Regional Repressions

A long article by Nikolai Petrov was published in Vedomosti yesterday on elite restructuring in the regions. My current working hypothesis is that Russia is in the middle of a slow-moving coup, and what Petrov says here seems to line up with what I have been noticing too.

Usually, Petrov writes, change takes place in the [federal] center first, and then makes its way down to the regions. However, “with repressions against the elite, the situation looks different: in the regions, they have moved much further than is now visible on the federal scale.”

“The Kremlin’s surgical operation to separate the siamese twins – the actual regional elite and the feds in the regions – is almost over. This was achieved in general after the reform of the Ministry of Internal Affairs [MVD] in 2011 and the extension of the principles of horizontal rotation to virtually all federal generals in the regions. …the conflict between the federal-regional and the regional-regional elite has been growing ever since.”

Governors and other federal officials sent to the regions know that their stints there are just temporary, and treat their time there as such.

“…success is understood as speed and clarity in executing commands from above while maintaining order and tranquility. This in itself is, perhaps, not bad, but it has nothing to do with strategy and can conflict with the interests of the region’s development.”

Background

“The crackdown on the regional authorities began in the middle of the early 2000s with the mayors, who until then had acted as a counterbalance to the governors. Then senior regional officials and former heads of regions… and finally, starting in 2015, the current governors [began to be replaced].”

Before 2015, the security service attacks on governors and their teams were conducted without publicly stated official sanction, Petrov continues, but “…in 2015, it seems, a total go-ahead was given.”

“A striking example of this was the arrest of the governor of Komi, Vyacheslav Gaizer and his team in September 2015, a couple of days after he was ranked as one of the top five most effective regional leaders by a pro-Kremlin group.”

Statistics

“In 2016, one governor, 13 deputy governors, and four mayors of regional capitals were prosecuted. Since the beginning of 2017, two regional leaders have been arrested (formally immediately after their voluntary resignation), seven vice-governors or government deputies, and one mayor of a regional capital. The total number of this kind of elite in the regions is only between 800 and 900 people. It turns out that 2% of them are [ousted] every year – that’s every 50th.”

Who is overseeing the crackdown?

“Cases are directly handled by the investigation departments of the FSB [Federal Security Service] and the SK [Russia’s version of the FBI]. The FSB has been particularly active after Sochi [2014 Olympics] and [the subsequent invasion of] Crimea, regaining their leading role…”

In 2014, Petrov says, the Ministry of Internal Affairs began to be cleaned out, with “…acting heads of that Ministry being detained in the regions – on Sakhalin, where a year later the governor was arrested, and in Ivanovo, where several vice-governors had already been arrested. In Mari El, the Minister of the MVD shot himself after learning that a criminal case had been initiated against him. Two years later, the governor of the region resigned and was subsequently arrested. Only in the first case the militia general was charged with organizing the illegal wiretapping of FSB and SK officers, in the other two, financial and economic violations. In 2014, they began to arrest the regional chiefs of the Federal Penitentiary Service. In 2015 they went after the governors.”

“We control everything, but the FSB controls us.”

“The predominant role of the FSB is manifested, in particular, in that it never acts as a object of repression against the public… and is only responsible for intracorporate [affairs]. At one time, before investigations were separated from the prosecutor’s office, this role was more likely played by prosecutors who now occupy a subordinate position. Prior to the abolition of direct elections of governors in 2004, if the Kremlin did not want to reelect the current head of the region, about six months before the elections, the prosecutor was replaced there, thereby cutting off the siloviki and law enforcement officers from the work of the political machine controlled by the governor.”

“The role of the chief federal inspector, who at first, was the coordinator of all the federal forces in the region, except for the FSB, has sharply decreased. This reflects the strengthening of power corporations and the relative weakening of the Kremlin’s political bloc.”

