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Cablegate: Embassy Moscow

VZCZCXRO1681
PP RUEHFL RUEHKW RUEHLA RUEHROV
DE RUEHMO #2759/01 2561350
ZNY SSSSS ZZH
P 121350Z SEP 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9967
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

S E C R E T SECTION 01 OF 03 MOSCOW 002759

SIPDIS

DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT
EUR/CARC, SCA (GALLAGHER, SUMAR)
DOE FOR FREDRIKSEN, HEGBORG, EKIMOFF
DOC FOR 4231/IEP/EUR/JBROUGHER

E.O. 12958: DECL: 09/05/2018
TA...
Secret SECTION 01 OF 03 MOSCOW 002759 SIPDIS DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT EUR/CARC, SCA (GALLAGHER, SUMAR) DOE FOR FREDRIKSEN, HEGBORG, EKIMOFF DOC FOR 4231/IEP/EUR/JBROUGHER E.O. 12958: DECL: 09/05/2018 TAGS: EPET ENRG ECON PREL PINR RS

Summary: As Deputy Head of Putin's Presidential Administration, Igor Sechin cloaked himself in secrecy, leaving some Kremlin watchers, especially economic liberals, to portray him as a one-dimensional, malevolent figure. These analysts see Sechin as driven by self-interest, working behind the scenes as Putin's business manager to distribute assets and property to favored parties. Others, however, seek to portray a more enlightened Sechin, pointing to his stance on business issues and international integration as indicators of a more nuanced approach to difficult economic questions. There is also disagreement on whether Sechin has been demoted or made even stronger by his move to the Russia's White House as one of Putin's deputies. As he fulfills his new responsibilities, greater public exposure as Deputy Premier may bring this former "grey cardinal" of the Kremlin into sharper focus and may give us a better sense of this powerful and secretive figure. End summary.

A Dark Force... ---------------

2. (C) A close aide to then-President and now Premier Putin, Igor Sechin is at the top of Russia's power structure -- a position many believe he abuses. The overarching sense of Sechin's role in Russia among liberal observers is that of a puppet-master pulling the strings of power for his own personal gain and for that of favored colleagues and partners. ---------- told us recently (ref A) that he thinks Sechin is "dangerous," that he "lacks a moral center," and that he does not use his power for good.

3. (S) Many see Sechin as a leader of a cadre of high-level GOR officials engaged in massive graft. Rumors of Sechin's ill-gotten wealth abound, even though all who discuss it are quick to admit that the rumors are purely speculative. ------------ told us he understands that Sechin's wealth, which he put at a surprisingly specific $14 billion, is second only to Putin's among high-ranking government officials. There is concern that Sechin's new official portfolio, overseeing the energy sector (septel), gives him still more opportunity to accumulate wealth. Former Deputy Energy Minister Vladimir Milov highlighted personal corruption in discussing Sechin with us, noting something that many others with whom we spoke also alluded to -- that Sechin's new direct authority over the lucrative energy sector would give him "better access to cash flow."

4. (C) Yet given that Sechin's power derives from his relationship with Putin, many see Sechin only as Putin's agent. Masha Lipman, editor of the Carnegie Moscow Center's journal "Pro and Contra," described Putin as the ultimate arbiter of the "redistribution" of wealth, assets, and property in Russia, with Sechin as one of his managers. Political analyst Dmitri Oreshkin told us that Sechin, in effect, maintains "a business empire protected by Putin," and run using bribes, fear and "kompromat." He suggested President Medvedev's role should be to provide an alternative and more benign power center -- "someone to run to when Sechin demands more protection money" -- but that Medvedev is making only slow progress, leaving Sechin unchecked. ... or Pragmatic Patriot? -------------------------

