Russia and Eurasia

“Waves” of the Russia’s Presidential Reforms Break About Premier’s “Energy-Rocks”

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In late March of this year, Russian President Dmitry Medvedev demanded that high-ranking officials – namely, deputy prime ministers and cabinet-level ministers that co-ordinate state policy in the same sectors in which those companies are active – step down from their seats on the boards of state-run energy companies by July 1. He also said that October 1 would be the deadline for replacing these civil servants with independent directors. The deadline has now passed, but Medvedev‟s bid to diminish the government‟s influence in the energy sector has run into roadblocks. Most of the high-level government officials who have stepped down are being replaced not by independent managers, but by directors from other state companies in the same sector. Russia‟s state-owned oil and gas companies have not been quick to replace directors who also hold high-ranking government posts, despite orders from President Dmitry Medvedev. High-ranking Russian officials have made a show of following President Medvedev‟s order to leave the boards of state-run energy companies, but government influence over the sector remains strong. This indicates that the political will needed for the presidential administration to push economic reforms forward may be inadequate.

At the end of March in Magnitogorsk, Russian Presi-dent Dmitry Medvedev announced plans for remov-ing high-level civil servants from the boards of state-owned energy-companies. So far, though, the gov-ernment has not fully executed this order, particular-ly with respect to companies active in the energy sector.

Medvedev has justified his decision by pointing out that government officials who are responsible for setting policy in a certain area – for example, energy – are serving as directors of competitive companies active in that same area. This causes conflicts of interest, he said, and leads to discord between the government, with its reformist agenda, and mem-bers of parliament, who are influenced by energy lobbyists.

The president has officially charged the government with executing his initiative in several stages. By July 1, state-owned companies must discharge all deputy prime ministers and cabinet-level ministers that co-ordinate state policy in the same sectors in which those companies are active and replace them with independent directors at their shareholder meetings.

By October 1, state-owned companies involved in the energy sector, as well as some state-run military-industrial firms, must elect supervisory board chair-men who are not civil servants.

Published in Political Reflection Magazine Vol. 2 No. 3

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