Timing

“The increase in crackdowns on the elites in general and the regional elites in particular has been going on for a long time, especially intensively since 2013. An analysis of media [reports] conducted by Stanislav Zemskov shows that in 2013, the total number of cases of detention on various charges by representatives of the regional and municipal elite grew about three times compared to 2012 and has since been maintained at the level of about 600 cases per year, that is, an average of seven cases per year per region. In 2015, the process took a turn, when (a) there was a sharp increase in the status of detainees, with sitting governors detained at work, and (b) entire teams of regional elites were accused of creating organized criminal groups.”

“At the same time, reprisals against the siloviki also intensified. Back in 2011, the prosecutor’s office with the famous case of the “Moscow regional prosecutors” came under attack, leading first to the resignation of the prosecutor of the Moscow region, and the flight of his first deputy from the country, as well as to the resignation of a dozen city prosecutors. Eventually, however, the prosecutor’s office fought it off and and the affair ended in nothing and was written off as a departmental conflict with the SK. Since 2014, as already noted, the regional heads of the Federal Penitentiary Service have been suspended (2014 – Perm, 2016 – Komi, 2017 – Rostov-on-Don, Kemerovo) and the Interior Ministry (2014 – Sakhalin, Ivanovo). Since 2016 the heads of the SK’s investigative departments (Kemerovo, and Moscow).”

This trend will only continue and intensify, Petrov predicts, noting that if before the victims were let off for time served after the conclusion of the trial, this is no longer happening, with sentences of “8-12 years for “fraud”” considered “unexceptional”. In addition, the arrests and searches have become more dramatic, with raids taking place in the early hours of the morning.

Targeting

As to who is being targeted, Petrov notes that there is a “confluence of different circumstances, but primarily the weakening or lack of a strong patron.”

It also depends on the regions and what is happening internally there.

“There are cases of pressure on the head [of a region] to leave and stripping the team, as in, say, Kabardino-Balkaria (2012), Krasnodar (2014-2015), Chelyabinsk (2014-2015), Perm Krai (2017). The governors of Vladimir and Kemerovo have publicly spoken out in defense of their detained team members. The first reaction in the region to the detention of a high-ranking official is to read what is happening as a signal to the governor, especially in connection with the end of his term.”

Crime and Punishment

“In terms of crime and punishment, a clear connection is not always seen. Sometimes there is a crime of an individual, or say, a group, and the punishment of others – sometimes the punishment is not for the crime which is in the sentence.”

What’s Next?

Of course, Petrov concedes, the regional elites who are being punished are guilty of at least some of the crimes of which they are accused, “…but no more so than their colleagues who remain at large (so far?).”

“This is not a fight against corruption, this is the transition of the elite into a new mode of existence, akin to the military field.”

“It is clear that this is, in part, a reaction to the deterioration of the economic situation…”

Turning a Blind Eye

He also points out that by turning a blind eye to corruption for so many years, the Kremlin has given the regional elite a long rope with which to hang them.

As for the specific people being chosen to make an example of, Petrov believes that it is mostly “accidental”. Certain people are chosen to be made examples of, in order to maintain control of those who remain.

“Fear becomes the resource that replaces shrinking rents. And it needs constant reproduction. And since the economic situation will not improve dramatically in the foreseeable future, the need for fear will not end, and that means repressions.”

These repressions “are systemic in nature”, Petrov concludes.

“In addition to the FSB and the SK, the judicial system is involved in its implementation, specially modified for this purpose… The entire management structure in the regions is imprisoned under them. There is therefore no reason to expect the situation to change for the better.”

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Bankers vs Russia’s Central Bank

Alfa Bank has suspended its membership in the Association of Russian Banks, Realnoe Vremya reported last week.

The reason?

“The bank categorically disagrees with the text of the Association’s 2017 annual report.”

“The style of the report, accusing the Central Bank of cynicism, favoritism, working in the “military operations” mode, the deliberate reduction of the number of banks… undermining the stability of the banking system, as well as the suppression of competition, contradicts the spirit of constructive interaction and cooperation, which has developed between the regulatory authority in the face of the Bank of Russia and the healthy part of the national banking system.”

