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25.09.07
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An Unsurprising Reshuffle
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By Dmitry Babich
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New Cabinet Mostly Remains the Same as the Old One
Personnel changes in the cabinet, announced by Russian President Vladimir Putin yesterday evening, came as less of a surprise than the appointment of Prime Minister Viktor Zubkov last week. In fact, the resignations of Economic Development and Trade Minister German Gref, Regional Development Minister Vladimir Yakovlev and Social Development and Health Minister Mikhail Zurabov were long expected.
There were clear political motives behind every one of the replacements. The removal of the highly unpopular Zurabov was especially rewarding for the Kremlin and the United Russia party. Bungled schemes of providing the poor with subsidized medicine and replacing old Soviet privileges with cash payments made Zurabov a figure whose presence in the government became increasingly more difficult for the Kremlin and the Duma to explain. However, Zurabov's replacement, Tatyana Golikova, who had been deputy finance minister, was Zurabov's partner and adviser in many of his projects, so change of a face may not necessarily lead to a change of policy.
The resignation of Vladimir Yakovlev has also been on the cards for at least a year. A former mayor of St. Petersburg, Yakovlev ousted Putin's mentor and benefactor Anatoly Chubais in local elections in 1996. Replacing Yakovlev with Dmitry Kozak, the presidential envoy to the Southern Federal District, brings a Putin loyalist back into the fold and can be seen as a welcome relief for Kozak himself, who otherwise might suffer politically from the growing violence in the Republic of Ingushetia.
As for Gref's resignation, it was widely predicted but rarely explained, which makes it worth a special analysis.
Even though rumors of Gref's resignation had been rife for a long time, his departure marks the end of an important era in Russia's economic development. Gref, formerly a privatization official in St. Petersburg, served as economic and trade minister since 1999 in two successive cabinets. Gref, who was seen as one of the chief masterminds of Russia's post-1999 economic reforms, transformed the Ministry of Economic Development and Trade into one of the most powerful decision making centers in the country. The ministry supervised such important spheres as Russia's macroeconomic policy, customs regulations, investment strategy and even the tourism industry, to name just a few. Experts see Gref's achievement in Russia’s macroeconomic stabilization between 2000-2007, which featured increased budget discipline and the refusal to print more money to fight inflation, resulting in increasing Russia’s attractiveness for foreign direct investment. These achievements of Gref and his team made him, along with then-Finance Minister Alexei Kudrin primary targets for attacks from leftist critics, including the Communist faction in the Duma and the Just Russia party. Kudrin, for his part, retains his position in the new cabinet along with a promotion to deputy prime minister.
In a way, Gref became a victim of his own success. As the cash flow into the country increased (Putin recently estimated expected foreign investments in Russia’s economy this in 2007 at $50 billion) the caps on social spending and government support for strategic industries became more and more painful. The emphasis shifted from macroeconomic stabilization to social development, symbolized by Putin's much publicized National Projects. Although Gref never objected to the projects publicly, his skepticism about increased social spending was barely disguised. This sometimes led to public wrangles between Gref and the former Prime Minister Mikhail Fradkov. Gref was widely known for his skepticism and his willingness to stand up to Putin. In 2004, for example, Gref dismissed Putin's plan to doubling Russia's GDP by the year 2010, calling it unfeasible.
Putin tolerated Gref's skepticism in 2004, but continuing to put the finances of the National Projects into the hands of a skeptic finally proved too much. Gref's replacement, Elvira Nabiullina, is the former head of the Expert Council on National Projects.
Much of the rest of the cabinet remained unchanged. Putin refused to accept the resignation of Defense Minister Anatoly Serdyukov, who had offered to leave because he is the son-in-law of Prime Minister Zubkov. |
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