Ivanov, who had served as defense minister since 2001, will be responsible for overseeing Russia's military-industrial complex, part of the civil-sector economy, and the development of innovative technologies.
At the same time, Putin named a virtual unknown as the new defense minister. Anatoly Serdyukov, who had been heading the Tax Service, will replace Ivanov in that role.
In other moves the chief of the government staff, Sergei Naryushkin, was named deputy prime minister in charge of foreign economic relations. This was a role, along with overseeing innovative technologies, that had been carried out by Economic Development and Trade Minister German Gref.
Race Is On
Of all the changes, it is Ivanov's promotion that promises to have the most resonance. This because it effectively signals the informal beginning of the Russian presidential campaign while also highlighting the weakened position of the so-called liberals within the Russian government.
To this point, Dmitry Medvedev -- a first deputy prime minister and a leader of the liberal camp -- had stood alone as the perceived favorite to succeed Putin, particularly following his January debut in Davos.
However, some of the sheen was taken off Medvedev's privileged standing with the elevation of Ivanov to equal status. Furthermore, the appointment of Naryushkin, a KGB man from Putin's hometown of St. Petersburg, served to signal a shift in government's balance from "liberals" to "siloviki."
The reorganization plans stem from Putin's desire to control Russia's rapidly growing defense budget.
Ivanov's appointment is also being viewed from an international perspective. European Parliament deputy and author of several books on Russia, Italy's Giulietto Chiesa, told Rosbalt on February 16 that Putin's move reflects his opposition to the West and addresses the concerns he expressed about the international security situation during his recent speech at the Munich Conference On Security Policy.
International undercurrents can also be detected in the appointment of the 45-year-old Serdyukov. A commerce institute graduate, Serdyukov appears at first glance to have no connection to Putin's team aside from receiving a second diploma in 2001 from the Law Faculty of St. Petersburg State University, the president's alma mater.
But Russian media have noted that Serdyukov is the son-in-law of longtime Putin associate Viktor Zubkov, who heads the Financial Monitoring Committee.
Many observers are characterizing Serdyukov's appointment as an assault on the Defense Ministry.
Mikhail Delyagin, director of the Moscow-based Institute of Globalization, described the situation as the "humiliation of the Russian Army." Leonid Ivashov, vice president of the nationalist Academy of Geopolitical Studies, called it an "experiment on the Russian military."
Indeed, Serdyukov's appointment marks the first time in the history of the Russian and Soviet military that a civilian with no military credentials will head the armed forces. His predecessor, Ivanov, was a retired colonel general of the Foreign Intelligence Service.
However, the heart of the matter lies in Putin's stated intention of increasing the role of the Russian General Staff and its head, Army General Yury Baluyevsky. Serdyukov, meanwhile, could focus on tackling the military's bureaucracy.
If Putin's plans materialize, the Russian military in will be modeled on select Western militaries -- particularly Israel's.
There, a civilian appointee serving as defense minister is checked by a strong chief General Staff responsible for all tactical operations conducted by the military.
The reorganization plans stem from Putin's desire to control Russia's rapidly growing defense budget and the funding of the longstanding effort to rearm Russia's military.
Will Ivanov (right) have Putin in his corner? (epa)
In 2007, the defense budget will increase by 23 percent to a record level of 860 billion rubles ($33 billion). And by 2015 Russia is expected to spend 5 trillion rubles on the rearmament and modernization of the military.
In an effort to ensure that this money goes where it is intended and is not used to line pockets, Putin earlier this month ordered Ivanov to create a special civilian agency that will preside over the procurement of all weapons systems.
The appointment of Serdyukov, who will control this activity from the other side of the money pipeline, appears to represent the logical continuation of this policy. Tough New Staff
As for Baluyevsky, he has shown that he is finely tuned in to the tough stance Putin took in Munich. Speaking to journalists on the day of his appointment, Baluyevsky warned that Russia may withdraw from the strategic U.S.-Soviet Treaty on Medium and Small-Range Missiles.
According to the 1988 treaty both, sides are obliged to destroy missiles with a range of 500 to 5,000 kilometers and to not produce them again. However, in his statement Baluyevsky linked Russia's continued observance of those stipulations to the outcome of U.S. plans to deploy an antimissile shield in Poland and the Czech Republic to offset the threats posed by "rogue" regimes.
Putin now has more control over two of the leading contenders to replace him and is in a better position to handpick his successor.
Moscow has opposed those plans, saying that the system could potentially be used against Russia. In his statement, Baluyevsky complained that the Soviet Union made too many concessions to the United States and that Russia's future adherence to the treaty could depend on the "activities of our American partners."
Putin apparently was preparing Baluyevsky for his new role in advance, seeing as earlier this year he prolonged the 60-year-old's military contract by 24 months. According to strict rules in the Russian military, commanders are required to retire at age 60.
Leaving To Stay
How Putin's cabinet reshuffle will affect the 2008 presidential campaign remains to be seen, but many observers agree that the president's moves serve to re-enforce the position of Putin himself.
It is certain that he now has more control over two of the leading contenders to replace him and is in a better position to handpick his successor. This, of course, plays very well into the tactic of "staying by leaving."
Or, in Kremlin spin doctor Gleb Pavlovsky words, as published by "Komsomolskaya pravda" and newsinfo.ru on February 16: "In its new configuration, the government of Russia is the government of Putin and the successor of Putin himself, while the president of Russia is somebody from his political team. It is hard to believe that this entire system was created for only one year."
In another comment, made on February 9, Pavlovsky was even more frank. Comparing Putin with Franklin D. Roosevelt through mention of the former U.S. president's reputed reluctance to enter a third term in office, Pavlovsky predicted that Putin will remain politician No. 1 after 2008. "A democratic nation cannot not release its leader," he wrote, "but it can provide him the opportunity to change from one job to another."