The report accuses the Central Bank of prioritizing “inflation targeting” over “GDP growth, employment, and the living standards of [Russian] citizens”.

As a result of the CBR’s actions, trust in the banking sector is deteriorating, the report also alleges.

Capital Flight

“…many large and even medium-sized organizations and wealthy citizens are concluding that it is necessary to keep large amounts of money abroad and obviously not in Russian currency.”

And:

“…most market participants note a delicately veiled favoritism towards a number of banks.

This, in turn, leads to a loss of confidence of all other market participants.

Seeing the growing requirements for the capital of banks, many companies also refuse to cooperate with those banks that do not have access to public [State] resources.”

The report continues by noting that:

In the end, the non-material damage in the form of erosion of confidence in financial institutions, and state policy are more important than the direct loss of money.

The report then offers alternatives to the easy out of revoking banking licences:

A top-down change in working strategy, changes in management, rehabilitation or sale of the bank to interested investors are complex alternatives to revoking the licence of a problematic bank. They are difficult measures. But they are needed to make the financial system of Russia not only stable but credible.

For instance, Italy has banks that are over 200 years old. In the 19th to 21st centuries, many of them went through obligatory change of owners and administration, rehabilitation, consolidations, and other procedures initiated by financial authorities. At the same time, they preserved their licences and continued working with clients.”

Too Big to Fail?

Meanwhile, S&P Global Ratings has also criticized Russia’s Central Bank for its actions regarding TatFondBank (Tatarstan’s second largest bank).

“First of all, we believe that the criteria used by the Bank of Russia in making a decision on financial recovery or revoking of the licence of troubled financial institutions have not been sufficiently transparent. We are not sure that the problem will be solved even after the introduction of a new rehabilitation mechanism. A recent example: the decision of the Bank of Russia to revoke the licence of TatFondBank was made, despite the high, by our estimation, significance of this financial institution for the banking sector of the Republic of Tatarstan.”

S&P also noted that:

“…Tatfondbank’s rehabilitation would require 100-200 billion rubles, and Deposit Insurance Agency granted loans of a comparable or bigger size within the financial rehabilitation of Bank of Moscow (294,8 billion rubles) and Mosoblbank (168,7 billion rubles).”

Alfa Bank

Alfa Bank is Russia’s largest private commercial bank, so it is no surprise that they sided with Nabiullina’s policies, Realnoye Vremya concludes.

“Emotions are emotions, but as business people in the West say, “Money loves silence. Big money loves grave silence”.

Alfa’s statement read in part:

“The bank supports the efforts of the regulator to clean up the banking system. To ensure a competitive environment, it is important not to allow unjustified differences in the regulation of private financial intermediaries and organizations with State participation.

Alfa Bank considers the proposals of the Central Bank of the Russian Federation on the proportional regulation of credit institutions to be justified. This is about the implementation of international approaches that extend the requirements of the Basel standards to large, internationally operating banks [like Alfa], and reduce regulatory pressure on small credit institutions. The practical task is to clarify the final legislative formulations and take into account the real commercial interests of all banking groups. This must be done in a calm and balanced dialogue, without loud slogans, accusations and labels. Thus, the Russian banking system must prove its maturity and readiness for change.”

Ulyukaev Affair

Rosbalt held a round-table earlier this week on the so-called “Ulyukaev Affair”. Former Economic Development Minister Ulyukaev remains under house arrest for allegedly taking a $2 million bribe for his decision on the Rosneft takeover of Bashneft.

The round-table included the Director of the “Political Experts Group” Konstantin Kalachev, and Nikolai Mironov of the Centre for Economic and Political Reform.

Kalachev told the group that he thought that what happened to Ulyukaev was a signal to Prime Minister Dmitry Medvedev that his future prospects were not bright. And that Medvedev had no hope of being President again.

