Magazine article Newsweek International

The Presidential Pipeline : With Elections Approaching, Candidates Are Fighting for the Support of Russia's Natural-Gas Giant

Magazine article Newsweek International

The Presidential Pipeline : With Elections Approaching, Candidates Are Fighting for the Support of Russia's Natural-Gas Giant

Article excerpt

Gazprom is the kind of corporate backer even a U. S. presidential candidate could want on his side. Russia's natural-gas giant has annual sales of $16 billion--not to mention an airline, a collection of newspapers and a one-third stake in NTV, one of Russia's most influential TV stations. And while most of Russia' s oligarchs were crippled by last August's financial crash, the partially privatized Gazprom, with its solid hard-currency sales to Western Europe, has gone from strength to strength.

Now, as elections loom, the Kremlin is trying hard to ensure that Gazprom's almost bottomless war chest is at its disposal--and, just as importantly, doesn't fall into the hands of its main rival, Moscow Mayor Yuri Luzhkov. But the Kremlin has a problem, and his name is Rem Vyakhirev, Gazprom's 65-year-old CEO. During Boris Yeltsin's 1996 re- election campaign Vyakhirev was generous with campaign funds and sympathetic media coverage. But more recently Vyakhirev has moved closer to Luzhkov. In March 1998, Gazprom guaranteed a $300 million loan to the Luzhkov-friendly Media-Most group, which in partnership with NEWSWEEK publishes the weekly news magazine Itogi. And early this year, Vyakhirev transferred regional Gazprom accounts--used to collect revenue from its regional consumers--to Moscow, where profit tax is collected not by the Russian state but by Luzhkov's city government, revenue which made up nearly a third of city hall's income.

Vyakhirev's flirtation with Luzhkov apparently infuriated the Kremlin. No less an authority than oligarch Boris Berezovsky, a key Yeltsin ally, said publicly that the Gazprom chief's days were numbered. But it wasn't quite that simple. Vyakhirev, in the words of one former employee, is "tsar and god" of Gazprom. Even the corporation's former head and later Russian prime minister Viktor Chernomyrdin worried that the whole structure of the company--which employs nearly a third of a million people--would unravel. The Kremlin hit on a compromise: government representation on the board would be increased, and Gazprom's taxes would go to the federal budget. …

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