Russia News Roundup

Once again my apologies for the light posting, which my work schedule has dictated.

  • Medvedev Power – last week Pres. Medvedev named a fifth Deputy Head of the Investigative Committee. Receiving the appointment was Elena Leonenko, yet another Medvedev classmate to be launched from relative obscurity and into a major position. I’ve been arguing for a while now that whether Medvedev consolidates his own power base will largely depend on how many of his own people he can put in key law enforcement positions at the General Prosecutor’s office and the Investigative Committee. Keep in mind that it is only these entities which can initiate criminal investigations and prosecutions in all of Russia. It is clear that Medvedev’s anti-corruption campaign will never yield measurable results unless he has decisive control over the prosecutorial machinery of Russia. So, this appointment might be a good sign though it’s hardly a dramatic development. An interesting sidenote is that Leonenko was in the fourth car of the ill-fated Nevsky Ekspress just a week before her appointment. Update: apparently Leonenko will be working with Nikolai Vinnichenko – the Pres. Envoy to the Urals Federal District and also a Medvedev classmate. Vinnichenko is quoted as saying that Leonenko will lead the ‘power structures’ (i.e., law enforcement) in the Urals, which “will strengthen the work in the war on corruption.” Just to sum up, the following is a non-exhaustive list of Medvedev classmates/students who have been installed into positions in the government: Min. of Justice Aleksandr Konovalov; Dep. Min. of Justice Yury Lyubimov; Chair of High Arbitrazh Court Anton Ivanov; Chair of Moscow Arbitrazh Court Valery Adamov; Presidential Envoy to the Ural District Nikolai Vinnichenko; Dep. Prosecutor of the Leningradskaya Oblast Nikolai Egorov; Dep. General Prosecutor of the Northwest Federal District Aleksandr Gutsan; Dep. Board Chairman of Gazprombank Ilya Iliseev; Head of the Central Administration of the MVD of the Central Federal District Valery Kozhokar; Director of the Federal Bailiffs Service Artur Parfenchikov; Head of the Control Department of the Presidential Administration, Konstantin Chuichenko; Head of Rostelekom Vadim Semyonov; RF Judge in Straosburg Andrei Bushev; Head of Personnel of the Presidential Administration Sergei Dubik.
  • Strategic Industries Law – Sechin v. Deripaska – the final Commission meeting of the year should occur in the next week or so. Among the twelve deals up for consideration will be Oleg Deripaska’s Basic Element’s proposed acquisition of Russneft. This is now Deripaska’s fourth attempt at obtaining approval for this purchase. In Feb. 2009, it’s application was denied due to “incompleteness of documentation” in its application. In June 2009, the application was not decided again, purportedly because of the complexity of the transaction (e.g., involves over 100 offshore companies per FAS Head Igor Artemyev). After the deal went undecided once again in the September 2009 meeting, Artemyev publicly acknowledged that “not all members of the Commission agree” on the deal. This saga has revealed two interesting lessons regarding the strategic industries law in particular and foreign investment in Russia generally. First, a single bureaucrat – in this case Igor Sechin – can completely derail a huge deal which has already been agreed upon by buyer/seller. Second, the “foreign” investment is actually Russian capital repatriated through offshore structures. Reports say that Sechin won’t support the deal unless the purchase is made through a Russian-registered entity. The question is why? The purpose of the strategic industries law is to protect against national security threats. So if the purchaser here is a Russian entity, via its offshore holdings, on what basis can Sechin find a threat? Sources quoted Sechin as saying that the deal is “not in the strategic interests of the country.” But again, this isn’t consistent with the law, which defines a threat as “an array of conditions and factors creating danger for vital interests of the individual, society, and (or) the government.” Just because something doesn’t serve Russia’s interests doesn’t mean that it is a threat to its interests.” The irony is that Sechin’s attempts at coercing the nature of the Russneft purchase justifies Russian investors’ desire to keep their money offshore.
  • New Nukes Agreement? – so START I expired yesterday. The two sides announced that they will “continue to work together in the spirit of the START treaty following its expiration.” Translation = we missed our deadline. Some reports say that the text is almost fully complete and perhaps could be ready for Obama’s Europe trip this week. Obama’s national security team should be cautious with these kinds of statements though. As students of past arms control negotiations know, with the Russians there is either an agreement or no agreement. Even a 99% agreement means nothing if, as is often the case in these negotiations, the most difficult sticking points have been put off until the end.

(Leonenko image: Itar-Tass; Sechin image:

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