Photo source: RIA Novosti.

Since President Dmitry Medvedev announced the dismissal of Moscow mayor Yuri Luzhkov, Western media, observers and commentators have mainly focused on the larger questions of what this decision means for the Putin-Medvedev tandem or the 2012 presidential elections. Indeed, Luzhkov was a titanic figure on the Russian political stage as a founding member of the ruling United Russia party. Less attention, however, is being paid to what Luzhkov’s removal means for the city of Moscow and for the business climate of Russia’s center of business and political power. Now that Luzhkov’s mayoral machine has ground to a halt, The Pipeline will assess the impact of Luzhkov’s exit from the Russian political arena and address key issues to watch.

The dismissal of longtime Moscow Mayor Yuri Luzhkov on September 28 marked the culmination of a brief but heated public standoff between the mayor and President Medvedev over Luzhkov’s public criticism of Medvedev’s decision to halt construction of a Moscow-St. Petersburg highway through the ancient Khimki oak forest. An article published in Rossiyskaya Gazeta accused Medvedev of indecisiveness and called for the return of “true meaning and authority to the Russian government,” a comment that some commentators read as a call for Vladimir Putin to return to the presidency. After a smear campaign against Luzhkov launched by Kremlin-controlled TV and a heated exchange of words, Medvedev sternly dismissed the stalwart mayor of Moscow on a working visit to China. The official reason – “loss of trust.”

Despite fears that the markets would take the news negatively, the markets did not overreact. In fact, Luzhkov’s ouster signaled renewed confidence for future reform and anti-corruption measures. Benchmark foreign bond yields tumbled to lows on September 29. Both Standard & Poor’s and Fitch confirmed their long-term ratings and affirmed that there would be no immediate impact on Moscow’s credit ratings

The Moscow political elite, meanwhile, was stunned. Luzhkov’s sudden dismissal after 18 years in power reminded Russians of his gargantuan role in running a city that contributes nearly one-quarter of Russia’s GDP. Medvedev’s decision to fire Luzhkov, however, was an act in the making – yet another change of the guard. In early 2009, President Medvedev pledged to dismiss or demote underperforming officials; he followed through by firing Murmansk’s governor. Murtaza Rakhimov of Bashkortostan, Eduard Rossel of Sverdlovsk Region, and Mintimir Shaymiev of Tatarstan – all figures of the Yeltsin-era old guard – were sacked this year. While Medvedev has eliminated most of the old regional bosses by offering them other jobs or retirement deals, Luzhkov’s ouster definitively spelled out the end of his career.

Observers wasted no time in putting Luzhkov’s ouster the broader political context. Political analyst Evgeny Gontmakher described Medvedev’s decision as a victory and a “following through with a kind of political toughness that has not been Medvedev’s forte.” Meanwhile, Ekho Moskvy’s Yulia Latynina, predicted that the president will be humiliated once again in another scandal, a repeat of how Luzhkov and Medvedev “devoured each other in public while Putin emerged unscathed and stronger than ever.”

As mayor, Luzhkov ensured relatively high salaries for teachers, police officers and pensioners. With his ouster, many voiced their concerns about cuts in benefits, including the “Luzhkov bonuses” – payments added to lower-paying federal salaries. Moscow City Duma Speaker Vladimir Platonov quickly assuaged their concerns, assuring that “all social benefits that have pleased Moscow citizens will stay,” and that Moscow’s social benefits are protected by law, legislation that can only be undone by the Moscow City Duma.

Aside from the implications on the ruling “tandemocracy” and immediate concerns about social packages, few Russian commentators rushed to defend Luzhkov’s management of the city of Moscow. Most argued that his administration was in charge of the city’s housekeeping and things could have arguably been better. Summer 2010 was Luzhkov’s summer of discontent: uncontrollable peat bog fires and smog raged around Moscow, while protests surrounding the Khimki forest highway grew louder. The mayor chose summer for an untimely vacation and prioritized tending to his prized bee hives. Commentators recalled the Moscow government’s failure to address traffic paralysis, an issue that will undoubtedly make or break the next mayor. By September, the broad consensus on Luzhkov’s tenure from the elite was that it was time for him to leave.

The Russian political elite from various backgrounds are now calling for radical reform. Igor Yurgens, head of the Medvedev-aligned INSOR think tank, believes that the new mayor of Moscow must slash bureaucratic red tape first before addressing the city’s other acute problems. “In the beginning of the 2000s, [small and medium sized] businesses blossomed, but now the capital is one of the most regulated places for leasing and bureaucratic barriers. Only after this may he address the issues of overpopulation, multiculturalism and xenophobia.” Meanwhile, Luzhkov’s predecessor Gavriil Popov suggested moving the capital to another city, adding “Luzhkov’s car should go along with the driver.”

Muscovites have long been excluded from the management of their own city, wrote Vedomosti, while Kommersant called for the “depoliticization” of the mayor’s political post. Billionaire Aleksandr Lebedev, a former Moscow mayoral candidate, called for a “disowning Luzhkov’s legacy” by creating transparency, tackling the problems of traffic congestion, and demonopolization of the construction industry. He also stated the need to “introduce a normal democracy” through mayoral elections and deputies. Vladimir Ulas, a Communist Duma Deputy, called for a reduction in bureaucracy and labeled the current level of local government a “sham.”

Others demanded a purge of Luzhkov’s cronies and his most compromised business partners. Sergei Stankevich, a first deputy chairman in the Moscow City Council in 1990-91, said that a new generation of employees was needed, young, educated, fluent in foreign languages and computer technologies with a motivation to succeed.” This approach matches the “Golden 100,” a confidential list of Russia’s next political class drafted by Medvedev last year now circulating in the Kremlin.

Possibly related posts:

1. The Last Weeks of Yuri Luzhkov: A Timeline
2. Skolkovo: One More Step Ahead
3. Forest Blockade II
4. Calling Them Out
5. The Latest Proxy Gas War

Khimki · Luzhkov · Medvedev · Moscow · Putin · Russia

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