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

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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

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effect the close cooperation of the Kremlin and the White
House.
RUSSELL