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.

 

Reforms

The historian Valery Solovei had this to say about the rumored reforms of the government that are supposedly coming:

Over the past two days I have received several dozen requests to comment on the possible reform of the state administration (the replacement of the presidency by the State Council as a central element of [this plan])….

He then lists four points on the subject. First, he writes:

Projects of drastic constitutional reform and structural renovation have been floating around the political establishment for the past decade. One of them was the idea of the creation of a State Council. The closest historical analogue to such a collective management is the Soviet Politburo.

He continues to his second argument:

The only point of creating a State Council at this moment in time is the inability to provide such personal continuity of the highest authority, which would be acceptable to the major groups of elites and society.

That is, there is nobody who could replace Putin. I do not agree with Solovei’s rationalization here. Vladimir Putin came seemingly out of nowhere to become President of Russia. Granted it took a lot of work to make it happen, but it could be done again. See for example the sales job and transformation that the Regime took on to make Dmitry Medvedev a viable candidate in 2008.

Solovei continues to his third point:

If we begin to politically, informationally, and legally move in this direction in the coming months, it will mean that the succession issue has deteriorated.

And finally, Solovei argues:

Such a radical reform of the higher echelons of the government in our current circumstances will inevitably lead to a sharp weakening of the already inefficient state apparatus, organizational chaos and political disorganization.

Nobody seems to be happy with these proposed “reforms”. But at this point they are mostly still just rumors. In my view, the Regime is putting out feelers to see how society reacts to its propositions.

Milov on the Shifting Cadres

Opposition politician Vladimir Milov had this to say about the games the Kremlin is playing with shifting the cadres around.

Frankly speaking, many have been asking me in the last few days what I think about all of these rearrangements -[former head of the Presidential Administration] Volodin to the Duma, [former Duma Speaker] Naryshkin to the SVR [Foreign Intelligence Service], [former SVR chief] Fradkov to Russian Railways, etc.

I can come up with just one word: MEANINGLESS. It is absolutely meaningless to transplant long well-known speakers’ asses from one chair to another. No matter how much I look, I cannot see in this rotation any forward strategy. It does not really matter that a talking ass from this list will sit in any chair. I do not see any reason to somehow seriously accept these shifts.