Putin’s Surprise: The Resurrection of Sergei Kirienko (Complete Version – Parts 1 and 2)

photo-kirienko-putin

by Gordon M. Hahn

Introduction

In October, 54-year old Russian state nuclear energy company ‘RosAtom’ director Sergei Kirienko was appointed to the post of deputy chief in charge of domestic politics in Russian President Vladimir Putin’s Presidential Administration (PA). Once dubbed ‘Kinder Surpriz’ or Kid’s Surprise by the Russian media to invoke Kirienko’s then youth and surprising rise to the Russian prime minister’s post in 1998 under then President Boris Yeltsin, Kirienko’s new rise to the heights of power in Russia is perhaps even more surprising than the first. Kirienko fits the bill for promotion under Russian Vladimir Putin. He is a loyal insider and an effective manager. But his new appointment raises several issues which challenge the Washington consensus’s rather distorted conceptualization of Putin and ‘his’ regime. Kirienko is a relative liberal and thus his appointment plays to liberal elements within the state bureaucracy, elite and society and could help Putin implement a mini-thaw in politics should he want one.

PART 1

Kirienko’s Early Political Career

Kirienko began his political life in the Communist Party of the Soviet Union’s Communist Youth League or ‘Komsomol’ in the province of Nizhnii Novgorod and eventually became a close associate of Boris Nemtsov, the region’s then pro-democracy governor and more recently a top democratic opposition leader whose murder in winter 2015 was attributed by many to Russian President Vladimir Putin. Kirienko played according to the rules of the game from his earliest political days. Kirienko was an ambitious young member of new Russia’s business elite. As a young man he changed his surname from the Jewish “Israitel”·to the Ukrainian “Kirienko” to facilitate his rise in the Komsomol and prepare for a Party career. During the perestroika era he was a Komsomol apparatchik, serving as Komsomol committee secretary at a factory and the Gorky (as Nizhnii Novgorod or simply Nizhegorod was then called) Oblast Komosomol first secretary  first secretary.

With the onset of Gorbachev’s perestroika, the young Kirienko, like many Komsomol apparatchiki, turned to the soviets and then business and commercial banking. In March 1990, with Mikhail Gorbachev’s recent transfer of some power from the CPSU apparat to the previously pseudo-legislative soviets, Kirienko ran for and won a seat as a deputy in the Gorky Oblast Soviet of People’s Deputies. Like many Komsomol and Party appartchiki after the Soviet collapse, Kirienko went into business. He became one of late perestroika’s millionery by creating a new regional lottery game and later by buying oil low domestically and selling it high abroad. In the interim held positions in several private companies. He first was General Director of the open stock company ‘Kontsern AMK’, then chairman of the board of Garantiya Bank, and then president of the Norsi Oil Company. During this period, Kirienko became a close associate of the now late liberal politician and then Nizhnii Novgorod Governor Boris Nemtsov. Kirienko’s Garantiia Bank in Nizhnii Novgorod eventually became an authorized bank conducting financial operations for many of the Nemtsov Nizhnii administration’s social programs. Garantiia and other authorized banks were designated to assist in Nemtsov’s housing certificate program for servicemen, distributing pension funds, handling nemtsovki regional government bonds, and the GAZ auto leasing program. Thus, Kirienko was another insider who benefited from the already hybrid state-market nature of Russia’s post-communist economy (see Gordon M. Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group,” Problems of Post-Communism, 45, 5, September-October 1998, pp. 1-15, http://www.tandfonline.com/doi/abs/10.1080/10758216.1998.11655802).

In 1997 President Yeltsin dubbed Nemtsov a possible successor and appointed him first deputy prime minister along with another long-standing liberal Anatolii Chubais. Nemtsov then convinced Prime Minister Viktor Chernomyrdin to appoint Kirienko as Deputy Fuel and Energy Minister in April 1997. Kirienko was soon promoted to the Fuel and Energy Minister’s post. Upon his arrival in Moscow, Kirienko found himself under heated attack because of his association with the liberal Nemtsov. Boris Berezovskii and Vladimir Gusinskii extended their smear campaign against Nemtsov to his protege Kirienko with a series of newspaper articles accusing Kirienko of shady use ofNizhnii Novgorod’s pension funds when he headed Garantiia. They accused him also of funneling profits from his oil company, Norsi, to Garantiia instead of paying off the company’s debts. His advocates claim that Kirienko took a fundamentally insolvent, Soviet-style oil enterprise and turned it into a modestly profitable company. Both interpretations may be true. Kirienko, like many Russian commercial bankers, took advantage of inflation, his bank’s authorized status, limited fmancial regulations, and cash flows from Garantiia and Norsi to profit from high-yield state bonds. These profits were then reinvested into Nizhnii Novgorod’s pension fund and Norsi’s coffers. The picture gets further confused, however, because of Nemtsov’s scheme allowing oil companies with arrears to the regional pension fund to make their payments in oil, leading to considerable ‘barterization’ of Nizhnii Novgorod’s pension system. This was likely Kirienko’s idea, given his involvement in both oil (Norsi) and pensions (Garantiia). In all fairness, it must be noted that Garantiia performed a service to both pensioners and Nemtsov’s administration in developing a fast, efficient system for distributing monthly pensions. Both Garantiia and NorsiBank, affiliated with Norsi Oil, also handled the low-yield nemtsovki bonds. However, they were among twelve other local banks authorized to participate in a program that produced earnings to compensate for savings lost to hyperinflation. The financial ties between Kirienko’s business operations and Nemtsov’s administration were more or less as state-oligarchic as those extant in Moscow and elsewhere in Russia at the time (Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group”).

