BACKGROUND:Early this September, the pro-Moscow Chechen parliament submitted a bill to the Russian State Duma, entitled “On Special Conditions for Entrepreneurial Activity in the Territory of the Chechen Republic”. This document proposes that Chechnya be exempted from paying customs tariffs; that investors in the republic be exempt from tax; and, perhaps most importantly, that jurisdiction over natural resources should reside with the Chechen government. None of these proposals was in the least bit surprising. Prominent pro-Moscow Chechens have long argued that the republic should be granted the status of a special economic zone in order to attract investment to rebuild its shattered infrastructure. Predictably, therefore, the bill envisages Chechnya assuming a status similar to that enjoyed by Ingushetia from 1992-97. During this period, under the auspices of Mikhail Gutseriev’s BIN bank, Ingushetia became, in essence, an off-shore tax haven. Of course, the Ingush “ofshornaya zona” was sanctioned by a very different type of Russian president – Boris Yeltsin – during an earlier period when the tenet of asymmetrical federalism was en vogue. Therefore, one cannot be at all certain how President Putin will receive this aspect of the bill. Regardless, the proposals concerning Chechnya’s natural resources are certain to prove more controversial. For the Chechen leadership, securing direct ownership of these resources is a major political objective. Currently, oil production in Chechnya is carried out by Grozneft. However, Grozneft is in fact a subsidiary of the oil conglomerate Rosneft, which also holds the production license in respect to Grozneft’s activity. The pro-Moscow Chechen president, Alu Alkhanov, has previously called for this license to be transferred to Grozneft directly. His prime minister, Ramzan Kadyrov, has echoed this call, arguing that Chechnya needs its own oil company; by which he presumably means a controlling stake in Grozneft (the Chechen government already owns 49 per cent of the company). Many observers see Kadyrov’s hand behind this entire initiative. In the main, this is because the Chechen parliament, which introduced the bill to the State Duma, is widely perceived as a mere extension of his political will. In truth, however, it would be rather unusual were Kadyrov – as prime minister, officially Chechnya’s chief economic functionary – not a party to this gambit. Importantly, should this bill become law, then Kadyrov will succeed in maximising Chechnya’s economic potential within the bounds of political autonomy. However, sceptics remain concerned about his outlook regarding the republic’s political potential. They wonder whether Russia’s bestowal of economic and political autonomy might serve as a prelude to a second Chechen declaration of independence almost fifteen years after the first. For those who believe Kadyrov to be a “creeping separatist”, therefore, the prospect of such a bill becoming law would be the final straw. Should this initiative succeed in gaining momentum, then it may well force these hitherto faceless anti-Kadyrovites to reveal themselves on terms not of their choosing.

IMPLICATIONS:While the Chechen government’s claim on the republic’s natural resources may prove too bitter a pill for Moscow to swallow, Kadyrov may well be assuaged – at least for now – should his benefactors grant Chechnya the status of a special economic zone. In the contemporary Chechen context there are few organizations which could perform the same function BIN bank performed in Ingushetia. One obvious exception is the so-called “Kadyrov Foundation”. Ostensibly a philanthropic organisation with obscure sources of financing, this foundation claims to have been established in memoriam of Ramzan’s father, the late Ahmed-Hajji Kadyrov. Should this body emerge in Chechnya as a conduit for inward investment, then Ramzan’s political and economic influence will increase considerably. However, given the ubiquitous correlation in Russia between energy and political power, Kadyrov is unlikely to simply discard his stated ambition to control the republic’s natural resources. While public disagreements over policy issues of a generic nature are permitted among Putin’s ministers and aides, few, if any, would dare to publicly question official policy with respect to Chechnya, which is considered a preserve of the president and a small group of influential advisors. However, this taboo could feasibly be lifted should Putin accede to Kadyrov’s request and grant his government jurisdiction over Chechnya’s natural resources. One luminary within the siloviki clan, which is widely believed to distrust Kadyrov, is Igor Sechin, a deputy chief of staff in Putin’s administration and, crucially, the incumbent chairman of Rosneft. Sechin’s profile is that of a political hatchet man: he is said to have been the instigator-in-chief of the Kremlin’s campaign against Mikhail Khodorkovsky’s Yukos Company, for example. His perceived political agenda has been to strengthen state control over Russia’s natural resources. Thus, any decision to effectively privatize a subsidiary of Rosneft – no matter how peripheral the company involved – would not be in keeping with his broad political outlook. Furthermore, the prospect of ceding control of Grozneft to someone of Kadyrov’s political profile would be particularly galling for Sechin. In such a scenario, one could reasonably envisage Prime Minister Kadyrov adding the chairmanship of Grozneft to his professional brief in much the same way as Dimitri Medvedev combines his responsibilities as first deputy prime minister with his chairmanship of Gazprom. The worry for the siloviki clan is that a political success of this magnitude might reanimate what they perceive as Kadyrov’s latent, neo-Dudayevist tendencies. The idea of turning Chechnya into a special economic zone is certainly a less controversial proposition. Its viability may hinge on Putin’s as-yet-unclear concept of devolution which he alluded to during his recent address to the Federal Assembly, stressing that it was “high time to stop overseeing the construction of schools, bathhouses and sewerage systems from Moscow.” It is worth noting that the Kadyrov Foundation is said to be involved in similar projects on an ongoing basis.

CONCLUSIONS:The issue of who will succeed Vladimir Putin to the presidency is already consuming Russia’s political class. Yet one need only look at the present political situation in Britain to see how uncertainty regarding the succession process can destabilize a political establishment. Indeed, Pavel Baev has recently written that various Putinites are already “at each other’s throats with the fury of cornered rats”. Thus, it would ill-behove Putin to upset certain colleagues at this juncture by grasping the Grozneft nettle. At the same time, however, he will be eager to ensure that his protégé, Kadyrov, will not lose face politically. A compromise solution might entail Putin giving his consent to Kadyrov’s proposal regarding a special economic status for Chechnya, in exchange for the latter reneging – at least temporarily – on his claim to Grozneft. In any case, Grozneft will not be changing hands as a result of Grozny’s recent initiative. In fact, given its polarizing nature, it is likely that this ownership dispute will comfortably outlast the lifespan of the present Russian administration.

AUTHOR’S BIO:Kevin Daniel Leahy holds a postgraduate degree in International Relations from University College Cork, Ireland.