PREMIER ZUBKOV'S FIRST STEPS SHOW REGIONAL EMPHASIS

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 004909 SIPDIS SIPDIS E.O. 12958: DECL: 10/05/2017 TAGS: PGOV PINR ECON RS SUBJECT: PREMIER ZUBKOV'S FIRST STEPS SHOW REGIONAL EMPHASIS Classified By: Ambassador William Burns: 1.4 (b,d). ¶1. (C) SUMMARY: Since Putin picked Viktor Zubkov from relative obscurity to serve as Premier, the Russian political elite have been scrambling to figure out who this new figure is and the role he is to play in Putin's plans. Our contacts among political analysts describe Zubkov as an unassuming, if capable administrator, who enjoys Putin's confidence and poses no challenge to his authority. Opinions abound as to why Zubkov was appointed from intrigues among the Kremlin elite, to Putin's maneuvering before the elections, to merely a chance to change a dysfunctional cabinet. Zubkov's actions since taking power, including the appointment of Minister for Regional Development Dmitriy Kozak, Minister for Economic Development and Trade Elvira Nabiullina, and Minister of Health Tatyana Golikova appear to signal a policy focused on jump-starting stalled regional development projects and working towards improved living standards for the population -- an agenda shaped to resonate with voters before the December legislature and March Presidential elections. END SUMMARY -------------- Brezhnevian Functionary -------------- ¶2. (C) Muscovite generally agree about Zubkov's character, seeing him primarily as a loyal, competent, yet unambitious functionary that Putin chose precisely because he would pose no political threat to the President himself. Yet, if our contacts largely agree on "who" Mr. Zubkov is, there is considerable disagreement as to why he was put into place. For some, the most important issue was that then Premier Fradkov had to go, owing to intrigues among the top elite over resources. Yegeniy Minchenko, the General Director of the International Institute for Political Expertise, told Embassy that Fradkov's opposition to the creation of a new, giant holding company for heavy industry, Rostekhnologia, caused his downfall, since Putin crony and head of the arms producer Rosoboroneksport Sergey Chemezov stands to gain from the creation of this firm. The week after Fradkov was fired, Putin himself put through legislation to form the new state-controlled company. ¶3. (C) Others saw Zubkov's appointment through the lens of the succession process. Sergey Zverev of the KROS public relations firm (which was working with Sergey Ivanov) argued that the choice of Zubkov is a way for Putin to reassert his primacy in the political elite and avoid the appearance of being a "lame duck." He also posited that Putin may have chosen the elder Zubkov as a potential presidential candidate who could be reasonably expected to step down and allow a Putin return to power. The Director of the Institute of Strategic Assessments, Aleksandr Konovalov, predicted that Zubkov's tasks will be to take some steps against corruption and to introduce some popular measures such as increasing salaries and pensions. Konovalev foresaw Zubkov taking few, if any, actions that would upset the balance of forces in the Kremlin. ¶4. (C) Zubkov is also skilled at balancing the various Kremlin factions, essentially supporting the role that Putin has played within the political elite. Andrey Ryabov of the Institute of World Economy and International Relations of Russian Academy of Sciences noted that Zubkov is not a "conspiratorial" figure, but is skilled at balancing bureaucratic interests -- an assessment that political analyst Stanislav Belkovksiy also shares. -------------- Promoting Regional Development -------------- ¶5. (C) Still others posit that Zubkov's appointment was Putin's attempt to deal with a dysfunctional cabinet, although Director of "Fond Politika" Vyacheslav Nikonov said he has little expectation that the new one would be any better. Zubkov's first steps in office have been in the direction of asserting greater government oversight of the work of federal and, more particularly, regional governments in providing an improvement in living standards across the country -- a goal that he has publicly established as the first priority for the new government. In this, Zubkov is following Putin's lead; Olga Kuznetsova of the Institute for Analytics at the Russian Academy of Sciences observed that Putin's success in tax reform was matched by his frustration with the slow pace of regional development. Putin himself has lamented the income growth disparities between western Russia's large cities and the regions as the greatest disappointment of his presidency. MOSCOW 00004909 002 OF 003 ¶6. (C) Zubkov's regionally-focused approach also may be in part a reaction to Putin's angry disappointment surrounding his trip to Kamchatka and the Far East in early September. In a well-publicized dressing down, the President blamed failures to implement particular projects -- a gas pipeline, fisheries, and