NEW MINISTER OF AGRICULTURE ANNOUNCED

UNCLAS MOSCOW 000640 SENSITIVE SIPDIS USDA FAS FOR OCRA/KUYPERS; OSTA/HAMILTON, HAXTON, BEAN; ONA/TING, SALLYARDS PASS APHIS MITCHELL STATE FOR EUR/RUS STATE PASS USTR FOR CHATTIN; HAFNER, KLEIN, MURPHY BRUSSELS PASS APHIS/FERNANDEZ VIENNA PASS APHIS/OELLERER E.O. 12958: N/A TAGS: EAGR ETRD ECON PINR WTO RS SUBJECT: NEW MINISTER OF AGRICULTURE ANNOUNCED SENSITIVE BUT UNCLASSIFIED ¶1. (SBU) SUMMARY: Russian President Dimitriy Medvedev appointed Elena Skrynnik (Screen-nik) as the Minister of Agriculture on March 12, 2009, succeeding Aleksey Gordeyev, who took over as Governor of Voronezh Oblast after serving for 10 years as Minister of Agriculture. Skrynnik, a 47-year-old with degrees in medicine and economics, is a relative unknown even to many agriculture professionals, and has more experience in the field of financing than in traditional agriculture. At least in the near-term, she will likely follow the current policies of her superiors and will not compete with First Deputy Prime Minister Zubkov in charting the direction of Russia's agricultural policies. Her views on WTO are as yet unclear, but she will have to work hard to be any more anti-WTO than her predecessor. END SUMMARY. -------------- Skrynnik's Background -------------- ¶2. (SBU) Elena Skrynnik was born in Chelyabinsk near the Ural Mountains and graduated from Chelyabinsk Medical Institute with a Doctor of Medicine degree. She came to Moscow and was a classmate of Aleksey Gordeyev at the Academy of National Economy of the Russian Federation from where she graduated in 1992 with a PhD in economics. Nearly her entire working life has been spent in the field of leasing, first in medical equipment in the 1990's and then in the agricultural sector (machinery, breeding stock, and equipment) since ¶2001. Since 2001, she has been the General Director of the Russian State Agro-Industrial Leasing Company OAO "Rosagroleasing", which has been the lead executor of the national priority project for Russian agricultural development. ¶3. (SBU) Financing of Rosagroleasing under the National Priority Project in agriculture from 2006-2008 totaled 24 billion rubles (then about USD 840 million),of which 3 billion rubles were used for financing of machinery needed by the livestock sector and 9 billion rubles for financing brood livestock needed by the domestic beef and dairy sectors. During that time, Rosagroleasing took orders from its network of dealers throughout the country to purchase agricultural machinery such as tractors and combines, equipment for the agroindustrial complex, along with breeding stock which was then re-sold to Russian buyers. Often, Rosagroleasing was the monopoly purchaser of these products and rural buyers spent more in payments of principal and interest to buy the products through Rosagroleasing than they would have through commercial purchases and commercial financing, suggesting there was enough slop in the system to cover corrupt payments. Nevertheless, farmers had to cooperate with Rosagroleasing since they represented the Ministry of Agriculture and the National Agricultural Priority Program funds passed through Rosagroleasing. Ms. Skrynnik was an active leader in this enterprise; President Medvedev said he met her in 2005 when he started overseeing the four National Priority Projects. First Deputy Prime Minister Zubkov, who is the current Chairman of the Board of Directors of Rosagroleasing, has also had the opportunity to work closely with Ms. Skrynnik, since she also served on the Rosagroleasing Board in addition to being its CEO. -------------- Events In the Past Week -------------- ¶4. (SBU) On the eve of the Women's Day national holiday on March 6, 2009, President Medvedev invited a number of prominent women to his residence and made comments which were covered widely in the media. He noted that there were only two women ministers, and that the country needs to bring more women to the government. Most analysts consider that policy to be a key motivation for the appointment. Skrynnik's name was not on Medvedev's "Golden 100" list, leading some to conclude that it was her connections to influential power brokers that made the difference in securing the appointment. ¶5. (SBU) Even though Skrynnik is on the United Russia Supreme Council, it was Communist Deputy Alexander Shirshov who made the motion in the State Duma on Wednesday, March 11 that Skrynnik be appointed Minister of Agriculture. In a strange twist, United Russia deputies rejected that motion, but the following day President Medvedev announced her selection, suggesting that this was a decision from the very top that was not vetted with the United Russia Party members in the Duma. Her selection evidently pleased Shirshov, who is quoted in the Moscow Times of March 13 as saying the sector needs an urgent rescue. "We need a breakthrough right now, so we