If the flamboyant Nemtsov came to Moscow as the self-proclaimed kamikaze prepared to take on Moscow’s natural monopolies and FIGs on behalf of the regions, the clerk-like Kirienko worked behind the scenes to support Nemtsov’s policies. Combining experience in both finance and oil, Kirienko came with the technical skills to deal with Russia’s permanent budget crisis. He and Nemtsov, along with Chubais, gradually weakened Chernomyrdin’s power base, forcing the natural monopolies to give up their most privileged positions by cutting railroad, oil pipeline, and electricity rates for enterprises, weakening Gazprom’s control over access to gas pipelines, and partially (25 percent) privatizing the telephone monopoly Sviazinvest. But they have not been able to break up the monopolies just yet. Like Chubais in 1994, Nemtsov backed down in mid-1997, suddenly arguing the global competitive advantages of monopolies. During his confirmation battles for the premiership, Kirienko did the same and played to the important oil lobby in the Duma by promising once more to help oil companies through the dip in world prices. However, Nemtsov and Kirienko had discredited Chernomyrdin’s brand of state intervention in the economy and Chubais’s indifference to insider privatization schemes (Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group”).

Given Nemtsov’s broad responsibilities as first deputy prime minister, many of the policy initiatives in the energy sphere had accrued to Kirienko, who ran the Ministry of Fuel and Energy on a daily basis. The liberal centrist newspaper Nezavisimaia gazeta credited Kirienko with a series of achievements, some of which had been attributed previously to Nemtsov. The reports were favorable despite Kirienko’s alleged backing of an auction plan to sell the large oil company Rosneft that effectively priced Berezovskii out of the running. Kirienko was said to have stood firm on oil pipeline transit fees in negotiating with Chechnya when others were prepared to compromise with the breakaway region’s demands, something about which Berezovskii would have had direct knowledge as then Moscow’s chief negotiator with ChechnYa. He is also said to have played an important role in getting the Law on Production Sharing through the Duma, which opened up seven major oil and gas deposits to foreign investment and may have saved the giant Sakhalin I and II offshore oil and gas projects. As minister of fuel and energy, Kirienko cut state outlays and overcame bureaucratic opposition to establish heat and energy consumption limits on subsidiary organizations. He provided additional export quotas to get oil companies to pay their R8 trillion in budget arrears. Kirienko also has been widely credited with settling coal miners’ strikes over wage arrears and declining subsidies in the Kuzbass and with easing the energy and supply crisis in the Russian Far East. Chubais himself admitted, “no one could come up with such an original and productive plan as the one Kirienko invented” for resolving wage debts to coal miners. Indeed, Kirienko resolved the summer 1997 energy crisis in Primorskii krai by integrating into one company the region’s Luchegorsk coal mine and state electric power station, immediately reducing the cost of electricity. He dismissed the glut of middlemen who resold power and introduced transit accounts to transfer consumers’ money directly to the accounts of the miners and electric power workers. He also lowered cargo tariffs and travel times on the Trans-Siberian Railway. While some wage arrears in the krai remained, tension between Moscow and Primore declined considerably. Local officials and union leaders began to seek business advice from Fuel and Energy Ministry officials (Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group”).

