BATTLE OF THE BANKERS

(3 of 4)

Berezovsky and Gusinsky now find themselves at war with a man they had considered a junior member of the oligarchy, 36-year-old Vladimir Potanin. His bank, Unexim, is one of the largest financial institutions in the country. It was reportedly founded on the ruins of the giant Soviet-era foreign-trade system, and Potanin once worked in the Soviet Foreign Trade Ministry. Potanin's fortune is estimated at $700 million. He recently acquired control of the country's most respected daily newspaper, Izvestiya, whereupon some 40 journalists, including the editor, quit to start their own newspaper--in all probability to be funded by Berezovsky.

During last year's presidential campaign, the oligarchs combined forces to make sure Yeltsin won. They provided strategists, logistics, uniformly positive media coverage of Yeltsin and, of course, money--lots of it. "It was made available as needed," recalls a banker. "Someone from the campaign would say, 'We need $700,000,' and it would be delivered." This banker scoffs at the rumor that Yeltsin spent $100 million. "No more than $30 million, I'd guess," he says.

And until this past summer the top oligarchs amicably divided the privatization spoils among themselves. But when, in July, the state offered a 25% share in the giant firm Svyazinvest, the state telecommunications monopoly, Potanin upset the applecart. Using a stake of almost $1 billion obtained from international investor George Soros, Potanin outbid Gusinsky. This was a shock.

Both Berezovsky and Gusinsky denounced the Svyazinvest sale through their TV stations and newspapers. But Chubais sided with Potanin, declaring the Svyazinvest sale fair and honest. The Chubais-Potanin alliance particularly inflamed Berezovsky, who launched a campaign of biting criticism against both men. Chubais's aides responded by denouncing Berezovsky. "He's made his money by bullying," says an official sympathetic to Chubais. "He's angry because he's found someone he can't buy."

In turn, Berezovsky characterizes Chubais as a Bolshevik who is trying to impose a new form of authoritarianism on Russia. As is frequently the case in modern Russia, the fight has taken on an undertone of menace. Chubais says he has received at least one death threat, a claim that Berezovsky has characterized as a publicity stunt by Chubais supporters. An official of the Federal Security Service, the successor agency to the KGB, refused a request to comment on the severity of the dispute. "It is too dangerous," he told TIME. "The wolves are fighting, and we are watching."

Reformers applaud Chubais's determination to rein in the political influence of some banks. But at the same time many wonder why Chubais is favoring Potanin's Unexim Bank, turning it into an economic "state within the state," in the words of newspaper columnist Otto Latsis. The answer is simple: power.