COMMENTATORS UNDERSCORE CONTINUITY IN ASSESSING

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001336 SIPDIS E.O. 12958: DECL: 05/13/2018 TAGS: PGOV PINR ECON SOCI RS SUBJECT: COMMENTATORS UNDERSCORE CONTINUITY IN ASSESSING NEW GOVERNMENT REF: MOSCOW 1321 Classified By: Charge d'Affaires Daniel A. Russell. Reasons: 1.4 (b,d ). ¶1. (C) Summary: On the day after the unveiling of Prime Minister Putin's new cabinet (reftel),commentators almost unanimously underscored the continuity it represented and pointed to the effort made to provide a bridge between the Kremlin and the White House in the form of the likes of Presidential Administration Head Naryshkin as the tandemocracy gains altitude. Also noticed was the sidelining of those whose feuding (Anti-Drug Tsar Cherkesov and spymaster Patrushev) or corruption (Minister of Communications Reiman) had become too public. The May 12 re-shuffle saw yet more St. Petersburgers (Minister of Justice Konovalov, Minister for Sport Mutko, the FSB's Bortnikov) brought into the mix. Although some observers were inclined to score the event as a "win" for Putin, others noted that the new Prime Minister and President were both almost equally long-serving veterans of the largely-recycled team, while among the new faces were those who were arguably closer to Medvedev than to Putin. In any event, the current constellation seems to strive for what its authors may hope is a creative tension among competing world views and personalities, and seems to offer evidence of the continued effort of Putin and Medvedev to pursue their joint agenda as a tandem. End summary. Kremlinology -------------- ¶2. (C) The May 12 Medvedev - Putin meeting was closely watched by Kremlinologists, and some saw in the spectacle of Putin sitting in the Kremlin chair he had occupied for the previous eight years a sign of the Prime Minister's intention to remain first among equals. Putin chronicler Andrey Kolesnikov reported it differently in the national daily Kommersant, where he had Putin telling Medvedev as he entered: "Now this is your place," to which Medvedev replied: "What difference does it make?" before taking the seat closer to him. More importantly for those interested in symbolism, Putin had traveled to the Kremlin to present his nominations, and was met by the new President in the room where Putin had received members of the government for the previous eight years. Continuity -------------- ¶3. (C) On the day after that meeting, Moscow commentators in unison used the by-word of the Putin Administration, "continuity," in describing the new arrangement. With only five new faces, the new government offers what Russia's citizens in poll after poll say that they want: a continuation of the status quo. From the more critically-minded Stanislav Belkovskiy, Vladimir Pribylovskiy, Mark Urnov, and Dmitriy Oreshkin to the more Kremlin-cozy Vyacheslav Nikonov observers all noted, as Oreshkin put it, that there were "no revolutionary changes" on May 12. Change: The Siloviki -------------- ¶4. (C) Against that background, those changes that did occur were given very different interpretations. The departure of FSB Chief Patrushev for the Security Council was scored variously as a blow against the "siloviki," a life preserver thrown to a man who is sick and unable to handle the day-to-day management of a sprawling agency, or punishment for feuding too publicly with "silovik" rival, Federal Narcotics Control Service Chief Cherkesov. Tatyana Stanovaya of the Center for Political Technologies told us May 13 that the "siloviki" have ceased to exist. She cited the departure of Patrushev, Cherkesov, and Ustinov, and the emergence of "grey cardinal" Igor Sechin from the shadows of the Presidential Administration into the more public role of Deputy Prime Minister, where he would be "boxed in," as evidence. ¶5. (C) Others were less certain, with some forecasting that the long-dormant Security Council under Patrushev could become a player in the power sweepstakes. Some alleged that legislation pending in the Duma would soon enhance the Council's powers, and that Sergey Ivanov and Putin himself had used the Council as a stepping stone. (Others recalled that for Igor Ivanov and Vladimir Rushailo it had been a stepping stone to retirement.) A question mark in the "siloviki" calculus was new FSB Chief Aleksandr Bortnikov who, unlike Minister of Defense Serdyukov, was an FSB insider MOSCOW 00001336 002 OF 