More Than Meets the Eye: Who Benefits Most from Russia’s Ministerial Rotations?

Russian Prime Minister Mikhail Mishustin has just conducted a mini reshuffle of his Cabinet, with five ministers variously promoted or moving horizontally to other government positions. The previous such reshuffle took place back in January, when Mishustin was first appointed and President Vladimir Putin announced several major constitutional amendments. Although the rotations are not seismic, they do reveal several clues about the Kremlin’s approach to important ministries such as the environment, the Far East and energy. The rotations also indicate the enduring power plays between individuals and business lobbying groups, and their ability to direct Russian politics.

Who’s in, Who’s out?

Many of the staffing changes replace ministers that former prime minister Dmitry Medvedev had appointed – from the ministries of construction, natural resources and transport – suggesting Mishustin might be conducting a clean break with his predecessor. But this does not imply that Mishustin’s authority might be increasing, or that he is anything but entirely loyal to Putin. Mishustin remains a Putin functionary and party loyalist, and there is no evidence to suggest he is attempting to reconfigure power in his favour.

Of the five ministers reshuffled, the departure of Dmitry Kobylkin as minister for natural resources, is perhaps the least surprising. Although he has only been in post since 2018, Kobylkin had been sharply criticised by the public and by federal agencies for his poor handling of the numerous environmental disasters that Russia has endured in recent months. His incompetence and inability to connect up the regional and federal administrations were particularly clear from the ongoing situation in the Far Eastern region of Kamchatka, where the Khalaktyrsky beach has been polluted by an as- yet-unknown substance. This was not the first mishap, for in May the ministry failed to coordinate a consistent response with regional governors in reaction to a large oil spill in Russia’s northern region of Norilsk. The oil spill only came to Putin’s attention after a staffer discovered the news on social media, igniting Putin’s personal displeasure.

Kobylkin has now been replaced by Alexander Kozlov, formerly head of the Ministry for the Development of the Far East (Minvostokrazvitiya). While Kozlov managed to raise public and government awareness of the importance of developing the sparsely populated and resource-rich Far East, he has done so at the expense of the environment. Kozlov drew attention to the Far East’s investment potential by showcasing the region’s numerous natural resources and the scope for their exploitation. He showered large oil and gas businesses such as Rosneft with tax benefits, encouraging them to exploit new oil fields in the Arctic with scant regard for pollution. Although Russia has officially made piecemeal attempts to acknowledge environmental issues such as climate change by ratifying the Paris agreement, its environmental policy is heavily influenced by powerful business lobbies from the oil and gas industries, keen to maintain high production and export of fossil fuels – upon which the Russian economy depends.

Under Kozlov’s leadership, Minvostokrazvitiya’s remit was expanded to include Russia’s strategy for the entire Arctic region, with a focus on economic development, as well as national security. Russia has invested significant amounts in upgrading its infrastructure in the Arctic region, including its Northern Sea Route shipping lanes and developing hydrocarbon deposits there, although its official strategies are vague about the environmental impact of this activity. It is clear Kozlov intends to continue this somewhat vague approach to the environment at the Ministry of Natural Resources, with the aim of prioritising the needs of major investors.

Alexei Chekunkov was appointed head of Minvostokrazvitiya in Kozlov’s stead. Chekunkov is a sensible choice, with a long career in business including Alrosa – a diamond-mining corporation – and interests in gold-mining assets in Yakutia, as well as a two-year stint at the Russian Direct Investment Fund (RDIF, which funds numerous projects in the Far East) from 2011 to 2013. Chekunkov’s experience in setting up the Russia-China Investment Fund, designed to encourage financial commitments to develop the Far East, fits within the ministry’s remit to encourage investments from Asia-Pacific countries. His appointment chimes with the Kremlin’s broader strategy to promote business in the region, as Chekunkov is a capable manager with knowledge of regional political dynamics as well as the investment climate.

Power Plays

There are inevitably other, possibly larger games at play in Kozlov’s appointment. Kozlov is known to be close (and ultimately subordinate) to Putin’s powerful presidential envoy of the Far East, Yury Trutnev, who is likely behind Kozlov’s appointment to the ministry, which is almost certainly a promotion for him. Trutnev’s links to Kozlov will enable him to work more closely with the Ministry of Natural Resources and increase his personal influence over the business regulatory environment. This ministry is responsible for issuing licences for businesses to mine and export natural resources such as coal or precious metals. Close access to a key decision-maker in this sector will give Trutnev even greater leverage in the business world, ensuring that he remains a gatekeeper for most investment prospects in the Far East.

But increasing power brings greater responsibility – as Trutnev’s and protégé Kozlov’s stars shine more brightly, they will be accompanied by increasing scrutiny from the Kremlin over their activities. Although Kozlov is a strong choice, Trutnev will have to continue to prove his usefulness to Putin to ensure that he does not lose his coveted position.

Moving On and Up

There are also power games at stake in the rotation of Alexander Novak, formerly Minister of Energy. Novak will become one of Mishustin’s 10 deputies, where he has been given the energy portfolio. This is a more strategic position for Novak, rewarded for his work with OPEC, even though he technically loses direct control over the ministry. However, in his first act as deputy prime minister, Novak outlined a programme designed to ensure the oil and gas industry’s dominance for the next 15 years, which includes strong support for state-controlled hydrocarbon producers such as Gazprom and Rosneft, while maintaining his status as OPEC’s point of contact within Russia.

This promotion is despite the fact that Novak’s relationship with Igor Sechin, chairman of Rosneft, is notoriously poor. Novak is relatively unique in that he does not belong to any particular oligarchic camp, but his loyalty to Putin is personal and enduring, and they meet together frequently. Sechin is known for getting his way in business and personal disputes, most sensationally in 2016 when he accused Alexei Ulyukayev, then minister for economic development who was trying to stand up to Sechin, of extortion; Ulyukayev was ultimately sentenced to eight years in a penal colony.

Novak’s removal from the day-to-day running of the ministry is likely to keep him out of Sechin’s way, but ensures that he remains a trusted guiding force to guarantee Russia’s commitment to hydrocarbon development, a further blow to environmental activists hoping for any reduction in Russia’s output.

Elections on the Horizon

One working theory is that these reshuffles could be testing the effectiveness of the constitutional amendments introduced at the start of the year. The changes stipulate that Mishustin must put forward ministerial candidates, which Putin would then officially appoint. If the reshuffle was a test of this process, it likely passed muster, as the five candidates were appointed within one day. This could be the Kremlin planning ahead; State Duma elections in 2021 are likely to herald much more significant rotations of government personnel, which will necessitate a smooth transition of portfolios.

Against the backdrop of these looming elections, Russia’s economic difficulties, exacerbated by the fluctuating oil prices, Western sanctions and continued disruption from coronavirus, will likely mean fewer federal funds available for important projects, even those considered official priorities.

The vested interests of particular individuals aside, it is likely that functionaries with backgrounds similar to Chekunkov and Novak would be in line for promotions. These men are reliable managers, with solid business understandings of how budgets work, but with few visible political ambitions themselves. As the elections approach next year, it will be worth watching whether other individuals matching this description emerge to lead important industries.

The views expressed in this Commentary are the author's, and do not represent those of RUSI or any other institution.