Economy minister's arrest shocks Russian government liberal wing

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Moscow (AFP) - The surprise arrest of Russia's economy minister over a two-million-dollar bribe on Wednesday sparked shock and bewilderment in the liberal wing of the Russian government, increasingly worried about political survival.

Alexei Ulyukayev's dismissal after being slapped with bribe-taking charges on Tuesday marks the first time in Russia's post-Soviet history that an active minister is detained and charged with a criminal offence.

Ulyukayev, 60, was put under house arrest Tuesday in a move that unleashed speculation as to whether the case against him was tied to an internal power struggle.

An uncharismatic official who had served as economy minister since 2013, he had been charged with the daunting task of pulling Russia out of a crippling economic crisis that has seen its currency collapse over Western sanctions and depressed energy prices.

His sudden fall from grace has sent shockwaves through the highest echelons of the Russian elite, with Prime Minister Dmitry Medvedev saying Tuesday it was "beyond comprehension."

Investigators said that Ulyukayev was caught red-handed as he was accepting a two-million-dollar bribe to greenlight state oil giant Rosneft's acquisition of state-owned majority stake in Russian oil company Bashneft for $5.2 billion.

The committee did not indicate who handed the alleged bribe to Ulyukayev, but described him as "threatening to create obstacles to the company's activities in the future by using his official powers".

Ulyukayev had originally opposed the sale but later endorsed it after President Vladimir Putin said it could help fill state coffers.

Vedomosti business daily reported that several high-ranking government officials, including Deputy Prime Minister Arkady Dvorkovich, had also caught investigators' attention during the probe.

RIA Novosti quoted unnamed sources as saying that other top bureaucrats could be caught up in the scandal, but the investigative committee said Wednesday the case currently had only one suspect.

The executive branch's influence on the justice system has led independent observers to question the allegations against Ulyukayev.

To think that the minister could extort money from Rosneft chief Igor Sechin, a powerful Putin ally, would be like "a sparrow extorting a lion", wrote Yulia Latynina, a columnist for Novaya Gazeta newspaper.

- A 'big catch' -

Different theories about Ulyukayev's demise have rapidly emerged among Russian pundits.

One theory suggests his arrest could be the result of infighting between security figures known as the "siloviki", such as Sechin, and the clan of liberal members of the Russian government.

Others have said it represents an attack on Russia's harshly-criticised economic policies that have seen Russians' purchasing power shrink dramatically over the past two years.

Political analyst Konstantin Kalachev said the case against Ulyukayev was "surprising".

"Sechin is a main character in the plot but his interests could have coincided with that of the FSB (security service) that is fighting corruption and wanted to bring Putin a big catch," he said.

"The only consequence is that Russia's liberal economists are demoralised," he added, stressing that economic stagnation would persevere and that proposed liberal reforms would not be carried out.

- Siloviki dominate -

Recognised as a member of the government's liberal wing, Ulyukayev had worked with Yegor Gaidar, a former liberal prime minister who masterminded the "shock therapy" economic reforms of the early 1990s blamed by Russians for wiping out their savings.

He had called for reforms including lifting the age of retirement and liberalising the labour market.

"For those who have known Alexei Ulyukayev for 30 years, what happened was a shock," Anatoly Chubais, the economist who oversaw market reforms in the 1990s, wrote on his Facebook page Wednesday.

Economists from Russia's Alfa Bank said Wednesday that the Ulyukayev case was a "litmus test" for Prime Minister Dmitry Medvedev, often associated with the government's liberal wing.

Political analyst Ekaterina Shulmann said the conflict was likely tied to the process of privatisation launched by Medvedev, as there are powerful people interested in state property who may be "negotiating in such original manner".

The arrest is symbolic of the security clan dominating over liberal economists, which isn't new, said Shulmann. "But that the siloviki are allowed to put away people as powerful as ministers -- that is news."