Moscow President Vladimir Putin tightened his grip on the Kremlin on Thursday by relieving chief of staff Alexander Voloshin from duty, Russian news agencies reported, a move likely to deepen political and economic turmoil after the arrest of Russia's richest tycoon.
Rumors that Voloshin, the last major figure in the Kremlin from the Boris Yeltsin era, had resigned rattled Russian political and business circles for several days. Voloshin reportedly offered his resignation after Saturday's arrest and jailing of Mikhail Khodorkovsky, the head of the Russian oil giant Yukos.
Voloshin was a key figure under Yeltsin in the years when former Soviet state industries were privatized at giveaway prices in dubious auctions. Voloshin and his allies believed that privatization would help prevent a Communist comeback following the 1991 Soviet collapse.
Infighting in the Kremlin has been a hallmark of Putin's presidency, and Voloshin's departure is likely to help Putin consolidate his own power and that of his allies.
Putin named Dmitry Medvedev, the first deputy chief of staff and the chairman of the Russian natural gas giant Gazprom, to succeed Voloshin. Medvedev is one of the many Kremlin figures from St. Petersburg who have been jockeying for influence with other groupings in the Kremlin.
The announcement of Voloshin's departure came hours after prosecutors froze a huge chunk of Yukos shares, plunging the stock market into its second nosedive in a week. The benchmark RTS Russian stock index closed down 8 percent after the announcement of the share freeze and Yukos shares lost 14 percent.
The stock market's sharp reaction appeared to reflect investor fears that a probe of Yukos that began in July could foretell troubles for Russia's biggest companies.
Many worry that the Kremlin could launch a broad revision of the results of the privatization of the 1990s, in which tycoons like Khodorkovsky snapped up chunks of state assets.