003 who would face no resistance from the rank-and-file and who, according to the Vladimir Pribylovskiy of the analytical center Panorama, was close to Sechin. (Bortnikov's appointment was by that calculus balanced by the departure of Sechin confederate and relative, Vladimir Ustinov.) Change: The Ekonomisty -------------- ¶6. (C) The selection of well-known market reformer Igor Shuvalov as First Deputy Prime Minister and the retention of Aleksey Kudrin as Deputy Prime Minister and Minister of Finance could boost efforts at economic reform. Both Medvedev in his inaugural presidential address and Putin in his first speech as Prime Minister sketched ambitious economic plans, which included a renewed focus on lowering taxes, curbing inflation, and infrastructure investment. Shuvalov and Kudrin would likely serve as the architects of these reforms. The role of Economic Development Minister Nabiullina appears to have diminished, but she is pro-reform as well. ¶7. (C) Shuvalov is reportedly in charge of WTO accession, our principal bilateral economic issue, although contacts tell us they do not know what that will mean in practical terms. It is difficult to see Kudrin disengaging from WTO, given his intense personal involvement in the first half of 2008, and current plans to continue negotiations with the Saudis on a bilateral agreement and with the USG on language for state-owned enterprises. Complicating the hand-off to Shuvalov on WTO could be the latter's lack of experience with the issue and a bad personal relationship between Shuvalov and Kudrin, who reportedly clashed frequently when in Prime Minister Kasyanov's cabinet. The Old Guard -------------- ¶8. (C) Balancing the market-friendly face of the new government are two loose groupings around First Deputy Prime Minister Viktor Zubkov and Sechin. The bad news is that ex-Prime Minister Zubkov, who cut his teeth on a collective farm in the Leningrad Region, brings with him more than a faint whiff of the Soviet Union. The good news is that his writ has been diminished and, as First Deputy he will be in charge of only Aleksey Gordeyev's Ministry of Agriculture. Stanovaya ascribes the narrow portfolio to the social significance of agriculture and Putin's need for a "strong leader, who can at difficult times whip the bureaucrats into line." ¶9. (C) In Sechin's camp is Minister of Industry and Trade Viktor Khristenko, one of the longer-serving members of the Russian government and not an economic reformer. Khristenko has vocally supported a government-driven industrial policy aimed at promoting priority sectors of the economy. Also in the Sechin orbit is Minister of Energy Sergey Shmatko. The 43-year old Shmatko, as head of Atomstroieksport, was in charge of building the Bushehr nuclear power plant. Some observers speculate that Shamtko's nuclear background may mean that he will attempt to move Russia's energy policy beyond oil and gas. Others suggest that his relative inexperience and close relationship to Sechin will make him little more than a shill for the Deputy Prime Minister, who has been jockeying for greater influence over energy policy. ¶10. (C) In the same orbit is Deputy Prime Minister Sergey Ivanov, who will remain in charge of the military-industrial complex. Connecting the Dots -------------- ¶11. (C) Although observers here have been at pains to see in each appointment a victory for either the President or the Prime Minister, the new constellation appears to be more an effort to balance competing interests among a finite number of personalities, and to create a seamless relationship between Russia's tandem couple. From that vantage point, the appointment of a Shuvalov as First Deputy Prime Minister can be variously viewed as a "victory" for Putin, since Shuvalov has moved over from the Presidential Administration, or a "victory" for Medvedev, since Shuvalov and the President are reportedly close, and the former could be seen as an "agent of influence" for Medvedev in the Putin Administration. A better clue to the intentions of the balanced arrangement that has emerged is the appointment of Sergey Naryshkin as head of the Presidential Administration. Naryshkin, as Stanovaya notes, is evidence that "in effect the Presidential Administration and the Government have been merged," and Naryshkin is one of many employees of the tandem who will MOSCOW 00001336 003 OF 003 effect the close cooperation of the Kremlin and the White House. RUSSELL