5. (C) Against this widespread image, there are some who see Sechin as a more complex character, whose interests lead him to take a more "liberal" or "integrationist" approach. Editor-in-chief of Ekho Moskvy radio Aleksey Venediktov, after a one-on-one lunch with the Deputy Premier, told us that Sechin sounded like former Yukos owner Mikhail Khodorkovskiy, in the sense that Sechin understood the need for Western expertise and capital to develop Russia's energy resources. Evoking another controversial reform figure, Venediktov said Sechin also resembled former RAO UES head Anatoliy Chubays ) in that "he gets things done." MOSCOW 00002759 002 OF 003

6. (C) Renaissance Capital Deputy Chairman Bob Foresman (Amcit, strictly protect) who has worked with Sechin over many years described him as someone who deeply cares about the future of Russia and who sincerely believes he is acting in the best interests of the country. He praised Sechin as "very smart," "incredibly hard-working," and "exceptionally courteous." He said Sechin's courtesy is especially evident when dealing with helpers to whom many others in Russia's elite would barely give a passing glance -- doormen, drivers, guards, etc. Foresman brushed aside rumors of Sechin's illicit wealth, saying "I don't know what he would do with the money; the guy is always in the office, morning to night."

7. (C) Dmitriy Butrin, the economics editor for the Kommersant newspaper, has argued that Sechin has taken an unexpectedly "liberal" approach as Deputy Premier. In an article in Vlast, Butrin noted that Sechin has promoted efforts to coordinate the work of the Ministry of Natural Resources with ecological groups, fought for lower taxes on the energy sector and industry, and opposed the use of government funds to support the state-owned pipeline company Transneft. While many saw Sechin as the driver behind Putin's attack on coal producer Mechel (and indeed Sechin himself told Venediktov that he had pushed Mechel four times on transfer pricing), Butrin disagreed. According to Butrin, Sechin's public assertion that the state had no problems with Mechel or its owner Igor Zyuzin had been meant to reassure the market and take the pressure of the company.

Another Mystery: Has Sechin been Demoted? ------------------------------------------

8. (C) As Deputy Head of the Presidential Administration in charge of the security services, there was little doubt about Igor Sechin's power. He was widely regarded as a very influential member of Putin's inner circle, perhaps even the most influential, with the requisite FSB background to advance the President's (and his own) agenda. However, there was also a great deal of mystery surrounding the secretive Sechin's specific responsibilities. His move to the more public role of Deputy Premier with responsibility for energy, the most important sector of the Russian economy, may change that. Milov told us recently he believes the new job has erased some of the "mythical" aura Sechin enjoyed "when he was working in the shadows."

9. (C) Milov is also one of many analysts who saw Sechin's transfer to Deputy Premier as a demotion, indicating the weakened role of the siloviki in favor of more "reform-minded" leaders such as President Medvedev, with whom Sechin reportedly had an uneasy relationship. Milov told us that Sechin had been "institutionally weakened" in his new role because "he now needs bureaucratic buy-in, but he doesn't have strong bureaucratic skills."

10. (C) Many of our other contacts disagree, suggesting Sechin, if anything, is even more powerful now because he maintains his behind-the-scenes influence while having added direct legal authorities. These analysts note that Sechin's relationship with Putin is ultimately the source of his power. Oreshkin and Lipman independently explained to us recently that titles and positions in the hierarchy have little to do with power in Russia. In a similar vein, Foresman told us Sechin's power extends far beyond whatever institutional role he fills at any given time because he is "very close to Putin." As Oreshkin put it, "whoever thinks Sechin is weaker now must think Medvedev is in charge, and that is obviously not the case."

Comment -------

11. (C) The competing views of Sechin and his place in the Russian government elite may be clarified as a result of his new responsibilities. Moving from the shadows of the Kremlin to a more public role as Deputy Premier will force Sechin to be a more open and accessible figure and it will subject him to public criticism and scrutiny. In the interval, while Sechin may still be primarily driven to serve Putin's and his own interests, there appears to be some evidence that his MOSCOW 00002759 003 OF 003 actions since taking responsibility for energy and industrial policy reveal an unexpected understanding of the importance of integration, markets, technology, and international expertise. As such, he may hew closer to the "integrationist" camp than we might have previously expected. End comment.
BEYRLE

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