Problems in the economy contribute to the reshaping of Politburo 2.0, Vladimir Putin’s inner circle.

Vladimir Dergachev

Ex-head of the Presidential Administration Sergei Ivanov and Volga Group head Gennady Timchenko have left President Vladimir Putin’s inner circle, “Politburo 2.0.” This information appears in Politburo 2.0: dismantling or rebooting? a report by Minchenko Consulting, which publishes an annual update on the unofficial group consisting of Russia’s most influential bureaucrats and businessmen.

Ivanov’s fall from grace can be explained by the fact that he has left his post as head of the Presidential Administration. Yevgeny Minchenko, head of Minchenko Consulting, explains that Timchenko’s departure from the “inner circle” relates to the fact that the businessman is less active in areas of strategic importance.

“The same happened some years ago to Roman Abramovich, who was indubitably part of the ‘politburo’ at the time of its formation in 2004,” Minchenko told RBC.

The report points out that, as the president’s special representative, Ivanov had fairly wide-ranging powers (unofficial oversight of the Transport and National Resources ministries), while Timchenko continues to have serious financial resources and has preserved his regional links.

New “politburo” candidate member Sergei Kirienko has moved from being head of Rosatom to the post of first deputy head of the Presidential Administration. The Minchenko report puts him as head of the technocrats in the “inner circle” (the Secretariat of the Central Committee, as it were). The new head of the Administration, Anton Vaino, has also strengthened his position as a candidate member of the “politburo.”

“To be a full member of the ‘politburo’ is to be a leader of a big elite group”

“To be a full member of the ‘politburo’ is to be a leader of a big elite group. Kirienko and Vaino both have the potential to grow into this role, but it hasn’t happened yet,” comments Minchenko.

The report considers that, of the remaining “politburo” members, the influence of Rostec head Sergei Chemezov, Russia Bank head Yury Kovalchuk, Rosneft head Igor Sechin and Moscow mayor Sergei Sobyanin is on the increase.

Chemezov’s increased influence can be explained by the consolidation of the military-industrial complex, and the weakening of Rostec’s competitor in the sector, Dmitry Rogozin, the deputy prime minister for the defence complex, He is close to the Rodina [Motherland] party, which did badly in the federal elections, and failed to gain control over Roskosmos. The Chemezov group influenced the reorganisation within the Presidential Administration and the regions, and is continuing to expand into other sectors of the economy. Minchenko sees Chemezov’s strength as a potential risk: if this member of the old guard becomes too strong, he could see his resources being “levelled off.”

The Kovalchuk brothers’ group could act as the intellectual and management base for the “shadow prime minister,” the ex-Finance Minister Alexei Kudrin. Yury Kovalchuk maintains a good relationship with the current prime minister, Dmitry Medvedev, and it was his group who influenced the appointment of Sergei Kirienko as first deputy head of the Presidential Administration.

Igor Sechin, the head of Rosneft, has preserved his reputation as the “grey cardinal with considerable unofficial influence”

Igor Sechin, the head of Rosneft, cemented his hold on the oil industry after the takeover of Bashneft, and has preserved his reputation as the “grey cardinal with considerable unofficial influence,” say the report’s authors. But he has lost several important partners in defence and law enforcement (the Federal Drug Monitoring Service was disbanded and there have been sackings in the FSB and the Investigative Committee). On top of that, the head of Transneft successfully defended his autonomy when the company was targeted by Rosneft; and smear campaigns increase the level of risk for Sechin as a member of the “old guard.”

Moscow mayor Sobyanin continues to be regarded as a candidate for prime minister. Many of the elite groupings connected with the capital’s financial flows find him unthreatening, and he controls the second biggest budget in the country (after the federal budget). The mayor has also preserved his influence in his home region of Tyumen.

On the other hand, Sobyanin is weakened by the insecure position of several of his protégés in the regions: the governor of Perm Region Viktor Basargin, and the head of the Sverdlovsk Region Yevgeny Kuivashev. Budget deficits and the approaching mayoral elections are also not in his favour.

Those maintaining a stable position in Putin’s “politburo” are Dmitry Medvedev, the businessman Arkady Rotenberg, Duma speaker Volodin and Defence Minister Shoigu.

Medvedev and Putin wear the “laurels of victory in the parliamentary election,” as the report says. But representatives of other influence groups have joined Medvedev’s government – Deputy Prime Minister Vitaly Mutko and Education Minister Olga Vasilyeva, for example. The financial influence of business groups close to Medvedev is on the increase, but some of his allies are under pressure from the siloviki [men in uniform].

“Smear campaigns against the prime minister and his circle weaken his image, as does the openly-conducted ‘casting’ for potential successors.”

“Smear campaigns against the prime minister and his circle weaken his image, as does the openly-conducted ‘casting’ for potential successors. He faces an additional risk because the term of office granted him by Putin in 2011 will soon expire,” says the report.