Kalachev also did not rule out more arrests:

“The genie is out of the bottle, and none of the elite can feel completely safe. The temptation to turn this story into the start of the presidential campaign – in response to a request for justice in society – is there. The popularity of officials is not high, as you know, and the old theme of “Good Tsar, bad boyars”… just might be implemented through high-profile arrests.”

Nikolai Mironov thought (as I do) that the case against Ulyukaev was to show people that the Kremlin was doing something to fight corruption.

“At the same time… data from the latest opinion polls shows that Russians’ belief in anti-corruption policies remains low even after the detention of a member of the government.”

Mironov recalled that after former Defense Minister Anatoly Serdyukov was let off easy for his role in the Oboronservis fraud case it became clear that there was one set of rules for the elite and another for everybody else. And Russians have not forgotten this.

Mironov also suggested that the rules of the game had changed, and that nobody could be considered safe. But, he pointed out, Russia still has a clan system that relies on “backroom agreements”.

Kalachev agreed, saying that “…the Ulyukaev affair continues to demonstrate “the Byzantine nature of our politics”.”

Meanwhile Reuters reported earlier this week that Ulyukaev had been discussing diluting the state’s share in Rosneft further than currently planned, though not right away. Rosneft’s sale is supposed to go through next month, with 19.5% of the state’s holding in the company up on the auction block. The state will then own 50% of the company, “a blocking stake”. The government is anxious to offload the shares before the end of the year in order to get the cash that it desperately needs.

Academy Reforms

Last week Russian President Vladimir Putin publicly called out the Academy of Sciences for allowing high-ranking bureaucrats to join.

“Speaking on Wednesday at a meeting of the Council for Science and Education, President Vladimir Putin said that late last year he asked officials to abstain from elections to the Russian Academy of Sciences… and he appealed to the head of the Academy, Vladimir Fortov.”

However, according to Vzglyad, when the elections to the Academy were held in October, “many of the civil servants disobeyed the President.”

Sergei Leskov writes in Rosbalt that what happened was “an unprecedented event and its underlying causes require analysis and interpretation.”

“The immediate reason for the conflict situation was the fact that… a half dozen [high-ranking] officials were elected to the Academy. A few months ago, Putin gave a written order that officials were not to run for the RAN… that is we are talking about direct disobedience.”

And, as we found out yesterday, the president followed through on his threat, and signed a decree dismissing four of the officials who had violated the ban.

“Putin, as the builder of the power vertical cannot understand how officials openly violated his will, which cannot be misinterpreted. In this sense, the president’s decision to dismiss officials from the civil service… to an academic path is quite logical.”

There seems to be some mass movement of civil servants into the Academy, a position that is for life once a person is allowed entry. The process to gain a seat in the Academy is a rather long and arduous one.

“Each applicant must be nominated, must go through six rounds of interviews, and voting is always secret. The procedure is consecrated in a century of tradition, and, by design, should serve as a barrier to entry into the ranks of the Academy the unworthy public. This ensures the independence of the Academy from the authorities, but on the other hand, it strengthens the state itself, which out of short-term motives in every era tends to dictate its will onto the Academy. There are examples where the independence of the Academy saved her prestige.”

But that’s a rather idealistic view of the situation, Leskov continues.

“…of course you do not have to be a professor of human nature to guess that a secret ballot can be controlled and regulated…. It is necessary to conclude that not only the conceited officials, but also the management of the Academy took a risk in going against the president.”

So why did the Academy decide to go through with this dilution of its ranks by adding new members from the bureaucracy?

“Following the recent ruthless reform [that took place in 2013], when officials deprived the Academy of its rich assets, it [the Academy] felt a threat to its existence. We must fight for survival! According to the laws of Darwinism, social mutations have become inevitable. The strong devour the weak. So we must be strong. One of the coping mechanisms – to attract the alpha male.”

So the Academy added these officials for protection, he alleges.

“Some colleagues of [Academy President Vladimir] Fortov told me: “How could Putin humiliate the president of the Academy?” But we must admit that from the start the Academy itself and its president humiliated himself by swallowing the joke of a reform… When you yourself are willing to be humiliated, do not be surprised when others humiliate you.”