In March 1998 Kirienko became Chernomyrdin’s would-be successor as Russian prime minister when Yeltsin appointed him acting prime minister after Chernomyrdin’s resignation. The Russian president then nominated and the Duma eventually approved Kirienko in its third vote for the post of prime minister in April, with Nemtsov serving as one of Kirienko’s first vice premiers. Why was Kirienko and not Nemtsov promoted to the premiership? Nemtsov might have been a hard sell to the Duma, given his high profile, well-known ties to Chubais, radical economic reformer and former prime minister Yegor Gaidar, and pro-democracy Yabloko Party leader Grigorii Yavlinskii, and his status as Yeltsin’s heir apparent. Moreover, Kirienko lacked the personal charisma and photogenic appearance of Nemtsov. Moreover, once in Moscow Kirienko was in a position to develop his own political persona, reputation, and relationships, quietly moving out from his patron’s shadow at least in the corridors of power and board rooms. Although one rung below Nemtsov, Kirienko headed perhaps the most important government ministry. The energy sectors, particularly oil and gas, produce the bulk of Russia’s foreign currency earnings, provide the largest budget revenues, and fill the coffers of Moscow’s banks and FIGs. After Chernomyrdin’s fall, therefore, the government energy minister and former oil man was strategically better-positioned than any government offials except the vice premiers. In addition, Kirienko had strong private sector backing.  Kirienko was reportedly on good terms with Vagit Alekperov, chair of Lukoil, Russia’s largest private oil company, and received the support of key Chubais associate, Vladimir Potanin. As president of Interros, Potanin led a financial-industrial empire that controlled the Oneximbank, then perhaos the most powerful financial empire in Russia. Interros controls more than 4 percent of total gross domestic product, about 7 percent of exports, and employs 400,000 people (Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group”).

At the same time, like Chubais’s then increasingly embattled St. Petersburg group, the Nizhegorodtsy developed close ties to the same Western international economic aid organizations that in some ways contributed to Chubais’s downfall. Potanin likely had ties to Kirienko and Nemtsov through International Finance Corporation, which provided loans to help small business in Nizhnii Novgorod. Similarly, the U.S. Agency for International Development’s infamous Harvard Project, which supported Chubais’s Petersburg clan so closely allied with Potanin’s financial empire, established one of its ten regional Russian Privatization Centers in Nizhnii Novgorod. Thus, when the Nizhegorod group moved away from sole reliance on Yavlinskii and Yabloko and moved towards Chubais, it also tied itself into the international financial aid network led by the United States, the International Monetary Fund, and the World Bank. Chubais’s subsequent appointment as vice premier suggest that in the wheeling and dealing during the Duma’s confirmation of Kirienko, Chubais also backed Kirienko (Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group”).

Kirienko also won key regional support. Chubais could help deliver that support. Shortly after his nomination, Kirienko told the Russian parliament’s upper house, the Council of the Federation, that he would support changes in the tax code to no longer benefit FIGs and companies headquartered in Moscow but with the bulk of the their business in the regions by allowing them pay their taxes to Moscow. In turn, Kirienko received the support of the most powerful governors, including, Kemerovo’s Arnan Tuleev, Primore’s Evgenii Nazdratenko, St. Petersburg’s Vladimir Yakovlev, and Cheliabinsk’s Petr Sumin. He even garnered Luzhkov’s tentative support by agreeing to hand over the Moskvich auto plant to Moscow city (Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group”).

However promising Kirienko’s government might have been, by the time of Kirienko’s appointment as prime minister, the Yeltsin-Chernomyrdin team with help from Chubais had led the country into a financial dead end and the edge of default. It came several months later when the state bond pyramid they had created collapsed on a fall in oil prices to $10/barrel, leaving the state short of the funds needed to pay those paid from the budget no less pay interest payments on the huge foreign debt Moscow inherited from the USSR and compounded by the post-Soviet depression of the 1990s. Nemtsov and more so Kirienko carried only indirect responsibility for the 1998 financial collapse, but paid with their resignations (see Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group” and Gordon M. Hahn, Russia’s Revolution From Above: Reform, Transition and Revolution in the Collapse of the Soviet Communist Regime, 1985-2000, Transaction, 2002, Chapter 10).

Kirienko turned to the more liberal regions to staff much of his new government. In addition to the deputy prime ministers Nemtsov and Chubais, all three deputy prime ministers are representatives from democratic regions: Nemtsov, Sysuev, and the new arrival from Cheliabinsk, Viktor Khristenko. In addition, the new labor and social development minister is fonner Duma deputy from St. Petersburg Oksana Dmitrieva (Yabloko), joining Finance Minister Mikhail Zadornov (Yabloko), a former deputy from Kamchatka. All these new government officials are 40 years old or younger. A last regional representative, the head of Perm oblast’s legislative assembly, Evgenii Sapiro, was appointed minister for regional arid nationalities policy (Hahn, “From Chernomyrdin to Kirienko and the Rise of the Nizhegorod Group”).

