Medvedev Names New Government

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SUBJECT: Medvedev Names New Government

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Summary
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1. (SBU) In a government marked by experience and continuity,
President Medvedev nominated a new cabinet today that leaves the
"Zubkov" cabinet largely intact and our main interlocutors Sergey
Lavrov at the Foreign Ministry and Finance Minister Kudrin at their
posts. Some of the more notable changes involved the move of
Presidential Administration (PA) Head Sergey Sobyanin to Deputy
Premier (most here had expected him to head Medvedev's
administration); the promotion of presidential aide, Igor Shuvalov,
to first deputy prime minister and the demotion of Sergey Ivanov
from that position to "just" a Deputy Premier; and the omission of a
nominee for the Ministry of Economic Development on the Kremlin
website list. (Press reports suggest that Elvira Naibullina will
stay on, but lose the trade aspect of her portfolio.) In other
developments, Minister of Justice Ustinov, Federal Security Service
Head Nikolay Patrushev, and Federal Drug Control Service Viktor
Cherkesov lost their jobs - suggesting a shake-up in the "silovik"
camp - but Patrushev will move to the vacant Secretary of the
Security Council. If all ministerial candidates are confirmed by
the Duma as expected, five new faces will join the government as
well as three of Putin's top lieutenants from the PA. Over the
coming weeks, we will be looking in greater depth at the
personalities involved as well as the government's new schema of
organization. End summary.

Deputy Premiers: Rotation of Cadres
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2. (SBU) Putin's new government will have at least seven deputies.
After confirmation by the Duma, former Premier Viktor Zubkov and
Igor Shuvalov - Putin's adviser on economic issues and WTO Sherpa -
will serve as First Deputy Premiers. According to press reports,
Zubkov will manage the National Priority Project on developing
agriculture, as well as having responsibility for government policy
related to fishing, timber, and the agro-industry. Shuvalov will be
piloting economic policy, particularly foreign trade and the sphere
of technical regulation. He will continue to head Russia's efforts
to join the WTO, oversee government policies to develop small
business, fight monopolies and encourage competition, and the
creation of a unified economic space. Perhaps more important,
analysts here see Shuvalov playing a critical role as the nexus
between the Kremlin and the White House, managing paper flows
between the two bureaucracies.


3. (SBU) Sergey Sobyanin, Putin's former head of the PA, and Igor
Sechin will move from the Kremlin to the White House. The former
will serve as the head of the government administration and will
continue his work on assessing the effectiveness of executive organs
and balancing the authorities between the federal, regional, and
municipal layers of government. Sechin's portfolio is concentrated
on state industrial policy, excepting the energy and military
industrial sectors. He will also supervise government policies
related to the use of natural resources, as well as oversight over
ecological, technical, and nuclear monitoring. Sobyanin's
appointment to the government comes as a surprise to many here,
since he, as the head of Medvedev's election campaign, was seen as
the most likely candidate to lead Medvedev's PA. (Medvedev today
announced that he is picking Sergey Naryshkin, the former head of
the government administration and Deputy Premier to take that role).



4. (SBU) Aleksey Kudrin will remain as the dual-hatted Deputy
Premier and Finance Minister, while Sergey Ivanov is demoted from
First Deputy Premier, but stays in the government. Kudrin's
portfolio remains largely unchanged, heading policy on
social-economic development. He will oversee all financial matters:
taxation, monetary policy, as well as the budget. We do not yet
know whether he and his staff will remain engaged on WTO issues.
Aleksandr Zhukov likewise will stay in the government to oversee the
other National Projects (excepting agriculture) and state policy for
education, health, social security, culture and the arts. He will
also be responsible for government policy related to the 2014 Summer
Olympics in Sochi as well as other aspects of sport, tourism, and
physical fitness.

Shake-Up in the Security Services
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6. (SBU) Perhaps the biggest surprises of the day came from
appointments within the security services. In addition to the
replacement of Justice Minister Ustinov, Medvedev announced that
both FSB head Patrushev and Federal Drug Control Service Cherkesov
would lose their jobs. The two have been involved in a behind the
scenes struggle for influence, with "embarrassing" behavior - such

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as Cherkesev's letter last year complaining about the conflict
between the services. Patrushev will move to the empty chair of the
Secretary of the Security Council, a probable comfortable sinecure,
and will be replaced by Army General Aleksandr Bortnikov, the deputy
head of the FSB and Director of the Department of Economic Security
at the FSB since 2004.

2+2 Intact
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7. (SBU) Despite rumors that the Foreign Minister was interested
in stepping down, FM Lavrov is a key holdover in the new government,
underscoring the stability in foreign policy promised by both the
outgoing and incoming Presidents. Along with Defense Minister
Serdyukov, the 2+2 architecture for U.S.-Russia relations remains
intact.

Five New Ministers
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8. (SBU) Twelve ministers will hold onto their positions in the new
government (see list below),although some will take on new
responsibilities - like Minister for Natural Resources Yuriy
Trutnev, who adds "ecology" to his portfolio. Moreover, there was
some shifting of accounts as the Ministry of Economic Development
and Trade lost its "trade" responsibilities to the Ministry of
Industry. The Minister of Industry and Energy has lost
responsibility for energy, as the Federal Energy Service is again
bumped up to ministerial level (and hived off of the Industry
Ministry). The new government will add yet another new ministry for
sport, tourism, and youth policies. Five new faces will appear in
the new government:

- Sergey Shmatko, who had headed Atomstroyeksport, the company which
manages construction of all NPPs Russia is building abroad, since
2005, will take the helm at Energy.
- Vitaliy Mutko, the nominee for Minister for Sport, Youth, and
Tourism is a former St Petersburg politician - a friend of Putin and
the late Anatoily Sobchak. His background as former President of FC
Zenit St Petersburg soccer team (Medvedev is a huge fan),former
Chairman of the Russian Premier Soccer League, and current position
as President of the Russian Football (Soccer) Union give him strong
credentials for the position.
- Aleksandr Konovalov, the President's Plenipotentiary to the Volga
region since 2005 and former St. Petersburg prosecutor with close
ties to Putin, will replace Vladimir Ustinov as the Minister of
Justice.
- Former head of the Presidential Protocol Igor Shchyogolev will
replace Leonid Reiman as the head of the Ministry of Communications
and Mass Media - the latter being a new portfolio for the ministry.
Our contacts in the Telecom Ministry's International Cooperation
Department were caught flat-footed by the announcement, saying that
they "learned about it from the press."
- In a surprise move, Russian Ambassador to France Aleksandr Avdeyev
will replace Culture Minister Sokolov -- leaving some puzzled here
as to the new appointment. Aleksandr Avdeyev had a long, successful
career with the Ministry of Foreign Affairs, heading the Department
for CIS Affairs and several positions as ambassador to Luxembourg
and Bulgaria.

Comment:
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9. (SBU) The structure of the new government reflects Medvedev's and
Putin's priorities and, as expected, features experience and
continuity - even with a few "surprises." The optics of the meeting
of the tandem, which took place in Medvedev's Kremlin office showed
the two men playing their appropriate roles (although Putin, perhaps
by habit, sat in his usual spot during the one-on-one meeting.) The
appointment of only seven deputies - far less than the 10-12 bandied
about in the press - appears to undermine assertions that Putin was
creating a "separate" cabinet, but also those theories that he would
not be actively involved in the day-to-day running of the
government. The firings within the security services have taken
many off-guard here, especially since today's announcements involve
the heads of both silovik camps. We will be following up with more
in-depth coverage about the new personalities within the government
and our assessments of the functioning of the government.