And, Leskov concedes, “…in our country the scientist has always been dependent and humiliated…. it is no coincidence that in our history there are practically no examples where a scientist has become an independent and wealthy man like Watt, Edison, Sikorsky, Gates, Jobs, Musk…!”

If in the Soviet era, it was rare for the elite to become members of the Academy (“it was a violation of party modesty”), then “in democratic times, habits have changed. Nobody has taken statistics, but there is a sense that the current election to the Academy has turned into a promenade show for VIPs.”

“The Academy of Sciences is often criticized for its lack of innovation. This is slander. A striking innovative achievement of the Academy is the trade in academic status…. But today the issue of the professional dignity of the scientist… is not necessary.”

What is happening in the Academy is a microcosm of what is taking place throughout academia in Russia, Leskov concludes.

“Russian academia is gradually and inexorably turning into a citadel of scientific nomenclature. And this leads to further brain drain. Young scientists, instead of living in Russia and moving up the career ladder, are forced to flee in search of the best scientific niches in the West. Youth… sees no prospects. It is characteristic that the Academy did not name [2010] Nobel Prize winner Konstantin Novoselov, who is a Russian citizen, but strengthens the rear of policemen, oilmen, and counterintelligence agents.”

“Once the Academy of Sciences was the most robust repository of moral and spiritual values of society. Today there are no intellectual and moral leaders, like Sakharov…  and none are visible on the horizon.”

*For more details on the “reforms” forced on the Academy by the Kremlin in 2013, see this article from the Institute of Modern Russia.

Clan War

Everybody is making much of what has happened with Ulyukaev, and calling it “a decisive turn in the fight against corruption…” former MP and KGB man Gennady Gudkov wrote on Facebook. But this is all just the “wishful thinking” of “naive fools”.

He says that a week ago he had a conversation with a friend who, he implies, is well-connected. According to Gudkov, the friend said,

“”You… cannot even imagine what terrible bickering has started at the very top! Soon there will begin a war between the clans the likes of which we have not seen before!” And he named some very famous surnames in Russia, warring with each other for live and death, including in the government and in the Kremlin.”

He continues:

“All that we see today, is not a fight against corruption (it is inseparable from the “vertical”…) but a fierce… struggle for influence, financial flows, and positions.”

And every method will be used in this clan conflict. From blackmail to corporate raids to physical violence. Gudkov also implies that more assassinations are likely.

Ulyukaev, he says, “was never part of the inner circle of “untouchables””.

“But not everybody has understood that the situation has changed dramatically… the rules have changed…”

Gudkov concludes:

“Describing the tensions in the highest levels [of power], my informed source said: “It will soon come to the point that Putin’s entourage will begin to blame each other for the most deadly sins on live TV… so that the opposition can sit back and relax: the snake will start eating its own tail.””

Anti-Corruption Sideshow

Alexei Ulyukaev appeared in court last night and was placed under house arrest until the middle of January. Prosecutors said he posed a flight risk. At about the same time, it was reported that President Putin had sacked the Minister for “loss of confidence”.

This is reportedly the highest ranking arrest since Beria was ousted.

Most of the opinions in Russian circles are still based on speculation. Most people seem to think that Ulyukaev is not even guilty of the crime he has been accused of, that of taking a $2 million bribe to make a decision that likely wasn’t even his to make.

Political analyst Gleb Kuznetsov told Rosbalt:

“This is a demonstration of the determination of the state in the fight against corruption. It demonstrated that we have no untouchable class. That not only a provincial governor of a region can be detained, but also one of the most influential government ministers. He can be prosecuted in the same way as any other person.”

Rosbalt also talked to the director of the Institute for Contemporary State Development, Dmitry Solonnikov:

“It is a hallmark of our time. The heads of regions, and security officials with the rank up to General, are not simply dismissed, but publicly and openly sent into custody. So in that sense, the detention of Ulyukaev seems logical and is not surprising.”