need a person with energy rather than a bureaucrat." ¶6. (SBU) Skrynnik was daring in her first press conference as the Agriculture Minister on Friday, March 13, commenting that, "We will be examining the effectiveness of work of the staff. Those, who do their duties professionally, will keep working. Those who do not understand what should be done, will not continue to work." First Deputy Prime Minister Zubkov echoed this sentiment when he presented her to the Agriculture Ministry and commented on her strong management skills and likelihood that she would bring with her some of her trusted team from Rosagroleasing. It is not clear whether her appointment will lead to any significant changes at the Veterinary and Phytosanitary Surveillance Service (VPSS). Although Sergey Dankvert, Head of VPSS, reports to the Ag Minister according to the organizational chart of the Ministry of Agriculture, in reality he appears to report directly to the Kremlin. During her press conference she also confirmed that her immediate priority would be determining grain intervention prices (the guaranteed minimum price), establishing control over fuel prices for farmers and expanding opportunities for farm credit. -------------- Policy and Trade Implications -------------- ¶7. (SBU) Based on conversations with officials and employees in the Ministry of Agriculture, the selection of Ms. Skrynnik was a shock to nearly everyone at the ministry. Many are unhappy as she was not among the leading contenders and is considered an outsider to the field of agriculture. An official who knows her well confirmed that she was selected because she will not compete with Zubkov in setting policy directions. She is known to be obedient to her superiors and is expected to use her managerial energies to help implement current programs. She is not considered a reformer, as she worked well for many years in the cozy and often corrupt style of Russian business at Rosagroleasing. A manager of a large-scale, private agricultural company in southern Russia told us that Skrynnik is a very competent manager and is able to make quick decisions. But he also sees her as implementing policies that would mostly be imposed from above. ¶8. (SBU) Post does not expect that Skrynnik will be as vocally outspoken or as independently critical of WTO accession as was Minister Gordeyev; she will more likely follow the Kremlin's line, which remains rhetorically pro-WTO. There are some who have noted that she is not overly friendly toward the United States in general. We will see whether she will take a lead from higher authorities in her willingness to engage cooperatively with us now as minister. ¶9. (SBU) Regarding other international matters, Ms. Skrynnik has at least the personal experience of purchasing foreign equipment and technology and understands its usefulness in modernizing the agricultural and agro-industrial sectors. For example, John Deere representatives in Russia worked closely with her four years ago and arranged a credit facility between Rosagroleasing and the Export-Import Bank. At the very last moment, Rosagroleasing was blocked from using the facility by the actions of other ministers in the government. ¶10. (SBU) Another manager for one of the U.S. agriculture equipment manufacturers in Russia told us that Skrynnik's selection was a complete surprise. He noted he had met her several times, and that she struck him as more of a businesswoman than a bureaucrat. He expressed some hope that she would listen to the needs of farmers and agricultural equipment suppliers, especially regarding financing for foreign agricultural equipment. ¶11. (SBU) In past years, Ms. Skrynnik looked primarily to Europe for cattle purchases to upgrade the productivity of both the beef and dairy sectors. After several Russian teams visited the United States in and reported back about the huge achievements of the U.S. dairy and beef sectors, Rosagroleasing bought 300 head of cattle from the United States, with plans to purchase at least 2,000 more in the coming months. -------------- COMMENT -------------- ¶12. (SBU) With the support of President Medvedev, Elena Skrynnik has received a huge promotion from her position at Rosagroleasing to become the first woman to hold the position of Minister of Agriculture. She will need all of her energy, expertise, and managerial skills to help transform the Russian agricultural sector, which has significant, fundamental problems. During this period of economic crisis, the Kremlin seems to have chosen a person who will follow existing policies and attempt to make them successful rather than someone who will lead Russian Agriculture in a new direction. After the ten-year tenure of the anti-trade, anti-WTO Minister Gordeyev, we expect Skrynnik will be more compliant, and less outspoken than Gordeyev, but not necessarily any more supportive of WTO accession. BEYRLE