Stratfor THE KREMLIN WARS (SPECIAL SERIES), PART 2: THE COMBATANTS

Stratfor

THE KREMLIN WARS (SPECIAL SERIES), PART 2: THE COMBATANTS

Summary
Former Russian president and current Prime Minister Vladimir Putin is the
indisputable executive power in Russia. His strength comes largely from his
ability to control Russia's opposing political clans. Those two clans, which
have been fighting for influence for most of the past eight years, are about to
see fresh conflict as a new force, the civiliki, attempt to use Russia's
economic crisis as an opportunity to reshape the country.

Editor's Note: This is part two in a five-part series examining the Russian
political clans and the coming conflict between them.

Analysis


Executive power in Russia indisputably rests with former president and current
Prime Minister Vladimir Putin. Putin emerged as the supreme political force in
Russia following the chaos that defined the 1990s precisely because he stepped
outside of the fray and acted effectively as an arbiter for the disparate power
structures. Although Putin's background is in the KGB (now called the Federal
Security Service, or FSB) and he used these links in intelligence and security
services to initially consolidate his reign, his power does not rest on those
foundations alone. Putin's power comes from his ability to control Russia's
opposing clans through favors and fear that he will give one clan the tools and
authority to destroy the other.

The two main clans within the Kremlin are the Sechin clan led by Deputy Prime
Minister Igor Sechin and the Surkov clan led by Russian President Dmitri
Medvedev's First Deputy Chief of Staff Vladislav Surkov. These clans have been
involved in almost continual competition for power for the past eight years. The
group that may tip the balance in the coming clan wars is a newly defined class
that is part of the Surkov clan: the civiliki. Putin's balance of power is
intertwined with economic reform, and the civiliki -- a group of lawyers and
economic technocrats -- want to use the economic crisis to reform Russia.


Sechin and the FSB and Siloviki

Sechin has deep roots within the FSB and the siloviki (a term which translates
as "the strongmen") who are either directly linked to the FSB or are former
security officers who have tried their hand at business or politics or both
during their "retirement." Sechin and his group generally have a comparatively
Soviet frame of mind, but without any ideological nostalgia for communism. They
do, however, long for the powerful Soviet Union, which acted forcefully on the
world stage, was respected by its foes and allies, was suspicious of the West
and was led by a firm (bordering on brutal) hand at home. The economic system
Sechin favors is one that harnesses Russia's plentiful natural resources to fund
champions of industry and military technology, and essentially depends on high
commodity prices to sustain itself.

Sechin's main source of power is undoubtedly the FSB. Although the FSB is fully
loyal to Putin, this does not mean that it would not side with Sechin in a
showdown against its opponents. Sechin uses the FSB as a talent pool from which
to fill various positions under his command, including the chairmanships of
various state-owned companies. This naturally irks the civiliki, who abhor the
thought of intelligence operatives running Russian companies.

Aside from the FSB, Sechin's other pillars of power are the state-owned oil
giant Rosneft and the interior, energy and defense ministries. The distribution
of assets between the Sechin and Surkov clans is not random; Putin coordinated
it precisely so that neither clan becomes too powerful. Sechin's control of
Rosneft is therefore balanced by Surkov's control of Gazprom, the state-owned
natural gas company. While Sechin gets control of the energy ministry, Surkov is
in charge of the natural resources ministry and so on.

Surkov and the GRU

Surkov rose through the ranks by proving himself invaluable in two key episodes
of Russian state consolidation: the Chechen insurgency and the collapse of the
largest Russian private energy firm, Yukos. Originally from Chechnya, Surkov
played a role in eliminating a major thorn in the Kremlin's side: Chechen
President Dzhokhar Dudayev. He also helped mastermind Moscow's win in the Second
Chechen War by creating a strategy that divided the insurgency between the
nationalist Chechens and the Islamists. His role in bringing down Yukos oligarch
Mikhail Khodorkovsky began the all-important consolidation of those economic
resources pillaged during the 1990s by disparate business interests.