Solonnikov added that it was clear that Ulyukaev was not the only one who was being monitored. “…the control of policymakers is not a secret.”

His speculation was likely correct as the Russian media reported today that four other high-ranking officials were being monitored. They were named as Deputy Prime Minister Arkady Dvorkovich, Presidential Aide Andrei Belousov, another official at the Ministry of Economic Development, Oksana Tarasenko, and Marina Romanova, who is an aide to First Deputy Prime Minister, Igor Shuvalov.

Others saw this as a continuation of the fight over an ever-shrinking pie of assets.

Political analyst Yevgeny Negrov told Rosbalt that he thought the fight was not over ideology but rather that “the ultimate beneficiary was some kind of “financial-industrial group”.

The President of the “Center for Political Technologies” Igor Bunin thought the conflict was of a more personal nature between Ulyukaev and Rosneft chief Igor Sechin.

But, as I said yesterday, this seems to be mostly about the continuation of the Kremlin’s faux anti-corruption campaign that they have co-opted from Alexei Navalny.

People are fed up with the corruption they see around them. And performing show trials for TV is an effective way to show people that the authorities are doing something, even though nothing will change.

Reshuffling the Cadres: Fradkov

In a clearly scripted conversation, the President announced that former SVR chief, Mikhail Fradkov, was now in charge at state-owned military industrial company Almaz-Antey. In addition, Fradkov will take responsibility at Russian Institute of Strategic Research.

Ivan Preobrazhansky writes:

“Early November was marked by new appointments. Changes in the upper echelons of power, which began prior to the September parliamentary elections, continue. In addition, each piece of news in this regard immediately acquires contradictory rumors. In the first place, because few people understand what causes this or that personnel decision.”

However, Preobrazhansky says, there is an explanation for the news that former SVR Chief Fradkov was put in charge of Almaz-Antey and the Russian Institute of Strategic Research [RISI in Russian].

“If you believe the rumors, Fradkov has de facto become a victim of the personal sanctions imposed by the US and the EU against a number of Russian officials.”

There was some confusion in the elite about who would be placed where, he continues. And it appeared that “even Naryshkin himself until recently was not sure that he would be sent to the SVR…”

Fradkov was then rumored to be heading to Russian Railways [RZhD], but this was allegedly nixed because of the sanctions against him, which would prevent RZhD from getting the necessary loans to keep operating. But then we heard nothing for almost two weeks. Now, however, “the Kremlin seems to have found a way out of a difficult situation.”

“And in addition to the solid but, by and large, symbolic position, the ex-Prime Minister unexpectedly received a second one – he became the director of the Russian Institute for Strategic Research [RISI], which at one time was part of the SVR, but in recent years became a “subsidiary” to the Presidential Administration, as well as working closely with the Russian Security Council.”

Preobrazhansky then reminds his readers of the scandal surrounding RISI in 2015 when a former employee, Aleksandr Sytin, accused them of being an ideological organization rather than a pragmatic and professional one [for more details, see here.].

Fradkov’s appointment to RISI gave rise to “rumors that it was an attempt to make a single formal “think tank”, built in the Kremlin administration, that was somewhat more “brainy”. For example, ridding it of “ideological” non-professionals.”

“However, there is a another version, saying that on the contrary, the president personally is satisfied with the intellectual product produced by RISI for public use as well as for internal use in the Presidential Administration. And he just wants to appoint a “political heavyweight” (the former Prime Minister), so that analyses from RISI also increase in political weight.”

A third version suggests that the changes come from “…the general “reshaping of the field of Russian experts, or rather that part of it which advises or would like to advise the Kremlin. As we know, the new curator of internal policy of the Presidential Administration, Sergei Kiriyenko, recently met with the experts: political scientists, sociologists, and political strategists.”