In his first television appearances, print interviews, and speeches before the parliament, Kirienko impressed as a sharp, intelligent, financially learned, and politically astute, if somewhat cold, technocrat. The ability to sell policies to the public was highly valued among Nemtsov’s Nizhnii Novgorodians, and Kirienko had shown himself to be sensitive to the political requirement of at least appearing to understand the public’s concerns. His ability to hit all the notes that his audience wants to hear, whether it be the public, governors, or regional assembly chairs, would help in his relations with the cantankerous Duma. As for his most important audience, Yeltsin, Kirienko’s restrained, deliberate, even diplomatic, style will stand him in good stead.

Putin and Kirienko would have crossed paths during Kirienko’s stint in the federal government from April 1997 to August 1998. In this period, Kirienko was Fuel and Energy Deputy Minister, then Minister, then Prime Minister. Putin, a member of the St. Petersburg clan led by Anatolii Chubais, beginning in March 1997 held the posts of Chief of the Main Control Directorate of the PA and First Deputy Chief of the PA and then PA First Deputy Chief responsible for the Russian Federation’s constituent regions. Then, it was then Prime Minister Kirienko who in July 1998 met Putin at Moscow’s Sheretmetevo Airport to inform and congratulate him on President Yeltsin’s appointing him to head the FSB (Nataliya Gevorkyan, Ot pervogo litsa: Razgovory s Vladimirom Putinym, Moscow, 2000). 

After the August 1998 default Kirienko resigned quietly taking the blame or the appearance of blame for the crisis quietly. This demonstration of loyalty to Yeltsin and his ruling elite assured many, perhaps including Putin, that Kirienko was a team player and would play by the rules of the game established by ruling circles in the Kremlin. Nemtsov made more noise and increasingly so as the years went on. With the demise of the Kirienko government Nizhegorod group, Putin and other members of the Petersburg clan rose up the ladder of the state apparatus, while the Nizhegorodtsy dissolved into civil society, seeking to revive their careers. Kirienko along with Nemtsov and liberal politicians Irina Khakamada formed the Union of Right Forces (Soyuz pravykh sil or SPS). The SPS finished fourth in the December 1999 Duma vote, with 8.5 percent of the vote, taking 29 seats in the 450-seat body, and Kirienko became the leader of the SPS deputies’ faction in the Duma. The same year the SPS nominated Kirienko to run for the mayoralty of the city of Moscow; he finished second with 11 percent of the vote. In May 2000, newly elected president Vladimir Putin appointed Kirienko to head the Volga Federal District – one of the then seven federal districts he created to rein in the unwieldy often separatist-leaning regions. This would be Putin’s first but not last appointment of Kirienko to important executive branch positions.

In 2001 Kirienko was transferred to the post of State Commission on Chemical Disarmament to deal with destroying Russian chemical weapons stockpiles leftover from the Soviet arsenal and destined for liquidation under the non-proliferation treaty. In November Kirienko was appointed head of the Federal Atomic Energy Agency, which was reorganized in 2007 into a federal business enterprise, ‘RosAtom’, also headed by Kirienko. Thus, Kirienko would be dealing with the Russian nuclear industry and international energy market for over a decade.

PART 2

Assessing Kirienko’s Tenure at RosAtom

Kirienko proposed the goal of Russia garnering 20 percent of the world’s nuclear industry market (www.rferl.org/a/1065790.html). By the time of his appointment as Putin’s PA  deputy chief, Rosatom would include numerous profitable subsidiaries, a global-leading portfolio of foreign orders, and growing export revenues. Already by 2014 Russia through RosAtom had become the world’s leader in nuclear power plant construction, building 37 percent of the plants under construction worldwide (www.cnbc.com/2014/03/21/nuclear-power-in-the-new-cold-war.html). Whereas in 2012 it had $66.5 billion in foreign orders, in 2015 foreign orders totaled over US$110 billion, excluding new projects in Egypt and export revenues of $6.4 billion, up 20% from 2014 (www.neimagazine.com/news/newsrosatom-aims-for-72bn-in-foreign-orders-for-2013 and www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx). Whereas in 2013 it had a presence in 28 countries, as of mid-November 2016 that was up to 49 countries (http://www.rosatom.ru/about-nuclear-industry/global-presence/). 2015, the last full year before Kirienko’s new appointment, was a major success for RosAtom. In April 2015 it said that it had contracts for 19 nuclear plants in nine countries, including those under construction. By December it had orders for 34 in 13 countries, each costing some $5 billion to construct (www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-fuel-cycle.aspx). As of mid-November 2016, RosAtom had 36 nuclear plant construction projects abroad (www.rosatom.ru). From 2020, Rosatom forecasts global construction of nuclear power plants at about 16 units per year; 4-5 of those potentially from Rosatom. Rosatom’s goal is to gain half its total revenue from exported goods and services by 2030, and half its reactor revenue from overseas projects in 2017. Early in 2016 Rosatom claimed Russian GDP gained two roubles for every one invested in building nuclear power plants abroad and enhanced nuclear trade (www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx).

