EXPERTS ON MEDVEDEV'S PRESIDENCY, ONE MONTH ON

C O N F I D E N T I A L MOSCOW 001705 SIPDIS E.O. 12958: DECL: 08/15/2017 TAGS: PGOV PHUM SOCI RS SUBJECT: EXPERTS ON MEDVEDEV'S PRESIDENCY, ONE MONTH ON REF: MOSCOW 1616 Classified By: Political M/C Alice G. Wells. Reason: 1.4 (d). Summary -------------- ¶1. (C) One month into the job, Medvedev has fulfilled all of the essential functions as president: he has initiated legislation, signed laws, engaged with foreign leaders, and traveled to regional stops to promote his policies. Although most analysts here see Putin as still "large, and in charge," there are varying assessments of Medvedev's effectiveness and a tendency to see Putin suffering the loss of his the "aura of invincibility" that he enjoyed as president. In meetings with visiting INR/REA analyst, five top Russian political observers underscored that Putin and Medvedev are working together, sharing the same "team," while simultaneously consolidating their own positions and separate support networks. There also appears to be some agreement that the process of sorting out the Medvedev-Putin relationship has little chance of fundamentally undermining the current political system; our contacts nonetheless envisioned looming problems - most notably rising inflation - that could create difficult challenges for the governing team. End Summary. Ryabov: Not Too Shabby -------------- ¶2. (C) Political scientist Andrey Ryabov of the Moscow Carnegie Center took a cautiously optimistic approach to the Medvedev presidency. Admittedly unsure about how the diarchy will work and its ability to deal with crisis, Ryabov looked at the first weeks of Medvedev's presidency from the "half-full" perspective. He acknowledged that Medvedev has limited political capital at this time and described the president's decision to target his efforts on one sector -- the judiciary -- as a prudent approach. In that regard, he saw Medvedev accomplishing "quite a bit" off the start: his opposition to an amendment to the media law; the favorable decision in the Solovyev case at the Arbitrazh court, in which a top judge accused the Kremlin of undue influence; and the Supreme Court ruling in favor of Manana Aslamazian. ¶3. (C) Ryabov further approved of Medvedev's approach of avoiding direct conflict. He pointed to Medvedev's and First Deputy Premier Shuvalov's speeches at the St. Petersburg Economic Forum as being against state corporations, but not setting any real policies against them as being a realistic approach for dealing with the "snowball" effect of Putin pal Sergey Chemezov's ever-expanding holding company, Rostekhnologii. (In an aside, he noted that Medvedev's supporters like Usmanov do not have sufficient political heft to offset that of Chemezov.) ¶4. (C) Echoing the views of his Carnegie colleague Lilia Shevtsova, Ryabov underscored that Medvedev does not have the luxury of a long transition period that Putin enjoyed. Instead, he must become "the" President within the year. Medvedev's primary challenge is the de-monopolization of the political environment, according to Ryabov. As such he needs a weak legislature and thus to work to limit the impact of United Russia. Petrov: More Skeptical of Medvedev -------------- ¶5. (C) Nikolay Petrov, also at Carnegie, preferred to look at current events as part of a longer transitional period that began as early as last fall. Putin continues to drive events, as seen by the near full continuity of his team in both the Kremlin and the White House and the reproduction of his leadership model through the creation of a government Presidium. Petrov admitted that whereas he had earlier looked at the Putin-Medvedev tandem as that of a "driving instructor," with Putin teaching his successor how to drive the car of state, now he is less confident that Putin wants to (or can) leave power. As evidence, Petrov pointed to Putin's continued push for populist issues such as increased salaries and pensions, designed to maintain his personal standing among the citizenry, as a prerequisite for a return to the presidency. ¶6. (C) According to Petrov, Medvedev's challenge is to strengthen institutions to replace the substitutes that Putin created during his presidency. He sees the deck stacked in favor of Putin, however, with Medvedev's constituencies limited to the judiciary and the small/medium business community. He was admittedly surprised by the demotions of Putin's silovik partners, particularly Nikolay Patrushev, as a possible sign of a shift in the balance of power. Belkovskiy: All the Same, In Any Case -------------- ¶7. (C) Stanislav Belkovskiy of the National Strategy Institute steadfastly maintained that Medvedev is getting stronger, not because of any personal attributes, but by virtue of his office, which stands above the political system. He described Medvedev as enjoying an ever growing support