Does Putin Hold all the Trump Cards?

Despite the intense speculation of recent weeks, the Kremlin has made it very clear that the democratic election of a new Chechen leader is "not yet on the agenda".

Instead, President Vladimir Putin has announced plans to introduce "direct presidential rule" in Chechnya, creating provisional power structures for an interim period of between 18 months and two years.

Putin believes this would give the government enough time to restore basic order and revive social services in a region where pensions have not been paid for at least three years. Only then would the Kremlin institute a so-called "electoral procedure" in the war-torn republic.

The draft legislation - which is almost certain to be passed by both houses of the Russian parliament - reflects the Kremlin's acceptance of two incontestable facts. Firstly, even if a large part of the rebel forces has been crushed, one cannot seriously talk of democratic elections until order has been fully restored. Secondly, a credible candidate for the Chechen presidency has yet to materialise (see Mikhail Ivanov's article in CRS No. 30).

The sense of urgency was underlined on Thursday, when Chechen fighters killed 18 Russian soldiers in an attack on an armoured column in Ingushetia. The first attack on federal troops outside Chechnya, the incident could well be an attempt by extremist warlords to destroy Aslan Maskhadov's credibility and put paid to any talk of peace.

But the exact meaning of "direct presidential rule" is still unclear. One can assume that the interim period will be used to restore a local administration, a law enforcement structure and a legal system (to replace the Islamic shariat).

These processes are already under way. The federal tax police are set to resume their activities in Chechnya on May 17. Headed by Ibragim Nuradiev and based in Mozdok, North Ossetia, the local branch will attempt to register all taxpayers, both individuals and legal entities, by late June.

The Chechen fuel and energy industry promises to yield the bulk of future tax payments to the federal coffers and, symbolically, the first tax contribution made by Russia's representation in Chechnya amounted to12 million roubles ($430,000) raised from the production of lubricants.

Paradoxically, the return of the tax police in Chechnya is one of the first signs that normality is returning to a republic which effectively stopped paying taxes to Moscow when Dzhokhar Dudaev came to power in 1991.

At the same time, the Kremlin is eager to mould the political and moral landscape in Chechnya. Putin has already said that he would consider a "mixed power structure whereby leaders would be chosen on meritocratic rather than ethnic grounds."

This clearly means that he would expect to see Russian nationals in any future Chechen administration.

Once the situation normalises and a Chechen leader is elected, the Kremlin would consider coming to an agreement with Grozny over a division of power within the framework of the Russian Federation.

The Western media has been quick to react to these latest developments. Agence France Presse pointed out that "direct presidential rule" "goes against the negotiations sought by Westerners and Chechen president Aslan Maskhadov."

Maskhadov himself commented that, by gravitating towards direct rule, Moscow had chosen "the path of war rather than peace".

And yet neither Maskhadov nor AFP has any real cause for surprise. Firstly, Putin had warned of direct rule as early as August last year. Secondly, the negotiating process has already begun behind the scenes.

May 9 saw further evidence of a gradual normalisation in Chechnya: as many as 862 Chechen war veterans took part in the Victory Day celebrations in Grozny. The common victory over Nazi Germany - to which Chechen troops made an invaluable contribution - offered the perfect pretext for Moscow to score a few positive PR points.

In fact, Grozny's war veterans enjoyed unprecedented exposure on Russian TV and thanked the nation for allowing them to celebrate Victory Day after such a long hiatus.

The rehabilitation of the May 9 holiday undoubtedly carried more weight than all the food parcels distributed by federal troops. It may even open a new chapter in Russia's PR campaign - emphasising the need to focus on the mutual achievements of the past rather than on Russo-Chechen conflicts dating back to the 19th century. A TV feature on the heyday of the illustrious Grozny Institute of Fuel and Energy or a report on Chechnya's Olympic wrestlers would do far more for reconciliation in Chechnya than the capture of the notorious Shamil Basaev.

Speaking of which, a captured commander from Basaev's camp has reportedly told Russian secret services that the feared warlord is preparing to negotiate with the federal forces. Basaev, who had his left leg amputated after stepping on a mine, is said to be suffering from severe blood poisoning. According to a recent report, he is ready to surrender his field commanders to the Russians in return for safe passage abroad.

In its Thursday issue, Kommersant Daily reported on growing frictions in units commanded by Basaev and the Arab mercenary, Khattab. It said the warlords were having a hard time preventing their fighters from deserting and now pay them only "blood money" for attacks on Russian troops.

These latest twists make it increasingly easy for Russia to hold a parallel dialogue with Maskhadov who is up against a May 15 deadline - the day that Moscow's amnesty runs out.

Last week, Duma deputy Pavel Krasheninnikov who chairs an independent human rights commission on Chechnya, met with Maskhadov's vice-premier, Kazbek Makhashev, for two days of talks in Ingushetia.

Even though Kremlin spokesman Sergei Yastrzhembsky denied that the meeting had been sanctioned by the government, it is clear Moscow sees the commission as way of testing the water. The liberal Sevodnya daily pointed out that Makhashev's security was provided by federal troops.

Even though the Kremlin now holds more trump cards than Maskhadov, Putin realises the value of securing Maskhadov's complicity and using his influence to quell as much armed resistance as possible. Perhaps in exchange for personal immunity.

The talks in Ingushetia were also timed to coincide with last week's deliberations at the Council of Europe, which has refused to approve the PACE recommendation to exclude Russia from its ranks.

In any case, Putin has nothing to lose. If the former justice minister can secure favourable conditions from Maskhadov, then Moscow can reassess its stance towards the Chechen president and give the commission a wider mandate.

Otherwise, Kremlin spin doctors will be quick to say that the trip was made on Krasheninnikov's personal initiative "entirely at his own risk".

For now it seems that Pavel Krasheninnikov will be the good cop. The role of the bad cop has been assigned to (or rather assumed by) Gennady Troshev, commander of the Russian forces in Chechnya.

Last week, Troshev openly condemned the dialogue between Krasheninnikov and Makhashev, adding that he would have arrested the Chechen envoy if he had known of his proposed visit to Ingushetia. In so doing, Troshev made it very clear that the generals won't take a passive stance should the Kremlin stage a second Khasavyurt behind their backs.

This option, however, seems extremely unlikely. As the Victory Day celebrations showed, Putin is so fond of identifying himself as the "Supreme Commander" that he is not ready to fall out with his general staff.

And the alleged endorsement of Krasheninnikov's talks with Makhashev may simply show that Putin can afford to be flexible and explore all possible options. This shrewd master of the intelligence game has a reputation for seeking the most practical solution to any given situation -- and the situation in Chechnya is apparently no exception.

Mikhail Ivanov is executive editor of Russian Life, a bimonthly magazine published by Russian Information Services, Inc.