Kirienko also set Russia’s nuclear industry on a fast track in developing new, more robust waste-free fast breeder reactors, the next generation in nuclear energy production, that will keep Russia in the lead of the global nuclear energy market for years to come. Domestically, Kirienko announced in 2006 a target of nuclear providing 23 percent of Russia’s electricity by 2020 and 25 percent by 2030. But the 2007 and 2009 plans approved by the government scaled this back significantly. Rosatom’s long-term strategy up to 2050 developed under Kirienko’s leadership will move Russian domestic energy to ecologically safe nuclear plants using fast reactors with a closed fuel cycle – the Proryv (Breakthrough) Project. The latest Federal Target Program sets the goal of nuclear fuel providing 45-50 percent of Russia’s electricity needs by 2050, rising to 70-80 percent by 2100. However, United Energy Systems (UES), Russia’s electric grid manager, projected a decrease from 17.2% to 15.9% for nuclear;s share of electricity output by 2020, with a substantial increase in fossil fuel power. Generating capacity target goals established by the government in June 2010 stipulating a 25 percent (43.4 GWe of 173 GWe) nuclear share of all capacity by 2030 were halved in January 2015 due to budget constraints created by Western sanctions.

Kirienko had to battle with the Ministry of Economic Development to achieve his goals, but received strong backing from what was for most of his tenure at RosAtom Aleksei Kudrin’s Finance Ministry. In May 2015 the former ministry announced a delay in commissioning new nuclear power plants due to “a current energy surplus.” The commissioning of two new units each in Leningrad and Novovoronezh units was delayed by a year, and construction of Smolensk II was postponed for six years. Nevertheless, in September 2015 Rosatom said it planned to commission 15 new reactors of 18.6 GWe by 2030. Under Kirienko’s lead, utilization of existing plants improved markedly from the 1990s when “capacity factors” averaged around 60 percent. In 2010, 2011 and 2014 they were above 81 percent (www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx). Most importantly, in August 2016 a government decree approved plans to build 11 new reactors by 2030 beyond those already under construction. It moved the dates for the first two closed-cycle, clean fast ‘BN-1200’ reactors forward (http://government.ru/docs/24102/). In total 5 BN-1200 reactors are set for construction by 2030. Technological innovations beyond the new closed-cycle fast reactors include the development of small reactors, testing of the nitride fuel in the BN-600 reactor, development of the 150 MWt multi-purpose fast neutron research reactor, and planned floating nuclear power plants (FNPPs), and development and export of combined nuclear power and desalination units (www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx).

Abroad, Kirienko managed to markedly expand Russia’s presence on the nuclear industry market. RosAtom will be building new nuclear reactors in countries in every region of the world from China to the Middle East to South America. In 2008 RosAtom increased its share in InterUES, UES’s international electricity-export branch, to 57.28 percent giving it a share of capacity sold to Armenia, Finland, and Kazakhstan. In May 2009 St Petersburg Atomenergopoekt (SPb AEP, now Atomproekt or SPbAP) said it was starting design work on a BN-800 closed-cycle fast reactor for China at Sanming – Chinese Demonstration Fast Reactors (CDFR). In May 2014 and in August 2015 RosAtom signed deals with China and Indonesia, respectively, to build FNPPs. In November 2016, Russia and China signed a new nuclear energy cooperation agreement, including fast breeder reactors, for RosAtom (www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx). It built Iran’s nuclear power plant at Bushehr, which became a major foreign policy asset for the Kremlin, and has contracted several more. In future, RosAtom Overseas expects two export Russian reactors constructed on a build-own-operate (BOO) basis to be operating soon after 2020 and 24 by 2030, including ongoing or planed projects in Bangladesh, Belarus, China, Czeck Republic, Finland, Hungary, India, Jordan, Kazakhstan, Bulgaria, Ukraine, South Africa, Turkey, and Vietnam.

The EU, especially the Baltic region states (the three Baltic countries as well as Poland and Germany), have resisted Kirienko’s efforts to expand RoasAtom’s and InterUES’s presence in the European nuclear-generated electric energy market. In 2008, laid plans for the Baltic plant in Kaliningrad, which was designed to “operate within the unified grid of the Baltics and North-West of Russia” and was to include 49 percent foreign investment and foreign-supplied components. However, in 2012 Lithuania adopted its new energy strategy that involved reorganizing its grid to be independent of the Russian/Belarus system, work within the European Network of Transmission System Operators (ENTSO) synchronous system, and strengthen ENTSO’s interconnection among the three Baltic states. Interest in the Baltic project from Czech power utility CEZ, Iberdrola from Spain, and multinational Enel, positioned by contract to take up to 49% of the plant, did not move forward. By June 2013 construction was suspended largely due to politics and “historical issues regarding Russia and/or Kaliningrad,” resulting in a “lack of interest” in the project from the Baltic states, Poland and Germany. The potential isolation of the Kaliningrad Region grid forced Rosatom to completely redraft the project. In a recent shift, in June 2015 Latvia’s SiltumElektroProjekt LLC (SEP) won a R47 million contract to do a feasibility study on connecting the Baltic plant ‘interstate.’