housing -- on the regional governor and ineffective Federal managers, particularly former Premier Kasyanov and Minister of Economic Development and Trade Gref. Although he did not expressly single out Fradkov, Putin's visible frustration over the inability to implement programs that he has repeatedly promoted as priorities -- particularly the development of the Far East and Siberia -- may have contributed to his decision for the government shuffle. Konstantin Remchukov, the editor-in-chief of Nezavisimaya Gazeta told Embassy that Fradkov was a stumbling block for the implementation of the National Projects, since all paperwork related to them had to pass through his office. That Fradkov was able to outmaneuver the head of the National Projects, First Deputy Prime Minister and would-be contender for President Dmitriy Medvedev, has been cited as proof of the latter's weakness. ¶7. (SBU) Zubkov's trips to Penza on September 26 and then to Astrakhan on October 3 set the stage for the new Premier to show his determination to implement Putin's agenda for social-economic development. Zubkov focused on "pocketbook issues" for ordinary citizens, highlighting problems of inflation, low wages, inadequate pensions, and poor communal services. In this he literally took money from his own pocket to pay for sweets and medicines for the young and aged. Zubkov's performance struck observers as playing the role of an avuncular "General Secretary," reminiscent of the dying days of the Soviet Union. Moreover, he publicly committed himself and the three new ministers to personally survey local conditions before government discussions of socio-economic conditions in a given region. By drawing attention to economic shortcomings and committing himself to leaving Moscow on a frequent basis, Zubkov may be seeking to distance himself from the failures of Fradkov's administration and cast himself as more capable in meeting the President's socio-economic agenda. At the same time, his well-publicized attention to populist issues helps to shape his own particular political "brand" as a first step towards a possible run for President in 2008. -------------- Kozak: Leading the Charge -------------- ¶8. (SBU) To succeed, Zubkov has to do more than just point out problems and he faces the same challenge that had frustrated Fradkov: breaking the inertia of bloated federal and regional bureaucracies that have stifled development projects. Dmitriy Kozak as the ambitious point-man for enacting the regional development program may, in fact, make some headway. Many in Russia see Kozak as a gifted administrator. Vladimir Lysenko, who worked with Kozak on regional issues, considers the new minister as "one of the most effective people in Putin's circle." The normally cynical Mercator President Dmitriy Oreshkin agreed, terming Kozak "one of the few managers" in the Putin government, and arguing that the decision to bring Kozak back to Moscow was evidence of how frustrated Putin was with the lack of progress in the regions. ¶9. (U) As a signal of the greater weight that Kozak and his ministry will have in the new government, Zubkov transferred authority over a significant part of the government's regional development budget from the MEDT to the MRD. Earlier in September, the deputy minister of the MEDT admitted that only a quarter of the money allocated for development projects had been allocated during the first half of the year. Now, Kozak will have responsibility for $200 billion for development projects over the next five years. ¶10. (U) Kozak's choice of influential but controversial Far East PolPred Kamil Iskhakov as one of his deputies (and the only that he, himself, selected) suggests that he recognizes the importance of the Far East to Putin. According to press, Iskhakov was one of the ideologists of the government's $15.6 billion special funding program, the "Program for the Development of the Far East and Trans-Baikal Area" that has been stymied for lack of funding. Although some, particularly regional commentators, see Iskhakov's removal as a demotion, Kozak's endorsement and expressed plans for giving Iskhakov full rein in overseeing development projects in the Far East suggest that his influence may increase as deputy minister. ¶11. (C) COMMENT: Zubkov's emphasis on regional issues and the appointment of competent managers could well break some of the roadblocks that have hindered Putin's regional agenda. MOSCOW 00004909 003 OF 003 But, at the end of the day, Zubkov faces the same problems of the recalcitrant bureaucracy and the limits of central authority over distant regional leaders that had stymied Fradkov's efforts. And, like Fradkov, Zubkov lacks the requisite personal influence and political stature to force through the changes that Putin wants for the regions. The demands of "Project Putin" and the succession question continue to overshadow the other aspects of the President's agenda that directly impact the lives of ordinary Russians. Burns