Publication: Monitor Volume: 7 Issue: 147

Although the State Duma is in recess and Russia’s overall political activity is in its yearly summertime ebb, the country’s political rumor mill is still working full time. The newspaper Novaya Gazeta this week quoted unnamed sources in the Kremlin and the Federal Security Service (FSB) as saying that President Vladimir Putin is planning to revamp his cabinet completely this coming autumn (see Prism, July 2001). According to the paper, the most likely candidate to replace Prime Minister Mikhail Kasyanov is Novgorod Oblast Governor Mikhail Prusak, who, it reported, is supported both by “liberals” and members of the “Leningrad team”–the latter referring to the security service veterans in the government who, like Putin, made their careers in Russia’s second city, today known as St. Petersburg. It should be noted that Prusak, along with two other regional leaders, urged last year that the presidential term be extended by seven years, that the country’s governors be appointed by the president and that the president be appointed by the parliament, prime minister and the “power ministries” rather than chosen in a direct popular election (see the Monitor, February 29, 2000).

The paper quoted unnamed sources in the presidential administration as saying that four people would play a key role in forming the new government: Yury Zaostrovtsev, a deputy FSB director who is currently in charge of organizing relations between the president and big business and who will be the new government team’s economic “brains”; Nikolai Tokarev, general director of the Zarubezhneft oil company and a former vice president of Transneft, the state oil pipeline company; Sergei Chemezov, first deputy general director of Rosoboroneksport, the state arms exporting agency; and Vladimir Chernov, chairman of the State Investment Corporation. Novaya Gazeta also reported that Sergei Kirienko, the former prime minister who is now Putin’s representative in the Volga federal district, is likely to be in the new cabinet.

The strategic goal of the new government, Novaya Gazeta claimed, would be to carry out a genuinely liberal economic policy, as distinct from the one Kasyanov, Finance Minister Aleksei Kudrin and Economics Minister German Gref are now carrying out, which has come in for praise from various Western officials, including U.S. Treasury Secretary Paul O’Neill, U.S. Commerce Secretary Don Evans and World Bank chief James Wolfensohn, all three of whom recently visited Russia (, July 10, 26; Reuters, July 26; see also Evans’s op-ed in the Washington Post, “Time to Get Down to Business With Russia,” July 27). According to the paper, those working on the strategy of the future government believe the Kasyanov cabinet, far from being liberal, is foisting “the Latin American model” on the country, a model characterized by “absolute power of the oligarchs under conditions of impoverishment of the main layers of the population and the economy’s total dependence on foreign crediting.” They also believe that some of the Kasyanov cabinet’s key policies, such as those involving housing reform and the restructuring of UES, the country’s electricity grid, are aimed at “satisfying exclusively the interests of super-big business” (Novaya Gazeta, July 30).

The Novaya Gazeta report appears to be connected to press reports last week that the FSB has drafted a plan aimed at giving it control over the main levers of the economy. Like the Novaya Gazeta article, those reports, which appeared in the Obshchaya Gazeta and Argumenty i Fakty weeklies, cited a plan reportedly drafted recently by Yury Ovshenko, an FSB officer who is director of the Institute of Problems of Economic Security. That report, among other things, called for reversing some of the “unlawful” privatizations of 1992-99, giving the FSB control over the Central Bank and the State Customs Committee, which today handle some of Russia’s largest financial flows, and giving the government control over all mass media outlets with a circulation or viewing audience of more than 200,000. The FSB, however, distanced itself from the plan, calling the reports in Obshchaya Gazeta and Argumenty i Fakty a “provocation” (Argumenty i Fakty, July 25; Moscow Times, July 30). It should also be noted that rumors about Kasyanov’s imminent ouster have been persistent for well over a year now. In addition, it is less than clear that Kirienko has Putin’s confidence following the victory of a Communist, Gennady Khodyrev, in the gubernatorial election in Nizhegorod Oblast, Kirienko’s home turf and part of the territory he oversees as the Volga federal district’s presidential representative. The Kremlin backed the former governor, Ivan Sklyarov, who lost to Khodyrev by a wide margin (see the Monitor, July 31).