“But there are many “newcomers” who are ready to try to break into the Kremlin’s expert pool. Basically, this is the oldest Russian political technology, political science, and sociological centers, which have ceased to cooperate with [new Duma speaker] Volodin because of their lack of loyalty. Here in those processes and supposedly reformed RISI, which is to take a “conservative” position in a broad coalition of experts, which gathers in the Kremlin (similar to how it was in 1996 before the presidential election).”

This would be in preparation for the coming Presidential election in early 2018. But these so-called experts will only tell the authorities what they want to hear rather than what is actually taking place, he alleges.

Mutko

Russia’s Sports Minister Vitaly Mutko has been removed from his post, and given a new role in the Russian government.

BBC’s Richard Conway had reported Mutko’s potential transfer last week:

And Conway’s sources were correct. Yesterday, President Putin named Mutko his 9th Deputy Prime Minister. Mutko’s portfolio will be that of sports, youth, and tourism.

In theory this would give Mutko more power because the more you are responsible for, the more rents you can extract. So rather than just getting kickbacks for sports, he can now take kickbacks for youth and tourism. And he can also give out more favors to more people. And I think that is why the Western media and analysts are reporting this as a promotion. But those of you who have been reading me for awhile know that I don’t view these moves as anything but lateral transfers. Because titles are not usually a true reflection of responsibilities and placement in the hierarchy.

Anton Orekh writes in Ekho Moskvy:

It is possible to simultaneously promote a person and send him to the bench. We can say this, since we are talking about sports. The appointment of Mutko to Deputy Prime Minister formally raises him in the hierarchy, but in fact, it is unclear [if this is the case]. The position may be purely nominal. Only Mutko himself became a living anecdote.

A chief might be good or bad, but should not be funny. Mutko sometimes says sensible things, and puts forward some interesting ideas, but all of this is drowned out by his eccentricities and flows of rambling verbiage.

But the truth is that Mutko had to be sacked after the Olympics, because of what happened at Rio, Orekh continues.

Sport is a showcase of Putin’s rule, because apart from sporting victories, and the bombing of Syria, we have nothing to boast of.

And with the doping scandal, he writes, “it was Mutko who primarily demonstrated a complete inability to accurately respond to the situation. Every time he was late, not by a step, but by a hundred paces. He constantly answered at random, was unable to give at least some explanation. And each new scandal was a surprise for him. He did not even have to come up with the role of scapegoat, because he chose [to take on] this role himself.”

But to sack Mutko would have been to admit that Russia was guilty, and so that option was impossible. But it was equally impossible to allow him to keep his position as Sports Minister.

“However, you could do worse: to merge into one the Ministry of Sport, Tourism and Youth Policy. That is three completely different areas of activity. It is somehow believed that sport is for young people. That tourists do sports. That young people are constantly traveling with dumbbells and skipping ropes. But, thank God, that did not happen.”

Instead it all went under “the duties of the new Deputy Prime Minister. And in this sense, the appointment of Mutko was the correct one.”

And the Sports Minister will be Pavel Kolobkov. Who performed a lot of draft organizational work, and if something in the Ministry was sensible, it was largely thanks to Kolobkov. And foreign “partners”, so to speak, are not allergic to him.”

And if Mutko will leave Kolobkov alone to get on with his work, Orekh concludes, “the current reshuffle can be evaluated as a solid four.”

Sergei Ivanov

Sergei Ivanov granted his first interview after he was transferred out of the Presidential Administration to Komsomolskaya Pravda.

The English language press will likely focus on KP’s question about the rumor that Ivanov “…would lead a new super-ministry of state security…”.

To which Ivanov answered:

“This is one-hundred percent fake! A ministry of state security is not intended… I can say this confidently.”

He also said that such a move would be a mistake from his point of view.

But I want to talk about a couple of Ivanov’s other statements in the interview, mostly because they confirm what I have said in the past about these moves.

Of course, the first question KP asked Ivanov was about his new position, and whether or not it was a demotion.

Ivanov dismissed any rumors that he was in disgrace or was ill.