from the elite, as Putin faced the loss of his "aura of invincibility" that the Presidency provided. Putin's priority, according to Belkovskiy, is managing his business projects, including the North and South Stream pipelines and the as of yet unrealized sale of Surgutneftegaz to Rosneft. In this endeavor, Putin is relying on Igor Sechin as his principal business manager and has passed responsibility for the business of government to First Deputy Premier Shuvalov. Belkovskiy points to the fact that Shuvalov, not Putin, gave the speech on economic strategy at the St. Petersburg Economic Forum as evidence for his theory. Somewhat contradictory, Belkovskiy also argued that Shuvalov's speech was a text prepared by the Premier "team" including Putin. Shuvalov got in trouble with Putin -- the Premier dressed him down publicly at a government meeting following the conference -- because his presentation was widely interpreted as "Shuvalov's opinion" rather than the government consensus, according to Belkovskiy. ¶8. (C) For Belkovskiy, there is little real difference between Putin and Medvedev. He dismissed the focus on Putin's security service background and described the former president primarily as a businessman. Medvedev and Putin share the same goal - to garner Western legitimization of the distribution of property among the elite. Belkovskiy argues that this had been Putin's goal until his pique at what he saw as Washington's betrayal during the Orange Revolution in Ukraine compelled him to shift course. In this regard, Putin still has a role to play as the "threat" to Medvedev's liberal reform agenda. Who's Up, Who's Down -------------- ¶9. (C) Belkovskiy, echoing the opinions of our other contacts, described former Drug Control Director Viktor Cherkesev and former First Deputy Premier Sergey Ivanov as the biggest losers in the recent government shake-up. There were mixed assessments of former Kremlin grey cardinal Igor Sechin. Belkovskiy argued that Sechin had actually done well, having his man, Bortnikov, placed at the FSB helm. Ryabov concurred, noting that Sechin had lost political power, but maintained his business influence and, perhaps more important, his close rapport with Putin. Belkovskiy also shared the assessment made by Dmitriy Oreshkin of the Mercator Analytic Group that Putin Kremlin spin-master Vladislav Surkov, still in Medvedev's Presidential Administration, was taking a more public, but less coherent position that he had previously. However, Surkov's earlier self-assurance has evaporated. Belkovskiy and Oreshkin both noted the continued incarceration of Finance Minister Kudrin's deputy Sergey Storchak, with Belkovksiy linking the arrest, despite Kudrin's close association with both Putin and Medvedev, as an indication of the limits of power in the inter-elite infighting. Challenges Ahead -------------- ¶10. (C) None of those contacts saw the tensions between Medvedev and Putin, which have mesmerized the political elite over the past several months, as posing a fundamental challenge to the existing political system. But all raised the systemic challenges as potential stumbling blocks for the political structure. Oreshkin complained that the tug-of-war among leading figures in the government had produced "alienation" (or laughter) among the population, and the likely result would be the strengthening of the already present tendency of an autonomous society living side-by-side with a "self-sufficient" government, as was the case in the Soviet era. ¶11. (C) Virtually all raised the issue of inflation and other economic challenges as potentially destabilizing to the status quo, complaining that neither Putin nor Medvedev were paying close attention to the issue. (As we have noted reftel, inflation is a problem, but one that government has accepted as a cost of further economic growth. The GOR has few instruments to control the problem, even if it had decided to set fighting inflation as a priority.) Leftist economist Mikhail Delyagin, the head of the Institute for Problems of Globalization, underlined the failure of administration efforts to curb inflation thus far, claiming that Belarus had ramped up exports of dry milk to Russia this year, but despite the increase in supply, the price of milk on store shelves continued to rise. Delygain described the problem as a result of monopolization of markets and corruption -- characteristics emblematic of the current political system. Petrov identified other potential potholes for the administration, including the looming debacle related to Putin's municipal reform, labor shortages, and deteriorating infrastructure. Belkovskiy also predicted a crisis coming and lamented that the bureaucracy -- which he said had been developed on the basis of "negative selection," as the more capable took jobs in the private sector -- would be ill equipped to manage. RUSSELL