The last several months have featured a series of scandalous, high-profile arrests and resignations that have shaken up the Russian political establishment. None of those episodes lived up to what happened earlier today. This time, the case is of legitimately historic proportions: a Russian federal minister, Alexey Ulyukaev, was arrested on suspicion of extortion.Ulyukaev is easily the most senior official ever detained and arrested in Russia. Defense Minister Anatoly Serdukov was involved in a high-profile case where several billions in public funds were alleged to be embezzled. But Serdukov was never detained nor charged. The Head of the Federal Custom Service, Andrey Belianinov, recently had his properties searched and had almost $1 million in cash found in his home. He was never charged, however, although he did lose his job. And technically, Belianinov was not a minister. The Federal Customs Service had ministerial status until January 2016, at which point it was subjugated to the Finance Ministry. The closest parallel came in 2007, when Deputy Finance Minister Sergey Storchak was detained by the FSB and charged with attempted fraud. He remained under arrest in a detention facility—the notorious Lefortovo jail in Moscow—for 11 months, but was released later due to lack of evidence.Ulyukaev, the Minister for Economic Development, was detained by FSB and Investigative Committee (SKR) officers in the middle of the night. The news of his arrest broke at 3am Moscow time. Simultaneously with the arrest, the SKR announced that it had opened a criminal investigation against Ulyukaev on charges of extortion and receiving bribes. He is alleged to have demanded $2 million from Rosneft for giving the company governmental approval on its privatization of the Bashneft oil company. Rosneft had informed law enforcement officials, who appear to have carried out some kind of sting operation.This afternoon Ulyukaev was brought to Basmanny Court of Moscow, where he was put under house arrest by a judge for two months, the maximum possible term. The court will decide on January 15 whether to extend it. Ulyukaev denied all the charges and pled not guilty. Russian President Vladimir Putin dismissed Ulyukaev from his post upon learning of the court’s decision.Russian media, citing a source in the FSB, reported that the Minister had been under observation by the security service as long as a year ago. Kremlin Spokesman Dmitry Peskov said both Vladimir Putin and Dmitry Medvedev knew about the operation when it was initiated. Russian media are reporting that at the moment of his detainment, Ulyukaev could not believe what was happening, had asked if it was a prank, and had tried to make some phone calls.There was no information from law enforcement why Ulyukaev was detained in the middle of the night, but Novaya Gazeta reported that the $2 million dollars had been put in a safe-deposit box. The Minister didn’t personally take possession of the money, but there were several indications that “Ulyukaev had claims on this money”, according to a source quoted by the newspaper. The SKR, for its part, is denying the existence of any safe-deposit box. Other media are reporting that Ulyukaev was detained at Rosneft’s office, but there is no official confirmation of that either.As Novaya Gazeta reports, Ulyukaev was detained by the officers of Department K of the Economical Security Service (SEB) of the FSB. As regular readers know, the SEB was recently outmaneuvered by an internal rival, the Interior Security Department (USB) of the FSB. The Minister’s detainment, according to Novaya Gazeta, was initiated by the Head of the Interior Security Department of Rosneft Oleg Feoktistov, who several media outlets are claiming is an FSB officer attached to Rosneft—a common practice at Russian state-allied firms. Until August of this year, when Feoktistov came to Rosneft, he had been a long-time chief deputy of the USB.So what exactly happened last night in Moscow? The emerging consensus among Russian experts is that the operation was personal revenge from Igor Sechin for the initial blocking of the Bashneft deal. Initially, Alexey Ulyukaev and his Ministry were against Rosneft’s participation in Bashneft’s privatization because major shares in both companies belonged to the government. In July the Minister called Rosneft an “inappropriate” buyer. After that, he publicly reiterated that he thought such a privatization would have been meaningless. When Medvedev’s cabinet, after a long battle, approved Rosneft’s bid, Ulyukaev was the one who announced it. Nevertheless, less then a week before his arrest, the Minister said in an interview to Die Welt that Rosneft’s buying the government’s share in Bashneft could be a temporary measure, and that the share could be sold to a foreign investors next year.Eventually, Bashneft was sold to Rosneft for $5.2 billion. Vladimir Putin, when asked about it, said he was surprised by the cabinet’s decision.The Russian people may believe that Putin, who likes to