Accessibility links

Breaking News

Affairs Of State

Sergei Chemezov of Russian Technologies
Sergei Chemezov of Russian Technologies
This could be the start of something big.

President Dmitry Medvedev has ordered an investigation into Russia's state corporations to determine how effectively they work, how efficiently they use their assets, and the degree to which they are complying with the law.

If Medvedev is serious about the probe and if he has the political muscle to see it through -- two very very big ifs -- the move could represent a serious blow to the statist system established by Vladimir Putin.

The state corporations -- Russian Technologies, the bank VEB, the nanotechnology firm Rosnano, the nuclear agency Rosatom, the Olympic construction firm Olympstroi, the Housing Maintenance Fund, and the Deposit Insurance Agency -- were supposed to form the backbone of Putin's authoritarian modernization of Russia's economy.

They were given access to massive funds, were allowed to operate with little oversight, and were exempt from disclosure requirements.

That was fine when oil was near $150 a barrel and Russia's economy was booming.

Now it is a big problem.

Top officials, including Finance Minister Aleksei Kudrin and presidential aide Arkady Dvorkovich, say these behemoths are a drag on the economy and need to be reined in.

But this being Russia, there is also a political subtext. The biggest advocate of the state corporation model is Deputy Prime Minister Igor Sechin, the bete noire of Russia's elite and the informal leader of the siloviki clan of security service veterans surrounding Putin.

Sechin and Kudrin have long been in a state of low-intensity bureaucratic war that the deepening economic crisis has only served to intensify.

So it is not surprising that, according to several observers, one of the main targets of the probe appears to be a close Sechin ally, Sergei Chemezov, the head of Russian Technologies.

"Russian Technologies was given the honorable mission of modernizing Russian industry. In essence, this meant a partial return to a model of the Soviet Union late 1970s, in which the military-industrial complex was supported with oil windfall profits," wrote economic analyst Maksim Blant in a recent column in

When the price of oil tanked late last year, Blant wrote, Chemezov's mission was changed to providing "technological breakthroughs." That, it appears, is a lot harder than spending petrodollars.

Russian Technologies also owns a 25 percent stake in the troubled automaker AvtoVAZ, which saw some 2,000 workers take to the streets in Tolyatti last week to protest cuts in working hours and demand that the factory be nationalized.

In another sign that Chemezov has fallen from grace, the Kremlin announced on August 6 that he has been removed from a presidential commission on economic modernization.

Speaking to RosBalt, Yevgeny Minchenko, president of the International Institute of Political Expertise, says the Kremlin is putting Chemezov on notice:

This should not be interpreted as a direct attack on Chemezov. The game is more subtle than that. It is instead a warning that he needs to get it together and strengthen his management or else stricter measures will be taken.

As we have written here on several occasions, competing wings of the Russian political elite have drawn diametrically opposed lessons from the financial crisis. Kudrin and the bean-counting technocrats say it underscores the need for a dose of (limited) liberalization and decentralization while Sechin and the siloviki are trying to cling to the status quo and strengthen the state's hand in the economy.

Medvedev appears to have shown his hand to an extent, but big questions remain. Does the president have the political will and political strength to follow through? Will Putin back up his protege? And how will Sechin react to this move against his political ally?

-- Brian Whitmore

About This Blog

The Power Vertical
The Power Vertical

The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It offers Brian's personal take on emerging and developing trends in Russian politics, shining a spotlight on the high-stakes power struggles, machinations, and clashing interests that shape Kremlin policy today. Check out The Power Vertical Facebook page or


Latest Posts

Latest Podcast