Liberals reportedly set to dominate Russian cabinet

By bne IntelliNews May 16, 2012

Graham Stack in Moscow -

Pundits began writing off Dmitry Medvedev's future, and worrying about the fortunes of his professed liberal reform agenda for Russia, as soon as he agreed to step down as president to allow Vladimir Putin to return. However, media reports suggest the new prime minister is due to cram the cabinet full of allies, whilst conservative statist figures are to be shown the door.

According to the Russian press, the former president is being given considerable freedom in drawing up the new government. Business daily Vedomosti, which cites an unnamed Kremlin source, says Putin is insisting on only three appointments. The returned president apparently wants to see Finance Minister Anton Siluanov retain his post and Deputy Economy Minister Andrei Belousov replace current boss Elvira Nabiullina. Igor Artemev will also retain his post as head of the Anti-Monopoly Service on Putin's request.

Whilst the posts Putin has earmarked are clearly amongst the most vital for the economic reforms that most analysts insist are critical for Russia to avoid stagnation, it's notable that all three of his candidates are liberal-minded economists close to Medvedev's mind-set. Meanwhile, a number of Vedomosti sources agree that the hard-nosed Igor Sechin - deputy prime minister and energy tsar - is on his way out, accompanied by Interior Minister Rashid Nurgaliev. Both are seen as conservative statist figures and Putin men.

Increasing the liberal element in the government, Medvedev is set to bring in former Presidential Economic Adviser Arkady Dvorkovich; Mikhail Abyzov, who has headed several major power and coal companies; and former Head of the Presidential Secretariat Aleksandr Voloshin. It's unclear in which capacity Voloshin will serve, but the return of Boris Yeltsin's last chief of staff, who resigned from the Kremlin over the arrest of Mikhail Khodorkovsky in 2003, is an eye opener.

Dvorkovich will be deputy prime minister with oversight of industry, including agriculture and transport, the newspaper claims, while Abyzov will liaise with Medvedev's "open government" of academics and experts. There is also speculation that Abyzov could head the energy ministry, however, Vladimir Rashevskii - CEO of Suek - is seen as a more likely candidate.

Liberal first deputy prime minister Igor Shuvalov, regarded as equally acceptable to both Medvedev and Putin, seems set to retain his post, as does recent appointment Dmitry Rogozin, deputy PM with oversight of the defence sector. Whilst Vladislav Surkov - credited as the architect of the Kremlin's "managed democracy" - is also likely to stay on board, its thought he might drop down to become the government chief of staff, a more technocratic job than his current post as deputy PM for modernization.

The confirmation that Nabiullina is set to leave the cabinet - apparently to go into academia - is thought to have two potential interpretations. She has been a proponent both of accelerated privatization and the use of a budget deficit to finance growth and modernization. Putin has categorically rejected the latter policy in favour of macro-economic stability, but remained on the fence on privatization, so it seems likely the macro-economic dispute is behind her move. The fact that Sechin - the main opponent to the plan to sell off state assets - is also likely on his way is another hint in that direction.

The new government, as outlined by Vedomosti, should it come to fruition, appears to point to Medvedev having more influence over appointments as prime minister than he did as president, when he was notably unable to move his own people into top positions. In combination with the new PM's move to head up the ruling United Russia party and his forthcoming trip to the G8 summit in Putin's stead, a cabinet dominated by reformists may point to the much-derided tandem having in fact strengthened since Putin and Medvedev swapped jobs. That said, Medvedev's talk of a "dual key" system of government - where both men must agree to any major policy initiative - remains hard to believe in fully.

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