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Reference ID Created Released Classification Origin
08MOSCOW1836 2008-06-27 14:34 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow


DE RUEHMO #1836/01 1791434
P 271434Z JUN 08

C O N F I D E N T I A L MOSCOW 001836 
E.O. 12958: DECL: 06/27/2018 
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 &#x0
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 
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. 
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. 


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