The Russian government and parliament have undergone a series of changes intended to strengthen President Vladimir Putin's control over the executive and legislative processes.
IHS perspective | |
Significance | Russian president Vladimir Putin has undertaken a number of high-level appointments in the past month, including within the security forces and regional administrations. |
Implications | The appointments are designed to strengthen government control over the security forces and regional governments in anticipation of potential future Western sanctions and associated domestic unrest. |
Outlook | The appointments further indicate a shift away from the liberal economic faction of government, reducing the prospect for investment-friendly reforms, while the risks of expropriation and nationalisation will increase. |
On 12 May, Russian president Vladimir Putin made a wide-ranging series of appointments that has altered the balance of power within the government for the first time since May 2012, when then-prime minister (and outgoing president) Dmitry Medvedev formed his cabinet.
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Russian president Vladimir Putin has appointed a number of loyalists |
Notably, Putin promoted senior officers from the Ministry of the Interior into political positions: Commander of Interior Troops Nikolai Rogozhkin was appointed as Presidential Envoy to the Siberian Federal District; and Sergei Melikov, Commander of Interior Troops in the North Caucasus, was promoted to Presidential Envoy to the North Caucasus Federal District. Rogozhkin and Melikov also both joined Russia's Security Council, the inner sanctum of decision-making on internal security and foreign policy issues. Aleksandr Khloponin, former general manager of Norilsk Nickel, was relieved of his post as a council member and presidential envoy to the North Caucasus but did retain his position as a deputy prime minister.
Putin also promoted a number of senior officials from the Federal Guard Service (Federalnaya sluzhba okhrany: FSO), which manages the security detail for the president and other senior officials, to key posts within the Ministry of the Interior and the Presidential Administration. Federal Guard Service officers are in close personal contact with the president and are renowned for their loyalty. Putin appointed the former head of the Presidential Security Detail, Viktor Zolotov, as Commander of Ministry of Interior Troops and First Deputy Minister of the Interior. Dmitrii Mironov, another former Federal Guard Service officer, was moved to the Ministry of the Interior to take over the main directorate for economic security and anti-corruption. Another FSO officer, Vladimir Kozhin, was appointed as Presidential Assistant for Military and Technical Co-operation; this position has been newly created and reflects Putin's increasing attention to close management of Ministry of the Interior troops and the army.
Parliamentary discipline
These appointments took place against the backdrop of a reshuffle among provincial governors and moves within the state parliament (Duma) to impose even greater party discipline on parliamentarians. Governors are currently directly appointed by the president. However, in May 2012, in a concession to what was then a mass pro-democracy protest movement, then-president Putin vowed to restore direct gubernatorial elections.
Gubernatorial elections will take place in September 2014, and the Kremlin is now reshuffling governors in order to ensure that incumbent holders of these posts, who are usually heavy favourites in such elections, are both loyal to Moscow and guaranteed to win. On 31 May, the head of the Just Russia parliamentary faction, Sergei Mironov, asked Putin to lend his support to a legislative initiative that would allow factions to replace parliamentarians who leave the factions that they were elected to originally or who consistently refuse to vote alongside the faction majority. This initiative is a reaction to two former Just Russia parliamentarians refusing to support Russia's ratification of a treaty incorporating Crimea into the federation. If adopted, this initiative would substantially increase party discipline within the Duma, which is already very high.
Reading between the lines
The latest administrative and legislative moves indicate that Putin is appointing trusted officials with personal links to pivotal positions within the security apparatus and the presidential administration. On the one hand, this retrenchment is simply an attempt to strengthen the federal centre's grip on provincial level politics in preparation for direct gubernatorial elections. Once governors are elected directly they will have a much greater leeway to resist policy directives from Moscow, and the Kremlin is attempting to remove as much of this leeway as possible, particularly in the strategically important regions of the North Caucasus, Siberia, and Crimea.
On the other hand, the retrenchment is also taking place in anticipation of the possible intensification of Western sanctions against Russia over the situation in Ukraine. Russia's economy is highly likely to rapidly enter a downturn if sectoral sanctions are introduced; such a downturn around the time of gubernatorial elections could trigger mass unrest and the popular rejection of candidates favoured by the Kremlin. In such an event, Putin wants to ensure that he has a high level of personal control over Ministry of the Interior troops, especially in restive regions – such as the North Caucasus, the Far East, the exclave of Kaliningrad, and Moscow – so that the government is not caught unawares as it was during the waves of mass protests in late 2011 and early 2012. These dynamics also suggest that Moscow is still keeping all of its options open in Ukraine – hence the need to prepare for wide-ranging Western sanctions.
Outlook and implications
From a business perspective, the recent appointments – and notably Khloponin's demotion and simultaneous elevation of several senior officers to key political positions – indicate that the security establishment (the so-called 'siloviki' faction) is now firmly in ascendance over economic liberals. Sergei Ivanov, head of the Presidential Administration, and Sergei Shoigu, now the Minister of Defence, continue to play key roles within the siloviki group. The primacy of the siloviki over economic liberals means that, at least over the next 12 months, the effort to make Russia more friendly towards foreign capital will likely stall. At the same time, the risks of expropriation and nationalisation – especially in response to Western sanctions – are likely to rise, and the country will begin to turn increasingly towards import substitution.
In the first instance, the government is likely to become more resistant to foreign investment in sectors that are considered to be strategic – such as metals, mining, and energy – by refusing to grant approval to investment deals or subjecting foreign-owned plants to inspections and regulatory complaints. Should the United States and European Union implement targeted sanctions against Russian energy majors, then risks of outright expropriation or nationalisation in the energy sector will rise substantially.
More broadly, the Russian government is increasingly espousing the rhetoric of import substitution in all sectors, from consumables to machine parts. In practice, import substitution will be difficult, if not impossible, to achieve over the next three to five years, although such moves are likely to be more successful in armament productions and, possibly, heavy industry.
Moreover, it is worth noting that there are internal disagreements within the siloviki faction as the Federal Security Service, the Ministry of Interior, and the Federal Guard Service struggle for control over government revenues and policy-making. While there is a general consensus within the siloviki faction that Russia must retrench economically by attempting import substitution and nurturing trade contacts in Asia and Latin America, there is no single plan on how to achieve this objective. This creates future opportunities for rapid reversal of government policies. More importantly, internal competition for dominance within the security establishment creates state stability risks in the three-to-five year outlook due to the possibility of cabinet ministers, and even the prime minister, being replaced.