Surkov's power base is the Russian Foreign Military Intelligence Directorate
(GRU). The GRU represents both military intelligence and the military.
Throughout Soviet and post-Soviet history, it has been the counterbalance to the
KGB/FSB. The GRU is larger than the FSB and has a longer reach abroad, although
it its accomplishments are not as well known as those of the FSB.

Also under Surkov's control are Gazprom; the ministries of finance, economics
and natural resources; and the Russian prosecutor general. However, Surkov's
rival Sechin controls the interior and defense ministries -- which have most of
Russia's armed forces under their command. This limits the GRU's ability to
control the military.

Surkov has sought to weaken Sechin and the FSB's position by constantly looking
for potential allies to add to his group. In 2003, he formed an alliance with
the heads of the reformist camp -- previously known as the St. Petersburgers --
that has proven to be invaluable in the context of the financial crisis. It is
this group, the civiliki, that will help Surkov in his attempt to defeat Sechin,
possibly for the last time.

The Civiliki

The civiliki are rooted in two camps. The first is the St. Petersburgers group
of legal experts and economists that coalesced around Anatoly Sobchak, mayor of
St. Petersburg from 1991-1996. Many of Russia's power players -- from Putin to
Medvedev to key civiliki figures like Finance Minister Alexei Kudrin and German
Gref, the former trade and economics minister and current head of Sberbank --
either worked directly under Sobchak or were somehow related to his
administration. The second is the somewhat younger group of Western-leaning
businessmen and economists that eventually joined the reformists from St.
Petersburg.

The civiliki primarily want economic stability and believe Russia has to reform
its economic system and move past state intervention in the economy that depends
largely on natural resources for output. They try to be non-ideological and are
for the most part uninterested in political intrigue. In their mind, economic
stability is to be founded on a strong business relationship with the West that
would provide Russia with access to capital with which to fund economic reforms.
From their perspective, funding from the West has to go to rational and
efficient companies that seek to maximize profit, not political power.

The first grouping of economic experts and Western leaning businessmen was led
by Anatoly Chubais, who led the St. Petersburg group and was essentially in
charge of various privatization efforts in the 1990s under former Russian
President Boris Yeltsin. However, most of the St. Petersburg group was sidelined
by the general failure of economic reforms enacted during this period. They were
then almost snuffed out by the siloviki during the commodities boom from 2005
onward, leaving only Kudrin in a position of some power.

However, Surkov rescued the civiliki and incorporated them, giving them the
powerful protector they lacked. Part of Surkov's plan was to turn one of the
more prominent civiliki -- Medvedev -- into a superstar at the Kremlin. In
Surkov's mind Medvedev was the correct choice since he was neither FSB nor GRU,
though Surkov still felt he could influence him. This move helped Medvedev
become president. Since Medvedev's ascendance to the presidency, and with
Surkov's support, the other civiliki leaders -- Kudrin and Gref -- have been
given even greater liberty to run the economy without fear of being replaced.
Kudrin is handling the economy while Gref essentially is masterminding the
banking system reform. The two of them work very well together, and with their
allies Economic Minister Elvira Nabiullina and Natural Resources Minister Yuri
Trutnev.

There is a rapidly brewing Surkov-backed conflict between the civiliki and
Sechin. The strife is rooted in the simple issue of efficiency: The civiliki
argument is that the Sechin clan wasted the good years of high commodity prices,
crashed the Russian economy and weakened the state. This forces Putin to look at
the conflict differently from previous clan battles. The Surkov-Sechin arguments
typically are "just" about power, and thus about maintaining a balance. But the
civiliki see Sechin's group not so much as a threat to them but as a threat to
Russia. This is an argument that Putin has been able to ignore, but the latest
economic crisis could have changed this.

The civiliki have a ready-made solution for the inherent problems in the Russian
economy. Surkov's support for the civiliki, along with the financial crisis, has
given Putin pause and he is giving their proposals consideration. However, the
implementation of such reforms could reignite the feud between the clans and
thus completely destabilize the delicate balance Putin has attempted to keep in
the Kremlin.

Copyright 2009 Stratfor.