Rosatom announced in 2012 that it would apply for design certification and then build in the UK the new standard for its nuclear plant projects both at home and for export –  evolution of Moscow Atomenergoproekt’s version of the AES-2006 power plant with the V-392M reactor, the VVER-TOI (typical optimized, with enhanced information) design for VVER-1300 and cheaper VVER-1300A reactors. Rusatom Overseas will build them in UK, upon successful application expected in 2015, in conjunction with Rolls-Royce, but delayed as a result of the Ukraine crisis. Thus, the first unit abroad likely will be in Akkuyu, Turkey (www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx).

Exports of combined power and desalination units are planned with China, Indonesia, Malaysia, Algeria, Cape Verde and Argentina. RosAtom would probably retain ownership and operation of such plants and simply sell the output. Rosatom has formed a group of expert desalination advisors as part of a strategy to sell its thermal desalination technologies. It is targeting its desalination technology at regions of the world where clean water is scarce (www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx).

In addition, Kirienko managed the Russian side’s activities under the Russian-American ‘Megotons to Megawatts’ Program that ended in 2013. Beginning in 1993, the 20-year program transferred more than 500 metric tons of downblended HEU having become more than 14,000 metric tons of low-enriched uranium (LEU) fuel sold to nuclear utility customers in the U.S. for use in nuclear reactors for energy. In the period between 1993 and 2013, when the project’s term ended, estimates are that one in 10 light bulbs in the US were lit by energy generated from the uranium delivered from 80 dismantled Russian nuclear warheads, and Russian nuclear fuel gave the U.S. some seven trillion kilowatts of electrical energy. With the program’s end, Rosatom began selling enriched uranium to the U.S. at international market prices considerably higher than the cost under the ended program. In 2012, Moscow announced it would not extend the so-called the Nunn-Lugar Cooperative Threat Reduction (CTR) Program, an umbrella program for the Megatons to Megawatts Program. But meeting with his American counterpart in Washington, the US Secretary of Energy Ernest Moniz and his deputy Daniel Poneman, Kirienko announced that the two parties had“compiled a list of mutually interesting projects,”  including an international fast-neutron reactor (http://tass.com/russia/711053). During but outside the program, Rosatom signed contracts worth more than $5.5 billion with US nuclear power generators (www.rt.com/news/heu-leu-agreement-over-037/). These were frozen by the Obama administration under economic sanctions targeting Russia after the Ukraine crisis in 2014.

Kirienko also garnered 20 percent of the Unites States’ uranium stocks in a controversial deal that has had some affect on the recent U.S. presidential campaign (“Cash Flowed to the Clinton Foundation Amid Russian Uranium Deal,” New York Times, 23 April 2015, www.nytimes.com/2015/04/24/us/cash-flowed-to-clinton-foundation-as-russians-pressed-for-control-of-uranium-company.html?_r=0).

Implications

Kirienko has a record of being a loyal insider with a reformist bent and skills in management. He appears to have been a very effective manager at RosAtom, helping develop new domestic and foreign strategies for Russia’s nuclear energy industry – one of Russia’s few major technology exports. In the process he developed invaluable domestic bureaucratic and foreign negotiating experience, the kind of which he was deprived when he was quickly and abruptly forced to resign the premiership in 1998.

Philosophically, Kirienko is liberal statist who sided with the pro-Putin wing of the SPS in 2000. His liberalism is most stridently expressed in terms of market economics, as Nezavisimaya gazeta editor-in-chief Konstantin Remchukov correctly notes. In a choice between private and state ownership, he will choose the former (www.ng.ru/politics/2016-11-07/100_echo07112016.html).

Thus, with the upcoming presidential election, Putin is using Kirienko’s appointment to improve management of the administration’s political departments. He also may be buttressing his support among liberal statists within the elite and moderate liberals within society. Kirienko enjoys some stature among the more liberal ‘civiliki’ – lawyers, economists, and financiers mostly from St. Petersburg.