pretend to be Solomonic president, doesn’t interfere anywhere. But anyone who knows the system at least a little bit is aware that Dmitry Medvedev is the least independent Prime Minister that has ever held the post, and moreover is a man more than willing to be publicly humiliated by the President from time to time. Thus, there can be no doubt that it was Vladimir Putin (probably persuaded by Igor Sechin, a long-time ally and rumored co-owner of an energy firm called Independent Petroleum Company) who ultimately told Medvedev to approve Rosneft’s bid for Bashneft.The idea that Sechin was bribing members of Medvedev’s cabinet is preposterous on its face. It’s not how things work. And, indeed, even if one were to credit this explanation for some reason, the amount of the bribe—a mere $2 million to let a $5.2 billion deal go through—also beggars belief. This is the amount one might need to pay a Deputy Mayor in Russia, Ilya Shumanov, the Deputy Chief of Transparency International’s Russian office quipped, not what one might have to pay a full-fledged federal minister. Only a person from another galaxy would consider extorting money from Rosneft, he added. And, indeed, Alexey Ulyukaev, despite being known as a “liberal”, is a person very much from and of Russia’s galaxy. From 2000-2004, he was First Deputy Finance Minister, and from 2004-2013, he was appointed and served as First Deputy Chief of the Central Bank of Russia.So while all this may have been some kind of elaborate revenge plot by Sechin, it’s also possible—indeed, quite likely—that something more sinister is afoot. Alert Russia-watchers may have noticed a recent article in The Moscow Times describing an interview, originally published in the Russian newspaper MK, that mysteriously disappeared from MK‘s website hours after being published. (The interview is still accessible at some internet archives.) The interviewee was Valeriy Solovey, a Professor at Moscow State Institute of International Relations, a man who earlier had “predicted” Sergey Ivanov’s resignation. (This is something that obviously could not have been predicted, but was rather known from a source inside.) In the missing interview, as replayed by The Moscow Times, Solovey made some bold claims:
Solovei said that Putin is facing certain “problems” that will necessitate his absence from the public for several consecutive months. Putin is disappointed with his current cadres, Solovei claims, and has doubts about their ability to lead Russia on the world stage and develop the country’s relationship with the West.Solovei said he believes Dmitry Medvedev, Russia’s current prime minister and the one-time placeholder chief executive between Putin’s presidencies, is being groomed for a return to the Kremlin, but the country’s hardliners are reportedly resisting the move.
Though the professor didn’t state what the reason for Putin’s possible absence, he seemed to be hinting at bad health as the culprit.Health aside, the part of the story that rings most true is the detail about the “hardliners”. As regular readers know, a clash between two rival departments inside the FSB has resulted in the emergence of a superpower of sorts among Russia’s siloviki, a force that has managed to wrest control of various law enforcement sectors in Russia—especially those responsible for overseeing and extracting rents from the financial sector. The long-time bodyguard of Vladimir Putin and now the Head of the National Guard, Viktor Zolotov, appears to be behind many of these developments. Among the victims of this power consolidation, so far, are three governors, the Federal Custom Service chief Andrey Belianinov, the head of Putin’s Presidential Administration Sergey Ivanov, and the chief of the Investigative Committee, Aleksandr Bastrykin. Formally, Bastrykin has not resigned yet, but key officers reporting to him have been replaced. And as the above-mentioned Professor Solvey said elsewhere in his interview, it hasn’t yet been decided whether to completely eliminate the SKR as an independent structure and make it part of the General Attorney office again or not. If not, then the current Governor of St. Petersburg, Georgy Poltavchenko, is thought to be the most probable candidate to replace Bastrykin. And the post he might vacate? Dmitry Medvedev would be great as Governor of St. Petersburg.Assuming that this silovik superpower actually exists, it’s likely it would want one of its own in charge if Putin has to go. And in that case, Ulyukaev’s arrest is best understood as a hit against Dmitry Medvedev. (Dmitry Peskov, of course, dismissed the idea that Medvedev’s cabinet shares any responsibility for Ulyukaev’s crime. So there’s that.)In any case, the arrest of Alexey Ulyukaev raises a familiar question after all of this year’s high profile arrests and resignations: Is Vladimir Putin fully in charge these days? And if he is not, then who is?And as to the legitimacy of the Rosneft-Bashneft deal due to this alleged bribery? The SKR said it sees no need to review it.