One of the most significant events in the life of Moscow business so far in this young year was Mayor Yury Luzhkov's decision to create a Moscow municipal bank to service all the city's budgetary and extra-budgetary accounts.


Only last March, the mayor decided to transfer all accounts belonging to government departments from Narodny Bank -- which used to be a branch of the U.S.S.R.'s State Bank -- to a system of specially authorized banks. The authorized-bank system had been in place since the spring of 1993, and included MOST-Bank, Natsionalny Kredit, Stolichny and several other, lesser-known ones.


At first, the authorized banks performed a number of financial services for the city government, even though they did not actually have the accounts. Considering that the city's annual budget is several trillion rubles, it is easy to see that the commissions on these services gave these banks enormous profits. Shortly thereafter, the authorized banks convinced Luzhkov to transfer all the city's accounts to them.


Now, out of the blue, we have Luzhkov's latest order creating a municipal bank to which these trillions of rubles will be transferred from the authorized banks. Moreover, even the temperamental Luzhkov understands that creating the new bank will take several months, and so -- in the meantime -- he intends to transfer the funds immediately to the Central Bank's Moscow branch.


This circumstance leads one to think that the mayor's initial goal in undertaking this measure was to remove this money from the control of the commercial banks. The close cooperation between the city's major banks and the municipal government had created a very powerful financial/political group, whose influence had produced alarm and envy in the Kremlin. In addition, MOST-Bank had already come into open conflict with General Alexander Korzhakov, a leading member of Yeltsin's inner circle. This, naturally, created tension between Yeltsin and Luzhkov.


Luzhkov realized this and had no desire to get into conflict with the president. Therefore, he decided to weaken the financial might of the authorized banks, including that of MOST-Bank. MOST had controlled the accounts of such important branches of government as the Department of Finances, the Municipal Housing Authority, the City Police and GAI and the Social Security Committee.


While MOST will not go bankrupt as a result of losing these accounts, it will no longer be able to afford to finance the NTV television station and the newspaper Segodnya as generously as in the past. These media outlets, it must be noted, have been extremely irritating to the federal authorities, especially since the beginning of the war in Chechnya.


However, there is one other, less obvious possible motivation behind the creation of the municipal bank. This bank will give Luzhkov control over the transfer of taxes collected in Moscow to the federal government. That transfer now occurs practically automatically; the new bank, firmly under the mayor's control, will enable Luzhkov -- if he pleases -- to withhold payments and thereby to exert pressure on the federal government.


That is, Luzhkov would be able to do what the governments of Tatarstan and Bashkortostan had been doing until recently. If one keeps in mind that Moscow pays about 20 percent of all federal taxes, it is easy to imagine the new power that Luzhkov has picked up by creating the municipal bank.