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By John Helmer in Moscow

Putin names his merry men, no change in the forest

The list of the new Russian government ministers, released by Prime Minister Vladimir Putin this afternoon, preserves most senior officials in their place, and keeps the precarious balance of factions, which compete for and decide Russia’s major resource concessions, and the biggest of the money-spinners, energy exports.

The immediate and obvious practical effect is that none of the established oligarchs, nor rising commercial challengers, has been able to promote his own man into the cabinet. Oil and gas, pipelines, ports, and tanker fleets remain in much the same hands that have controlled these lines of business for the past four years.

For those who may have been looking to gauge who is likely to win the major new mining concessions to be awarded this year — the Udokan copper project in Chita region, and the Sukhoi Log gold licence in Irkutsk — the new cabinet appointments suggest the same answer as before: Putin and his closest associates will encourage competitive bidding, and then decide for themselves.

The outgoing Minister of Natural Resources, Yury Trutnev, has been reappointed. But the power struggle for control over mine licensing, reserve estimates, and investment in resource development remains hotly contested beneath him — and Trutnev doesn’t appear to have the power to settle it.

The former Ministry of Economic Development and Trade has been swallowed up itself by a new ministry of industry and trade, to be headed by the ex-industry minister, Victor Khristenko; he is an apparatchik who has played a reliable batman for superior officers for years. The Finance Minister, and chief among the butlers, Alexei Kudrin also hangs on to his Deputy Prime Minister’s rank and finance portfolio.

This defers the struggle to come over who will lead Alrosa, Russia’s dominant diamond miner, which is now diversifying into other minerals. Kudrin has served for eight years as the senior diamond policymaker in government, and chairman of the board of Alrosa, too weak to control the Yakut faction run by regional president, Vyacheslav Shtirov.

The sign of change in the diamond-mining sector has yet to be given. If Shtirov hangs on to his post, Alrosa will stay where it is under Sergei Vybornov. If Roman Abramovich exits from the Chukotka governorship, it will be up to Putin to say so soon. That in turn is going to impact on the gold assets Abramovich controls directly through the Millhouse holding (such as Highland Gold), or indirectly through the Chukotka administration.

The energy portfolio used to be rented to the protege of the oil oligarchs, who took turns in seating their man, and drawing the dividends they required. Putin ended this practice, abolishing the post, and subordinating the portfolio to Khristenko at the Industry ministry.

Putin has now decided to separate energy again, as it was in the 1990s. But no longer is it under the control of an oligarch. The new portfolio will be held by Sergei Shmatko from the uranium sector. Lest anyone doubt that he is not delegating much to the oilers, Putin announced in his maiden speech to the State Duma last week that he intends to reward oil companies which invest in new oilfield development with tax relief, and balance-sheet incentives.

Igor Shuvalov, who previously worked as Putin’s assistant in the Kremlin for the annual round of G8 negotiations — a well-known connoisseur of antique furniture — has been named first vice-premier in charge of coordinating government operations. It remains to be seen whether Shuvalov will keep his post as chairman of the board of Sovcomflot, the state owned oil tanker company.

He will share his new rank with the outgoing prime minister, Victor Zubkov, who is expected to become chairman of the Gazprom board, in place of President Dmitri Medvedev. Zubkov’s term as prime minister revealed little personal interest in the base or precious metals, but he has taken sides in the battle for the mineral fertilizer concessions. If he takes over Gazprom, this is likely to impact on at least two of the current concessionnaires — Andrei Melnichenko, who owns Eurochem; and Dmitri Rybolovlev, the controlling shareholder of potash miner, Uralkali.

If Zubkov moves to Gazprom, the future will be cloudier for Gazprom’s long surviving bagman, Alisher Usmanov, whose iron-ore concession is currently the target of consolidation within Norilsk Nickel.

Sergei Ivanov, who has supervised ports, shipyards, and the military industrial complex, remains more or less where he was, but one notch down in status as a deputy prime minister. Igor Sechin, the strongest of Putin’s Kremlin assistants, has been named Deputy Prime Minister, where he is likely to retain his interest in almost everything, especially Rosneft, oil exports, and tanker fleet policy.

Just one appointment appears to come from President Medvedev’s circle of associates — Alexander Konovalov, the presidential representative for the Volga district, has been named the new minister of justice. A reshuffle at the top of the Federal Security Service (FSB), with Alexander Bortnikov replacing Nikolai Patrushev, appears to have been more Putin’s doing than Medvedev’s; Bortnikov was Patrushev’s deputy. Patrushev moves to head the staff of the Security Council, which has been talking-shop on a sideroad to nowhere for those who have preceded him as council secretary. Again, if anyone emerges from today’s reshuffle to complete the recentralization of the old KGB functions, that is Putin.

Among the most significant of the non-appointments is Vladimir Yakunin. Once touted (by himself) as a presidential candidate, he is a former member of the KGB, who has been confined to running state shipping concerns and railways. Lucrative concessions though these have been, there is talk inside Rail HQ that Yakunin will be leaving shortly, and will cede his chair to Anatoly Chubais, the electricity boss. He is a figure whose ambition peaked when Boris Yeltsin was nominally in charge; the US ambassador played viceroy; and Oleg Deripaska and Victor Vekselberg dictated the electricity prices for their smelters.

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