Putin Starts Fourth Term by Sacking Several Senior Ministers

No post for the liberal Kudrin, but the fiscal hawk Siluanov heading the treasury is promoted to First Deputy Prime Minister

On the same day as he was inaugurated for his fourth term as president Russia's President Vladimir Putin immediately started on a highly anticipated government reshuffle by sacking several very prominent senior ministers.

Putin who begins a new 6-year presidential term nominated Dmitri Medvedev for the post of the prime minister as expected and has signed a special presidential decree setting social and economic development goals by 2024. The government automatically resigns on the day a new president is installed.

The nominations for the cabinet presented by Medvedev to State Duma brought no surprises and several government incumbents lost their jobs.

So far no nomination for the government or presidential administration has been announced for ex-Finance Minister Alexei Kudrin, the one "joker" in the pack, who is expected to be given a key post with real power to oversee a wide ranging reform programme for the coming years.

Current Finance Minister Anton Siluanov was promoted and nominated for a post of the First Deputy Prime Minister, replacing outgoing Igor Shuvalov, who has been marred by multiple corruption allegations.

"Judging from the details announced so far, the line-up of the government shows significant elements of continuity," VTB Capital commented on May 8, seeing Siluanov’s promotion as sign of macroeconomic stability and responsible fiscal management remaining high on the list of the priorities in the next Putin's term. 

The social issues Deputy PM could become current head of Audit Chamber Tatyana Golikova, while Arcady Dvorkovich is set to lose his Deputy PM post.

Kommersant daily commented that the distribution of the posts in the new government resembles that of 2008, when Putin sat one presidential term out, taking the prime minister’s job in the government and passing the presidency to Medvedev. "This [government] composition [is] to go with the flow," unnamed federal official told the Bell.  

Most notably, Medvedev is entrusted with implementing the 2024 presidential development strategy signed by Putin the same day as he takes up the new term, which is the reincarnation of infamous May decrees signed following his return to presidency in 2012 

While Putin ran his campaign with no coherent election message, confirming previous reports that Kremlin was struggling to consolidate an economic and social development vision in pre-election years, the new decree was introduced with a populist title "Russia for the People" (Rossiya - dlya lyudey).

"The populist tone of the new 'May decree' signed by Putin disapointed those, who like us, expected the Kremlin to move actively towards structural reforms and improving investment climate," Vladimir Tikhomirov of BCS Global Market wrote on May 8. 

The decree signed this May 7 consolidates 12 national development programs designed to better the lives of ordinary Russians, and have confirmed previously raised concerns as potentially yielding massive state spending with no clear target, implementation goals, or funding sources.

Tikhomirov added that the decree leaves more questions than answers, including the financing plan of ambitious goals, while omitting the changes in the spheres seen by investors and markets as crucial for Russian economy, such as state-business relations, property protection, judicial reform, taxation, and higher efficiency and transparency for state companies.

The Russian Audit Chamber previously warned that the new decree could cost about RUB8 trillion to implement, while government sources told the press in April it could be closer to RUB10 trillion ($162bn).

Development programs include healthcare, education, demographics, housing and urban development, international cooperation and exports, labour productivity, SMEs, roads and infrastructure, ecology, digital economy, science and culture.

Among the ambitious goals that the implementation of the programs should achieve is making Russia one of top five largest economies globally by 2024. The criteria are not specified, Gazeta.ru commented, noting that in terms of nominal GDP Russia currently ranks 13th and in terms of total purchasing power parity 6th (following China, US, India, Japan, and Germany). 

Other goals include extending the life expectancy in Russia to 78 years by 2024 from current 71 and to 80 years by 2030, halving the number of people in poverty, keeping productivity growth at 5%, and maintaining GDP growth at a pace faster than global. 

The need to make a "breakthrough" diversifying away from hydrocarbon focused economy to radically improve the quality of life and break the ranks of global economic powers is the recycled nutshell message that has been repeated by Putin for over a decade.

At the same time the new decree continues to suggest no clear or viable means to finance the set goals or radical economic reforms, thereby increasing uncertainty for the incoming government. bne IntelliNews has covered this topic of the reforms in Russia in a series of interviews and podcasts. Extracts from the podcasts were published here:

VOX: The cost of reform and Putin’s spending promises - part 1

VOX: The cost of reform II – boosting Russian incomes in a time of austerity

And links to the podcasts are here:

WoE The cost of change and Putin's spending promises with Vladimir Tikhomirov - part 1

WoE The cost of reform II – boosting Russian incomes in a time of austerity

Source: bne IntelliNews