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VZCZCXYZ0000
PP RUEHWEB
DE RUEHMO #1836/01 1791434
ZNY CCCCC ZZH
P 271434Z JUN 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 8786
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
C O N F I D E N T I A L MOSCOW 001836
SIPDIS
E.O. 12958: DECL: 06/27/2018
TAGS: PGOV PHUM SOCI RS
SUBJECT: SIBERIA SHOWS SUCESS, FAILURE OF APPOINTED
GOVERNORS
Classified By: Acting Political M/C Robert Patterson. Reason: 1.4 (d)
.
¶1. (SBU) SUMMARY. The fate of two regions, Irkutsk Oblast
and Krasnoyarsk Kray, encapsulates the success and failure of
Putin's system of appointing governors. In Irkutsk, Putin
appointee Aleksandr Tishanin failed to consolidate the
regional elite and resigned in disgrace for "personal
reasons" in April following an ugly fight with the
legislature over the regional budget. Few have much hope for
his successor -- Igor Esipovskiy -- who is also an "outsider"
seen as lacking the requisite political heft to challenge the
regional financial-industrial groups, linked to powerful
Moscow business interests. The fecklessness of the Irkutsk
governors compares unfavorably with the successful
administration of Aleksandr Khloponin in Krasnoyarsk, whose
close relations to the Kremlin allowed him to corral the
local elite and secure funding from the center, leading to
unprecedented political stability and economic growth.
Krasnoyarsk has eclipsed Irkutsk as the "capital" of Siberia
and is poised to consolidate its position as the dominant
region in that resource rich area. During our June 23 - 24
visit, some voiced concern that Krasnoyarsk's political
stability is built on a less than secure footing, especially
with the maneuvering around Norilsk Nickel, but none expected
a return to the "aluminum" wars that had wracked the region
in the 1990s. END SUMMARY
Tishanin's Failures
-------------------
¶2. (C) While few were surprised that Tishanin had to go, the
timing of his resignation -- only a few weeks before
Medvedev's inauguration -- caught some of our regional
contacts off guard. Sergey Levchenko, the head of the
Communist Party faction in the local legislature, voiced a
common complaint that dismissed Tishanin as a "stranger"
loyal to Moscow, with little sense of the region's needs.
Levchenko pointed to the budget crisis, in which both
Tishanin and the legislature deadlocked, then ultimately
promulgated their own budgets, as evidence of the former
governor's inability to come to terms with the regional
elite. At its core, the fight was over the allocation of
funds from the sale of shares in Verkhnechonskneftegaz
(VChNG). Tishanin had reserved those monies, totaling around
$28 million, for a regional development fund. As such, he
alone had authority for its disposition and he used the money
for renovating regional churches, launching sports programs
and, according to analyst Oksana Goncharenko of the
Moscow-based Center for Current Political Events, financing
United Russia's election campaign. The regional legislative
assembly in its turn refused to pass a budget that did not
include those funds. Tishanin issued his own budget, but was
embarrassed when the local prosecutor ruled that his
activities were illegal: according to the constitution he
could only reject or accept the legislature's budget.
¶3. (C) Oleg Voronin of Irkutsk State University, an observer
on regional politics for the Moscow Carnegie Center,
described Tishanin's problems as an integral part of a
broader competition for assets and influence among the
regional elite, backed by Moscow-based financial-industrial
groups. Tishanin, whose wife is the sister of Russian
Railways head Vladimir Yakunin, was seen as representing the
interests of his brother-in-law (who is reported to have
influenced Putin to appoint Tishanin), as well as those of
Rosneft and Gazprom. He reversed his predecessor's decision
on the disposition of VChNG to oil company TNK and awarded
part of it to Rosneft. His decision put him at odds with
legislative assembly chairman Viktor Kruglov, who Voronin
described as linked to TNK's Viktor Vekselberg. Kruglov was
unable to stop Tishanin from transferring control over VChNG
to the state corporation, but he used the budget issue to
undermine his opponent.
¶4. (C) Voronin noted that Tishanin himself had been his own
worst enemy, at least in his management of relations with the
Kremlin. Voronin said that the governor did not show up for a
regional economic exhibition in Vienna, leaving the Russian
Ambassador to Austria holding the bag. More serious, he
failed to appear for a five-minute meeting with Putin at the
St. Petersburg economic forum. Ultimately, Putin and even
Yakunin had come to the conclusion that Tishanin's
appointment had been a mistake. Tishanin was "encouraged" to
step down, ostensibly for personal reasons, and has not yet
been assigned a new position.
