 1000 people at Triumfalnaya Square). • “On the one hand, we must not create artificial barriers to mass demonstrations, legal protests, and citizen activism. On the other hand, you and I must strictly suppress illegal demonstrations and attempts to provoke mass disorder in the city. ” (Sobyanin to Moscow police, Jan 19 2011)

• RIANovosti comparison of October 31 demonstration by human rights activists with the December 11 “youth demonstrations” by “leftistradical youth” • Harsher measures toward human rights activists: – At the Oct 31 meeting, for which permission was received, 28 of 800 people were detained. – At the unsanctioned Dec 11 demonstration, 65 of 5500 participants were reportedly detained at police stations, and about ten criminal cases were brought.

Moscow’s Airports Ownership Passengers in 2009 Domodedovo East Line 18. 7 mln Sheremetyevo State 14. 8 mln Vnukovo Moscow City owns 75% (may sell) 7. 7 mln

Domodedovo Attack of January 24 2011 • Airport not within city limits: Sobyanin not formally responsible • Nevertheless, he and Moscow Oblast governor Gromov competed to appear responsive. • No apparent connection of Luzhkov or Sobyanin to East Line, the company that owned Domodedovo. However, close to Moscow Oblast authorities

Domodedovo Airport Bombing: Struggles Over Money and Power • Medvedev criticized the airport’s owners for lax security. • Who owns Domodedovo? • Domodedovo’s ups and downs: – High-level competition over airport traffic, China trade (and contraband? ) monopolies. – Criminal investigations – Battles with Russian Property Agency – Powerful protectors • Possible changes in ownership after bombing?

Domodedovo: choice property • 2000: Rosimushchestvo (Russian state property ministry) sued East Line, alleging improprieties in past rental agreements. • 2005: President Putin recommended that East Line be left alone. Economics Minister Gref ordered Rosimushchestvo head Valeriy Nazarov to drop the lawsuit • Rosimushchestvo ignored them, continued the suit. • Did it have a powerful protector? • September 30 2008: On instructions from new President Medvedev, the Supreme Arbitration Court quashes Rosimushchestvo lawsuits against East Line.

Who Owns Domodedovo Airport? • Hacienda Investments (Cyprus) > • East Line Group (Ист-Лайн)> • FML Ltd. (Isle of Man) > • Nominal owners: Jane Peters and Sean Cairns • Real majority owners thought to be Dmitriy Kamenshchik and Valeriy Kogan • Others: FSB-linked arms exporter Rosoboroneksport was said to receive 25% in 2000.

Valeriy Mikhaylovich Kogan, chair of the Supervisory Council, Domodedovo International Airport since 2004 • Said to be the one who really controls the company. • Allegedly helped Kamenshchik settle disputes with Russian Property Agency in 2005. • Said to have been skiing with Putin. • Owns mansions in Caesaria, Israel and Greenwich, CT. His wife’s application to “build a replica of Orly Airport” at their Greenwich home was denied.

Dmitriy Vladimirovich Kamenshchik, Chairman of the Board • According to a 2002 Stringer investigation he: – Worked with the Ural. Mash organized crime group in the 1990 s – Hauled contraband (clothing and other goods from China), evading import tariffs. – Turned over 25% of East Line shares to an FSB-linked company in 2000 in return for the FSB’s tapes and other evidence of his sexual and financial misconduct. • Serves on Council on Entrepreneurship under the Russian Government, advisor to the State Duma chair, advisor to the Moscow Oblast administration.

Don’t let a crisis go to waste. Who might take advantage of the Domodedovo tragedy? • East Line was planning an IPO. If Medvedev’s warning indicates trouble with the government, its share value will fall. • Possible merger plan for the three Moscow-area airports has been developed by Troika Dialogue for a Putin-led government commission. – Under one variant, Kamenshchik and Kogan would hold the largest number of shares, but the state would own the golden share. – Kamenshchik and Kogan reportedly resisted this idea. – Criticism following the airport tragedy could pressure them to agree to it, and could lower the value of their stake in the combined airport.

The Meaning of Moscow • Sobyanin is now the federal mayor rather than Moscow’s mayor • Moscow’s problems are now increasingly federal programs • Although destabilizing unrest in the city is unlikley, it remains a possibility. • If Sobyanin is judge successful, he could become a national figure (replacing Medev? )

Whither Luzhkov? • • Former mayor is exploring his options Says he wants to stay in Russia But has also explored his options in Latvia and the UK A potentially destabilizing factor if he became politically active

Meanwhile, Luzhkov tries to Move to Latvia