Russia and Eurasia

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

0 6


Story about the Russian President Dmitry Medvedev’s initiative to change the make-up of the boards of state-owned firms, especially energy companies.

Dmitry_Medvedev_and_Vladimir_PutinIn 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 President Dmitry Medvedev announced plans for removing high-level civil servants from the boards of state-owned energy-companies. So far, though, the government has not fully executed this order, particularly 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 members 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 chairmen who are not civil servants.

October 1 has also been designated as the deadline for finalising the replacement of all high-level civil servants with independent directors. (Board seats will still be open to officials at the level of deputy minister and departmental director, as these are not considered to have independent political influence.)
State involvement

The high number of government representatives on the boards of state-run companies stems from the fact that the Russian state has a high level of direct involvement in many sectors of the economy.

In other words, the Russian economy has yet to be extensively liberalised. Although more than a decade has passed since the so-called “Chubais” wave of post-Soviet privatisation (a reference to former First Deputy Prime Minister Anatoly Chubais), Russia is still home to many state-owned enterprises, not least in the oil and gas sectors.

After a period of consolidation of state interests under former President Vladimir Putin, now serving as prime minister, the push for reform took on renewed urgency because of the world economic slowdown that erupted in 2008.

In 2009-2010, the government of the Russian Federation again began actively considering serious reforms. However, the tortuous recovery from the crisis and the return of high oil prices have stymied Moscow’s efforts to move in this direction.

Moreover, the state has even raised its stake in some companies. This year, for example, the government has upped its interest in the Russian oil pipeline monopoly Transneft by 3.5%.

  • Sechin’s moves

Now, though, Medvedev is pushing for a change. He won his first victory in April, when Deputy Prime Minister Igor Sechin agreed to leave his post as chairman of the board of directors of Rosneft, the state-owned oil company.It should be noted that Sechin is still in a position to influence Rosneft, as his departure coincided with the promotion of another board member who is completely loyal to him – Sergei Shishin, the vice president of state-owned VTB Bank. According to a source close to the oil company’s board, Shishin has “good relations with both Igor Sechin and with the directorate of the FSB [Russia’s Federal Security Service, the successor to the KGB] – in particular, with [FSB director] Alexander Bortnikov.”



To Read the rest of the article Please Click Here for Free Download.

* Published in Political Reflection Magazine (PR) Vol. 2 | No. 3

** Dr. Zurab Garakanidze is an author in News Base E-magazine.

About the author / 


Leave a reply

You must be logged in to post a comment.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


  • 25th Issue is Online Now!

    Vol. VI | No. IV – October-November-December 2020 To Download the Magazine Click Here… CONTENTS 05-13….. World News by Ebru Birinci 15-20….. The Jungle Grows Back How can We Redefine the Future World Order in the Tension of Power and Ideas? by Marco Marsili 22-29….. Interview With Professor Katharyne Mitchell by Ozgur Tufekci & Rahman…

  • 24th Issue is Online Now!

    Vol. VI | No. III – July-August-September 2020 To Download the Magazine Click Here… CONTENTS 05-14….. World News by Ebru Birinci 17-24….. Preparedness for an Uncertain Future “The Only Thing We Have to Fear is Fear Itself” by Professor Mark Meirowitz 25-39….. EU LAW vs UK LAW The Primacy of EU Law over National Law:…

  • IEPAS2020 is Going Virtual!

    Dear Friends and Colleagues, IEPAS2020 is Going Virtual! Due to the COVID19 pandemic, we are holding our entire conference virtually by streaming all of the live sessions. You may participate in all of our virtual networking events. In case of missing a session, you may get full access to the replays of every session since all…

  • The 13th issue of JCTS (Journal of Conflict Transformation & Security) is out now…

    The 13th issue of JCTS (Journal of Conflict Transformation & Security) is out now… Vol. 8 | No. 1 | 2020 Click here to Download the Entire Issue   TABLE OF CONTENTS Editor’s Note By David Curran Introduction By Nergis Canefe Research Articles Statelessness as a Permanent State: Challenges to the Human Security Paradigm By…

  • The 19th Issue of The Rest: Journal of Politics and Development is Out Now!

    The 19th issue of the rest: journal of politics and development is out now. Download the issue here… TABLE OF CONTENTS Research Articles Turkish AK Parti’s Posture towards the 2003 War in Iraq: The Impact of Religion amid Security Concerns By Alberto Gasparetto Nigeria and the Great Powers: The Impacts of the Boko Haram Terrorism on…

  • CESRAN International Named again amongst the Top Think Tanks in the World

    CESRAN International is pleased to announce that it has been named again amongst the world’s best think tanks. The 2019 Global Go To Think Tank Index ranked CESRAN International 141st among the World’s “Top Think Tanks in Western Europe” 75th among the World’s “Top Environment Policy Think Tanks” 153rd among the World’s “Top Foreign Policy…