Esipovskiy - The New Varangian
------------------------------
¶5. (C) Putin appointed Igor Esipovskiy as "acting governor"
on April 15, once again picking an outsider with close ties
to one of Moscow's financial-industrial groups. Esipovskiy
had served as the president and general director of the
Avtovaz company in Samara Oblast -- a major asset controlled
by Putin pal Sergey Chemezov's Rosoboroneksport. According
to Aleksey Petrov of the regional Open Russia office,
Esipovskiy first focused on removing Tishanin's cronies from �
00A;positions of power, and replacing many of them with members
of Tishanin's predecessor's team. Indeed, Esipovskiy took a
special trip to Mongolia where former governor Golovin serves
as Russia's ambassador: a move seen as an effort to align
himself with the old guard. He also sought to patch up
relations with the legislative assembly by signing the budget.
¶6. (C) Thus far, Esipovskiy remains an enigma for the Irkutsk
elite. Levchenko complained that the "acting" governor has
not yet met with his faction, while Dmitriy Lyustritskiy,
deputy editor of the regional newspaper Vostochno-Sibirskaya
Pravda, commented that he has held no press conference with
the regional media. Lyustritskiy commented that a lack of
information has fostered a host of rumors, including
questions about Esipovskiy's future as the "real" governor.
(Esipovskiy cannot be officially nominated as governor until
after elections to the regional legislature this October.
Owing to the change in the Irkutsk Oblast configuration from
the assimilation of the Ust-Orda Buryat Autonomous Okrug, the
legislature has lost its mandate as fully-functioning body.)
Some suggest that the Kremlin will appoint somebody else to
the position after the October elections. In part,
Esipovskiy's refusal to give up his position as a Duma deputy
-- he was elected as a United Russia deputy in December 2007
-- has been interpreted as evidence that even Esipovskiy
himself has doubts about his chances. One name that came up
often as a potential rival was Sergey Sokol, who Esipovskiy
recruited from Krasnoyarsk to serve as First Deputy Governor.
Sokol has a reputation as a capable administrator and is
reputed to have close ties to Krasnoyarsk governor Khloponin.
¶7. (C) The Chair of United Russia's regional executive
committee Natalya Dengina dismissed rumors about Esipovskiy
and offered her assurances that he would become the next
governor. Indeed, United Russia picked the "acting" governor
to head the party's list for the December elections and his
picture enjoys a place of prominence on Dengina's office
wall, along with Medvedev and Putin. Voronin also scotched
rumors of an alternate candidate for governor, if only
because the Kremlin does not want to look foolish in
appointing Esipovskiy as "acting" governor.
Krasnoyarsk - Comparatively, An Island of Stability
--------------------------------------------- --------
¶8. (C) At first glance, Krasnoyarsk Kray appears to be a
larger version of Irkutsk Oblast with a similar abundance of
resources and the involvement of major financial-industrial
groups. Indeed, when asked about current political
stability, all of our contacts reminded us that during the
1990s Krasnoyarsk was riven by inter-elite fighting for
resources during the bloody "aluminum wars." However, under
the leadership of Aleksandr Khloponin, the regional elite has
put that behind them.
¶9. (C) Even those who had lost the most, such as Speaker of
the regional legislature and leader of the United Russia
faction Aleksandr Uss, had positive words for Khloponin and
emphasized the benefits of his administration. Uss, a former
professor of law and, in his own words, an accidental
politician, was once seen as potential contender for
governor's when there were direct elections. Now, he sings
the praises of Khloponin's successes in, for example,
garnering federal funding for a new heart center and a
pre-natal care hospital; gaining Moscow's approval for the
establishment of the new Federal Siberian University; and
having the vision for the region, as evidenced by his
ambitious plan for a 2020 international exhibition in the
region. Uss described his vision of the political
environment as a "family" -- in which United Russia
represented the elite, but maintained comradely relations
with other parties. (He noted that he had initially hesitated
to join the party, but took the plunge three years ago and
was happy with his decision.)
¶9. (C) Contacts outside the government concurred with those
assessments of political stability. Television host and
journalism teacher Sergey Kim dismissed out of hand any
"tremors" in the political system and underscored the
population's general satisfaction with Khloponin's efforts.
