Balancing Act; Vladimir Putin is a man of many faces. Publicly, he's the people's defender cracking down on corruption. Behind the scenes, he plays hard-nosed politics.

Byline: Owen Matthews (With Anna Nemtsova in Moscow)

Vladimir Putin sternly told Russia's Parliament last month that the Kremlin was launching a drive to "stamp out corruption." Forgive the management of Motorola for cracking a wry smile. The company has discovered the hard way that, in Russia, following the rules isn't quite enough to stay on the right side of the law.

When a shipment of 167,500 Motorola mobile phones worth $19 million was confiscated at Moscow airport in March, police initially told bewildered Motorola reps that Customs duties hadn't been paid. Then the authorities changed their story, the company says. The phones were allegedly emitting unsafe levels of radiation, police claimed, and 50,000 handsets had been destroyed on health grounds. When the company produced a sheaf of certifications showing that its product was safe, a mysterious Moscow-based company filed suit that Motorola was in breach of a Russian patent--and demanded money for allowing the company to distribute its products in Russia.

The last straw came this spring, when execs discovered that the phones confiscated by Customs last year were being dumped on Moscow's thriving black market, depressing over-the-counter sales for Motorola's Russian partner, Evroset. (Evroset estimates that it has lost $200 million since last August to what it calls state-sponsored theft.) Angered, Motorola went to Washington to protest vigorously that Russia shouldn't be allowed to join the World Trade Organization while its Customs service was full of racketeers. According to a Western diplomat in Moscow, that message was "passed loud and clear" to Putin, who desperately wants a deal on the WTO before next month's G8 summit in St. Petersburg.

Heads are now rolling. In recent weeks the director of the Federal Customs Service, Aleksandr Zherekhov, and three generals from the Federal Security Service, or FSB, were fired, plus two generals from the Prosecutor's Office and five senior Interior Ministry officers. More, the long-serving Prosecutor General Vladimir Ustinov abruptly resigned after a brief chat with Putin in the Kremlin. Some, at least, were allegedly involved in the Customs scam, according to company officials and Russian media reports.

Score one to Motorola, justice and the American Way? It would be nice to think so. But as always in Russia, there's a back game and a front game. For sure, Putin cares about making Russia work, and that means cracking down on the corruption that threatens to choke the economy in red tape and kickbacks. But the back game is more dangerous and subtle--and, ultimately, more important to Putin than pleasing the United States or even joining the WTO. Putin's main priority is to ensure a smooth succession by a chosen political heir when he steps down in 2008. That in turn means keeping a fine balance between the political clans who run Russia. Of late, one of those clans--the "siloviki" faction of FSB and military men who constitute the Kremlin's hard-liners--has been getting a little too powerful. High time, Putin decided, to "cut the siloviki down a little, not destroy them," says Aleksei Makarkin of Moscow's Center for Political Technologies. The president's new

anticorruption campaign provided a convenient tool for doing just that: a chance to remove selected political opponents, while trimming the balance of power at the top of Russia's most influential ministries.