In addition, given his work overseeing the Russian side of the ‘Megatons to Megawatts’ Program, Kirienko has extensive experience in negotiating, and general connections with Americans and some broader foreign policy-related experience. At the Megatons-to-Megawatts Program’s end Kirienko said that the program had become “unique experience” in Russian-American relations and paved the way for future Russia-US cooperation in the nuclear energy sphere (https://nuclear-news.net/category/2-world/europe/russia-europe-2-world-area/page/9/). Thus, although the two sides, according to Kirienko “faced technical, commercial and political problems, and if somebody wanted to find a pretext for the withdrawal from the project, it could be done,” “if there is the will to find a solution, it can be found in the most difficult situation” (http://tass.com/russia/711055). Given the defunct program’s success and Kirienko’s resulting connections and inside understanding of the U.S., could Putin be positioning Kirienko for another position, perhaps as his successor and leader of a new ‘reset’ at some point in the future? Unlikely. Although a PA deputy chief’s position provides sufficient status and leverage for one holding it to contend for the presidency, Kirienko lacks the patronage networks, personal charisma and probably the toughness to mount the apex of Russian politics. Less far-fetched is the possibility he could move back to the White House he left abruptly 18 years ago or be appointed foreign minister should Sergei Lavrov be transferred to another position or promoted to temporary (or permanent) Putin successor.

There has been much speculation that Kirienko’s appointment in addition to other developments might herald a return to the political ‘thaw’ or aborted ‘perestroika 2.0’ begun during Medvedev’s presidency apparently under Putin’s supervision (on the thaw see, for example, Gordon M. Hahn, “Medvedev, Putin, and Perestroika 2.0,” Demokratizatsiya, Vol. 18, No. 3, Summer 2010, pp. 228-259, http://www.gwu.edu/~ieresgwu/assets/docs/demokratizatsiya%20archive/GWASHU_DEMO_18_3/C6RV2N817P0572R3/C6RV2N817P0572R3.pdf and Gordon M. Hahn “Perestroika 2.0: Towards Non-Revolutionary Regime Transformation in Russia?,” Post-Soviet Affairs, 28, 4, October-December 2012, pp. 472-515, www.tandfonline.com/doi/abs/10.2747/1060-586X.28.4.472#.VNIAL53F-uw). After Putin’s return to the Kremlin, a distinct ‘zamorozka’ or freezing of political, civil and economic freedoms ensued as compared with the Medvedev presidency (Gordon M. Hahn, “The Russian Federation in 2012: From ‘Thaw’ and ‘Reset’ to ‘Freeze’,” Asian Survey, 53, 1, 2013, pp. 214-223). Prior to Kirienko’s new appointment, Putin appointed Anton Vaino to replace the more traditionalist and hawkish predecessor, Sergei Ivanov, who was the hardline siloviki’s choice to succeed Putin in 2008 after his first two terms in office. Instead, the more liberal ‘civilik’ Dmitrii Medvedev, then first deputy prime minister and previously Putin’s presidential administration chief, succeeded Putin in the presidency for a single term. Now Kirienko, a relative liberal like Medvedev, has received a top appointment. Whether this is a sign of a coming mini-thaw or just shoring up Putin’s liberal flank before the presidential election remains unclear.

Kirienko lent credence to the possibility of a Putin-led mini-thaw (no more can really be expected from Putin given his more traditionalist bent). On November 1st Kirienko met with eight experts behind closed doors primarily to discuss the upcoming presidential elections. At the same time, he criticized the chief traditionalist television ideologue on the state television ‘First Channel’ for his inflammatory rhetoric. Television pundit Dmitrii Kiselyov, the Kremlin’s supposed “chief propagandist,” according to more politicized commentators, was criticized for saying recently that Russia is the only country capable of turning the United States into “radioactive ash.” Kirienko threatened to crackdown on such statements on state television. This was the third time in two weeks that state officials have broken with Kiselyov, who made the “radioactive ash” comment more than two years ago, at the height of U.S.-Russian tensions over Moscow’s annexation of Crimea. Last A week earlier, Russian Foreign Ministry officials refused to endorse recent Kiselyov criticism of Hungary’s 1956 anti-Soviet uprising, and Putin himself told reporters that he rejects such bellicose language about nuclear war, calling it “harmful.” In an open rebuke to those who recently soiled a monument to the great Soviet dissident and Russian writer Aleksandr Solzhenitsyn, Putin invited and stood next to Solzhenitsyn’s wife Nadezhda at the ceremony opening the new monument in Moscow to Prince Vladimir of Kievan Rus, who Christianized Russia in the 12th century. At the same time, Putin’s spokesman, Dmitrii Peskov, called the blocking of Jacques Sterges’ exhibition by the Officers of Russia association as “hooliganism” and criticized the statements of pro-Putin motorcyclist or ‘biker’ Aleksandr Zaldostanov against liberal actor Konstantin Raikin (www.ng.ru/politics/2016-11-07/100_echo07112016.html). This week a court repealed the verdict and sentence against Russian opposition activist Aleksei Navalnyi and returned the case to the courts for further review, and the Kremlin’s often shallow and politicized fight against corruption seemed to get serious when for the first time an acting – liberal albeit – federal minster, Economic Development Minister Aleksei Ulyukaev, was arrested for bribe-taking. Simultaneously, two deputies of Kemerovo Governor Aman Tuleev were detained for corruption.