Sociologist Irina Muratov, whose firm "East Siberia" does
both political and marketing polls, said that her research
showed broad support for the governor and underscored that he
was now considered "ours," rather than an outsider. (Like
Tishanin and Esipovskiy, Khloponin was appointed from outside
the Krasnoyarsk political system.) Viktor Isaev, of the
Independent Information Agency, noted that Khloponin had come
into office with a plan, set clear goals -- such as the
unification of the region with the Envenk and Tamyr
Autonomous Regions. Five years later, those goals had been
met and Khloponin continued to push new objectives for
economic and political development.
¶10. (C) Political stability has fostered economic growth,
leading to a growing confidence that Krasnoyarsk Kray is
destined to secure its position as the Siberian capital.
Isaev praised Khloponin for reading the signals from Moscow
concerning the creation of "macro-regions," seeing
Krasnoyarsk -- the only "donor region" (meaning that it
provides more resources to the Federal budget than it
receives) in the neighborhood -- as the natural leader. Uss
smugly implied that the decision to build the Federal
Siberian University in Krasnoyarsk, rather than the
traditional academic centers of Tomsk or Novosibirsk,
signaled a recognition from Moscow of Krasnoyarsk's rising
star. As such, the region would be better positioned to
attract the best and brightest of Siberia's youth at the
expense of the other regions.
Problems? What Problems?
------------------------
¶11. (C) Most of our contacts thought that rising prices,
media freedom, and migration, most of our contacts thought
that rising prices, lack of media freedom and migration would
have little influence on the regional political and economic
trajectory. Muratov said that the urban population sees
little to get worked up about over the inflation issue, which
she says does not even register at the top of peoples
grievances when polled. Instead, they tend to be concerned
about "everyday" issues, like trash pickup or cleaning the
city. Uss explained away the inflation problem as far less
critical for Krasnoyarsk, than for neighboring regions. He
argued that the higher wages paid in Krasnoyarsk mitigated
public concern, although he admitted that housing prices
continued to bedevil the administration's plans to control
prices. He noted that the region planned to sell its 40
percent stake in the gasoline distribution company
Krasnoyarsknefteprodukt to Rosneft in exchange for
"preferences" for regional fuel needs, thereby
creating some insurance against rising oil prices.
&#
x000A;¶12. (C) Uss similarly dismissed worries about the labor
supply, explaining his vision of a more modern agricultural
system providing a pool of labor for the ambitious industrial
projects -- a "third wave" of industrialization for the
region. Noting concern that Krasnoyarsk provided a final
"bulwark" against Chinese encroachment, Uss saw a risk in
bringing in more migrants from China. To strengthen the
qualifications of "Russian" workers, he identified the main
challenge as providing training for former rural workers to
prepare them for work in the cities. He proudly reported
that the region had passed a milestone in 2007, in which
population gains (births and immigration) were greater than
losses.
¶13. (C) Only Mark Denisov, the regional Ombudsman for Human
Rights, raised the specter that even Khloponin's political
future was rested on a soft foundation. Denisov noted that
the current maneuvering over control of Norilsk Nickel could
change the balance of power within the region, particularly
if Aluminum magnate Oleg Deripaska ends up controlling the
mining giant. Further the state oil and gas companies,
Rosneft and Gazprom, are only marginal players at this time
but Denisov (and others) expect them to become much more
influential over the next 3-4 years. As such, the political
landscape is expected to change and could challenge
Khloponin's ability to act as arbiter.
Comment
-------
¶14. (SBU) The issue of appointing, rather than electing,
governors has become an issue of controversy in Moscow,
following the call by Tatarstan President Mintimer Shaymiev
to return to elections for picking regional leaders. The
experiences of Irkutsk and Krasnoyarsk illustrate the varying
results of Putin's regional policy. For Krasnoyarsk, the
appointment of a strong, well-connected leader with the
ability to bring home the Federal bacon for his region has
created conditions for economic growth and political
stability that his democratically elected predecessors failed
to achieve. Indeed, it seems that only an outsider without a
"dog in the fight" among the groups could have assumed the
role of impartial arbiter among the competing elites. The
Irkutsk experience shows the risks involved when the
selection process is influenced by the players themselves and
suggests that there may be problems finding strong candidates
from the Kremlin's rather limited bench.
RUSSELL
Wikileaks: Russia 