Putin's Gas-Patch Putsch.(Brief Article)

For years Russia's economic reformers dreamed about it. Prime ministers attempted it at their peril. Western investors pleaded for it in vain and last week Vladimir Putin finally pulled it off with remarkable ease. With a deftly orchestrated boardroom shakeup, the Russian president took the first step toward taming his country's most powerful company, the natural-gas monopoly Gazprom. Putin faced no opposition as he replaced powerful Gazprom chief Rem Vyakhirev with a man two decades younger and much less famous. So obscure is Alexei Miller, 39, plucked from a post as deputy minister of Energy, that Moscow news outlets had a hard time finding his picture.

The repercussions of Miller's unlikely ascendance go far beyond the corporate intrigue surrounding Gazprom. In modern-day Russia, business is thoroughly entwined with politics. And no Russian business is bigger than Gazprom, which controls one quarter of the world's proven natural- gas reserves and accounts

for 8 percent of Russia's GNP. By appointing Miller, Putin was reasserting Kremlin control over a former state monopoly that had been "privatized" years ago under President Boris Yeltsin--yet global markets welcomed the news. On the day of Miller's promotion, Gazprom shares rose 10 percent on the London Stock Exchange. It was a strange moment: global capitalists cheering as the Kremlin reconquered Russia's largest company.

Miller offers hope for change. Appointed by Yeltsin to run Gazprom in 1993, Vyakhirev had come to treat the gas industry as a private fiefdom. In recent years, allegations emerged that Vyakhirev and other Gazprom bosses were stripping assets from the company. Even as production began to fall, Vyakhirev wielded enormous power, controlling the spigot from Gazprom's massive west Siberian fields to Russian consumers, the former Soviet republics and beyond. "Gazprom subsidizes the economy through its low prices and gives gas to nonpaying customers for higher political reasons," says Sergei Glaser, an analyst at Moscow's Alfa Bank. During the 1990s Yeltsin allowed Vyakhirev to run Gazprom with a free hand. He even managed the government's 38 percent stake for a time.

For that reason, many in Moscow see the Gazprom shakeup as part of a Putin assault on Yeltsin-era tycoons. Ironically, Vyakhirev and his entangled alliance ...