First Deputy Prime Minister Igor Shuvalov and Rosneft head Sechin are viewed as possible candidates for the post of prime minister after the next presidential election. This year both Shuvalov and Sechin have been the victims of powerful smear campaigns, as have Prime Minister Medvedev and presidential aide Vladislav Surkov.

Defence Minister Shoigu has managed to remain relatively popular. The report highlights how military conflicts contributed to the Defence Minister’s irresistible rise, the counterbalance to which was the appearance on the scene of Viktor Zolotov, head of the new law enforcement agency the National Guard. Shoigu’s reputation could also be threatened by Western criticism of Russian military action in Syria.

Arkady Rotenberg, another “politburo” member, has preserved his importance as a “key infrastructure project operator” and “king of government contracts,” and this is especially so as Timchenko’s importance declines. Rotenberg could act as counterbalance to the increasing influence of the Kovalchuk brothers. Key risks for the billionaire could be claims about the inefficiency of the state corporation, and regional bosses allied with him (the head of Russian Railways and the governor of St Petersburg).

Volodin, who moved from being first deputy head of the Presidential Administration to the post of Duma Speaker, is still part of Putin’s “politburo” team. In his favour, he has considerable influence on the composition of the State Duma and the United Russia policy-making bodies, and has preserved his regional links. The report forecasts that Volodin could be given the role of “re-organising the party system, and the professionalisation of its deputies.” A possible scenario where the State Duma becomes stronger, as a counterweight to the government and the deputies, and as buffers and mitigators of protest movements, is also considered. But in this new post the formal administrative weight of Volodin’s group has declined and he faces the risk that his unofficial influence will decline as well.

The report’s authors consider that the State Duma elections passed off without conflict, demonstrating a sufficient level of consolidation around the president and the ruling party. The inertia of the “Crimea consensus” has been maintained, despite turbulence in the economy.

There has nevertheless been a regrouping of the forces within the Russian nomenclature.

Several members of the “old guard” have been put out to grass or moved sideways; there have been conspicuous changes of personnel in the Kremlin, the body of [regional] governors and the government. The intra-elite struggle has intensified the anti-corruption agenda and there have been serious changes in the line-up within defence and law enforcement bodies (the creation of the National Guard, the disbandment of the Federal Drug Monitoring Service). The shift in the balance of power has also been affected by the significantly different composition of the new State Duma.

There are several factors influencing the escalation of rivalries within the elite: the decline in spoils to share out, the reshaping of ideology and the fine-tuning of new techniques for accumulating and re-distributing those same spoils. The experts point out that the formation of the “politburo” as an unofficial collective management institute took place during the years of economic growth.

The intra-elite struggle is also affected by foreign policy instability, the upcoming presidential election and “Putin’s unwillingness to become a hostage to his inner circle and his desire to formulate independently his pre-election support coalition and the shape of his future government.”

The report considers that the “politburo” has fulfilled its function as a tool for dismantling the Putin-Medvedev tandem and has now reached the limit of its usefulness. For this reason the Kremlin is seeking a less cost-intensive, more efficient management system in the run-up to the presidential election.

But Minchenko told RBC that it is now less likely there will be a snap presidential election in Russia: “The indirect evidence for this is the unhurried pace of reform and staffing changes in the Presidential Administration.”

The report’s authors are of the opinion that the elite is trying out various ideological options and ideas for staff recruitment, for the next presidential term of office. Having studied the recent Kremlin reshuffle, they conclude that the elite regards the first presidential term as a benchmark “with successful liberal economic reforms and the normalisation of relations with the West.”

The rapidly shifting world situation and attempts to find some common ground for a compromise with the West could affect the line-up within the elite. There is an acute shortage in the “politburo” of figures with serious foreign experience. Alexei Kudrin and the ex-head of the Presidential Administration Alexander Voloshin are capable of communicating effectively with the West. Vaino has links with Japan, and Energy Minister Alexander Novak with Turkey and the Arab world.

“If there is no breakthrough in relations with the outside world, it is highly likely that there will be a slide towards a scenario of mobilisation and a military ‘Gosplan.2’ [State Plan.2] and foreign policy activity will be reduced to ad hoc support for opponents of the US, a ‘Comintern 2.0’ [the international communist organisation advocating world communism, 1919-43].” In addition, the reshuffle of personnel within the Kremlin will be significantly affected by the results of the US election this year, and the French and German elections next year.

But the failure of the liberal-democratic parties in the State Duma election has made the possibility of a “shift to the right” in domestic policy more complicated. If the former occupants of the political central ground were to set up an alternative centre of gravity, this could serve to balance the increase in “radical conservative-aggressive rhetoric.”

This article was first published in RBC