Operations was replaced by Egran Petrossian, a former deep cover operative for Section in Eastern Europe who was extracted last year during a rescue mission. It is interesting to note that Madeline was not placed in command as per command protocol.
Character Analysis: Petrossian
Egran Petrossian is ruthless and despotic. He believes in ruling with an iron hand and has been known to kill without provocation. Petrossian demands absolute obedience. He will play one person against another to maintain control.
The disposition of Petrossian is unknown at this time although it is rumored that Operations had him canceled.
Internal Revolt:
It has come to Psych Ops attention that an internal power struggle is in process. The underlying issues of this struggle are unknown, but it is believed that the attempted takeover of Section by Petrossian was the first salvo. (See The Destruction of Section)
Nikita and Petrossian:
It is evident that Petrossian had been actively keeping surveillance on Nikita since her participation in his retrieval.
As part of an overall take-over plan, Nikita was a natural for second in command. She's defiant, strong-willed, takes chances, and it is widely known that she and Operations do not get along. Petrossian must have read Nikita's file very closely. The orders that Petrossian gave to Nikita were very specific - each targeted what is ultimately her greatest weakness - compassion. Ordering her to spy on Walter under the guise of protecting him and canceling Sykes, were designed to chip away at that compassion and to isolate her from those she considered friends.
Petrossian set up a "meet" between Nikita and Michael. He too is aware of the bond that exists between them. In this observer's eyes, this was a blatant statement to Nikita - if you follow me I will deliver to you what you want (namely Michael and a life outside Section). It is interesting to note, that Nikita did not press Michael into anything other than just being there.
Ultimately, Petrossian underestimated Nikita. By boasting to Nikita that when you found an enemies' weakness, you exploit it - whether it was a lover or a mother. This one statement (in view of what Walter had told her about Kronnen's mother and the "meeting" with Michael), caused her to look a little deeper into what actually happened with Kronnen. With Birkoff's help, she was able to start to put the pieces together. Nikita forced Petrossian's hand by luring him into believing that she was willing to kill Operations. By "failing" that mission, she exposed Petrossian and enabled Madeline to trap him.