War Inside the Kremlin

No shots were fired a few weeks ago when AK-47-wielding members of two Russian police agencies faced off outside a suburban Moscow mansion—but it got uncomfortably close. Members of the Federal Drug Control Service (FSKN) challenged a squad from the Federal Security Service (FSB) that had been sent to arrest the FSKN's Lt. Gen. Aleksandr Bulbov. He wasn't home, though; another FSB team had intercepted him arriving at Moscow's Domodedovo airport. After a scuffle, Bulbov landed in jail, where he's still awaiting trial on extortion charges. Bulbov's lawyer insists his client is innocent. So does Bulbov's boss, FSKN chief Viktor Cherkesov. In an open letter after the arrest, Cherkesov called it part of "an internecine war within the security services"—a struggle between two powerful Kremlin factions. If unchecked, such feuds might "bring down the stability Russia has won," leading to "chaos," Cherkesov warned.

Forget this week's elections for Russia's rubber-stamp Parliament. The country's real political contest, a brutal struggle for wealth and power, is elsewhere: in and around the Kremlin's executive offices. While Vladimir Putin prepares to give up the presidency as the Constitution requires next March, when his second term expires, Russia's ruling clans are defending their interests at any cost and using Russia's patchwork of security services to carry out personal agendas.

The Cherkesov spat gives a rare glimpse into one of those feuds. His open letter suggested that the charges against Bulbov were payback for the FSKN's investigation of an import scam allegedly involving senior FSB officers. And Bulbov wasn't the only FSKN officer to suffer: Sergei Lomako and Konstantin Druzenko of the service's St. Petersburg branch died from lethal doses of radioactive poison soon after Bulbov's arrest. The feud, Cherkesov warned, could become a repeat of the "bankers' war" of the late 1990s, when Yeltsin-era oligarchs fought over the spoils of privatization, destroying what little faith Russians still had in their system.

Putin's Russia looks very different from Yeltsin's—on the surface, at least. Former FSB Col. Gennady Gudkov, now a deputy in the Duma, the Russian Parliament's lower house, says the elite now is "far closer knit and far more cohesive" than it ever was under Yeltsin. The Putin regime's power brokers are a club of Kremlin bureaucrats, many of them with personal ties to the president and his hometown of St. Petersburg—and many of those former colleagues of his from the KGB.

Even so, says the Kremlin-connected analyst Stanislav Belkovsky, "Russia is much more of an oligarchy now than under Yeltsin." Unlike the Yeltsin-era oligarchs, Putin's new elite are bureaucrats, not businessmen. Each clan uses a key chunk of the state as a source of revenue and patronage—like the state-owned oil company Rosneft, controlled by Igor Sechin, Putin's deputy chief of staff, or Gazprom, headed by Dmitry Medvedev, the deputy prime minister. And each has its own law enforcers, which it uses to promote its private ends. As the FSB-FSKN feud has shown, only the president can keep their rivalries in check. "Putin has been controlling this tug of war," says Kremlin political adviser Vyacheslav Nikonov. "Nobody but Putin can provide the balance between the different Kremlin factions."

That's a job Putin probably won't be able to hand off in March. But how can he keep doing it? He could amend the Constitution and hold power indefinitely, if that was his wish. With his approval rating above 70 percent and his solid majority in Parliament, no one could likely stop him. But many believe Putin is strongly against the idea of becoming a dictator for life. "He is convinced that Russia cannot be run by a junta," says a former senior Kremlin official who doesn't want to be named discussing his ex-boss. "Likewise, he knows that his successor as president cannot be a puppet."

Putin needs a new political niche. One possibility: leader of the United Russia Party, whose candidate list he headed in this week's Duma races. As a substitute for an actual campaign, the Kremlin turned the election runup into a frenzy of Putin-worship. The focus on him helped keep people's minds off the clans' feuds—and averted any discussion of Russia's very real problems. The oil-powered economy may be soaring, but so is inflation, and labor unrest is breaking out. A pay strike recently shut down the Ford Motor Co. plant in Vsevolozhsk, near St. Petersburg, and roughly 1,500 teachers and nurses staged a protest outside Astrakhan's regional Parliament to demand better public-sector salaries. Resolving problems like these is likely to be a full-time job for the next president. That is, if he's not too busy breaking up fights among his bureaucrats and their private armies.