“I don’t feel any disgrace. And I am generally optimistic about the fact that now I can finally do specific things that I love [emphasis added -ed.] and have actually worked toward for a long time, but, you know, in fits and starts.”

I have brought this up before when speaking about former Russian Railways Chief Vladimir Yakunin. Many people thought that Yakunin had been ousted from his position due to corruption in the company. But it turned out that Yakunin had been freed to work more closely on a project that was very important to both him and the Regime. And I think that this is also what happened with Ivanov, and Ivanov seems to confirm that in this interview.

Ivanov also stated that he had wanted to leave his post in the Presidential Administration earlier, but that Putin had asked him to wait a bit longer. He squashed rumors that there were problems with his health, but said that he was tired of working nearly every weekend, while insisting that he was not tired.

Ivanov described himself as:

“A pragmatic and enlightened patriot. I am doing what I think is useful and necessary for Russia. No matter the scope of this economy, transport, and communications (I, by the way, still remain chairman of Rostelecom’s Board of Directors). I love culture, am engaged in supporting it, and lead the board of trustees of the Kremlin museums.”

He said that his contact with the President “…is not so intense [as it was before], but it still exists.”

On the subject of corruption, Ivanov cited plans to push through revisions to the criminal code. He also confirmed that the government will continue its “fight” against corrupt “officials, security services, the banking sector, and ordinary crooks”.

KP noted that high-profile arrests were increasing.

Ivanov replied:

“This proves that we are sincerely trying to fight corruption, and there are no untouchables.”

He named the banking sector specifically, saying: “It is necessary to tighten banking supervision, in my opinion.”

KP followed that up by asking if the government intended to continue their anti-corruption course, and Ivanov answered affirmatively.

P.S. Compare this with Ivanov’s interview with the FT in June 2015.

Here We Die

As previously rumored, the former head of Rosatom, Sergei Kiriyenko, has been appointed First Deputy Chief of Staff of the Presidential Administration.

kiriyenko-may2015
Kiriyenko at a meeting with Putin in May 2015

The general consensus seems to be that Kiriyenko’s new position does not bode well. Not for the Kremlin, not system itself, and certainly not for ordinary Russians.

Fyodor Krasheninnikov wrote on Facebook:

I do not know how he led Rosatom (they say he did well), but in public policy he has experience in a great and important task: to go to the fore with a sad face and say – everything is bad, it didn’t work out, sorry, nothing can be done.

He recalled the time after Russia’s 1998 default when Kiriyenko had to go begging to the West for loans to bail out Russia.

Konstantin Eggert noted:

The arrival of Kiriyenko means one thing – the coming great political reformatting, including of the party system. ~ The rise of former PM Kiriyenko means that Putin plans a major transformation of the political landscape, including the political parties.

The political analyst Evgeny Minchenko made the following points:

There are several important nuances related to Kiriyenko:

  • He is familiar with Putin, at least since 1997;
  • He was at the head of the SPS [the Union of Right Forces was a new party created for that election] part of the victorious Putin coalition in the parliamentary elections of 1999;
  • He was another Nemtsov;
  • He is a successful and tough negotiator and lobbyist. He is experienced in public policy;
  • As head of Rosatom, he was involved in both domestic and foreign policy issues;
  • He is close to the Kovalchuk [supposedly a Putin crony] group, but is an independent player.

Alexey Chadayev thought that this was not a demotion for Volodin.

There was something deeply wrong with the fact that the position of Speaker of the State Duma was always considered weaker in comparison with the deputy head of the PA [Presidential Administration], and that Parliament was seen as something secondary in comparison with Old Square [the KGB]. It is strange that many champions of democracy and democratization took it for granted.

However, Maxim Kononenko had the opposite view:

I still think Kiriyenko was not appointed but removed. Rosatom needed someone else. Along with the plutonium [a reference to Russia’s decision this week to walk out of their agreement with the US to reduce weapons-grade plutonium].

And that this position in the PA is now under Vaino does not mean anything.

At all.

The Administration has died.