Subsequently, liberal elements in civil society began wondering whether Kirienko’s criticism of Kiselyov is a sign of a coming thaw (http://echo.msk.ru/blog/pressa_echo/1867766-echo/). However unlikely, it cannot be excluded entirely that Putin will slightly loosen the screws in the run-up to the presidential election in an attempt to give them a more open veneer. This scenario would become more likely if Putin wants to set the stage for political reforms after his inevitable re-election or, less likely, should he choose to surprise all and step down for an early interregnum and return Medvedev to the Kremlin for another single term. The turn to a thaw even during Putin’s continuing presidency should not be excluded out of hand.

However, Kirienko’s appointment was preceded by the appointment of the relative traditionalist Anton Vaino as PA chief in August. Rather than seeing Kirienko’s rise and other recent developments as a sign of an imminent liberal thaw on the order of Medvedev’s stalled ‘perestroika 2.0,’ it is more likely that we are seeing a pre-presidential campaign adjustment–a counterbalancing against the upperhand held by the hardline siloviki as a result of NATO expansion, the consequent Ukrainian and Syrian crises and great chill in post-Soviet Russian-American relations and Putin’s return to the Kremlin. The silovikis’ power may be reflected in the Ulyukaev arrest, if the charges against are deemed false. His release and the dropping of charges will be further evidence that their power has reached its apex and they are overplaying their hand as they did in the run-up to Putin’s decision to name a successor after his second presidential term. Putin may be seeing the need to roll the siloviki back a notch to maximize his take of the vote in the presidential election and keep regime liberals like Medvedev and former Finance Minister and recently appointed Putin economic advisor Aleksei Kudrin on board.

Thus, Kirienko’s appointment once again demonstrates that Putin is as much a product, arbiter, even prisoner rather than a master of ‘his’ system. He is by far the most powerful operator within the system but not all-powerful. He must balance rather than eliminate tendencies, weakening then strengthening one or another political orientation or bureaucratic-business clan in alternation. Thus, Putin’s survival in power in the hybrid Russian regime is dependent both on: (1) balancing various elite factions – from liberal to ultra-nationalist – to retain their support, (2) popular support in polling exercises masquerading as fully free and fair elections, and (3) and considerable though not full compliance with Russia’s constitution which provides some stickiness and thus regime stability.

~~~~~~~~~~~~~~~~~~~~~~~

About the Author – Gordon M. Hahn, Ph.D., is an Analyst and Advisory Board Member at Geostrategic Forecasting Corporation (Chicago), http://www.geostrategicforecasting.com; member of the Executive Advisory Board at the American Institute of Geostrategy (AIGEO) (Los Angeles), http://www.aigeo.org; Contributing Expert for Russia Direct, russia-direct.org; Senior Researcher at the Center for Terrorism and Intelligence Studies (CETIS), Akribis Group, San Jose, California; and an Analyst and Consultant for Russia – Other Points of View (San Mateo, California), www.russiaotherpointsofview.com.

Dr. Hahn is the author of the forthcoming book from McFarland Publishers Ukraine Over the Edge: Russia, the West, and the Making of the Ukrainian Crisis and ‘New Cold War. Previously, he has authored three well-received books: The Caucasus Emirate Mujahedin: Global Jihadism in Russia’s North Caucasus and Beyond (McFarland Publishers, 2014), Russia’s Islamic Threat (Yale University Press, 2007), and Russia’s Revolution From Above: Reform, Transition and Revolution in the Fall of the Soviet Communist Regime, 1985-2000 (Transaction Publishers, 2002). He also has published numerous think tank reports, academic articles, analyses, and commentaries in both English and Russian language media.

Dr. Hahn also has taught at Boston, American, Stanford, San Jose State, and San Francisco State Universities and as a Fulbright Scholar at Saint Petersburg State University, Russia and has been a senior associate and visiting fellow at the Center for Strategic and International Studies, the Kennan Institute in Washington DC, and the Hoover Institution.

6 thoughts on “Putin’s Surprise: The Resurrection of Sergei Kirienko (Complete Version – Parts 1 and 2)

    1. That decision, nor the recent one making it optional for those in national republics (and autonomous) to study the titular nationality’s (ies’) language, would be made by President Putin and not deputy admin head.

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About Gordon M. Hahn