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Moscow Times
February 16, 2007.
Ivanov and Kadyrov Promoted in Shakeup
By Nabi Abdullaev
Staff Writer

In a major shakeup, President Vladimir Putin on Thursday promoted Sergei Ivanov to the post of first deputy prime minister and named Ramzan Kadyrov acting president of Chechnya.

Putin also relieved Ivanov of his duties as defense minister and appointed in his place Anatoly Serdyukov, the Federal Tax Service chief who drew up the multibillion-dollar tax bills against Yukos that ultimately led to the oil giant's demise.

The president also promoted Cabinet chief of staff Sergei Naryshkin to the post of deputy prime minister in charge of foreign trade, particularly with other former Soviet republics.

Ivanov, Serdyukov and Naryshkin are all from Putin's native St. Petersburg, and their appointments appear to bolster Putin's position within the Kremlin clans just a year before the presidential election. All three are seen as people loyal directly to Putin.

Ivanov's promotion probably improves his chances of becoming president, political analysts said. Ivanov now holds the same rank as another possible Putin successor, Dmitry Medvedev, and will oversee a large swath of the economy.

"I have signed a decree to widen the sphere of responsibility of Sergei Borisovich Ivanov in the government of the Russian Federation and put him in charge of coordinating a part of the civilian sector of the economy," Putin told a Cabinet meeting in comments broadcast on state television late Thursday.

Putin appeared uncharacteristically nervous as he spoke, pausing often and flipping back and forth through a notebook.

He praised Ivanov for his work as defense minister and for his efforts to coordinate the military-industrial complex in the past year, a portfolio he will keep in his new post.

Kremlin spokesman Dmitry Peskov said by telephone that the changes were "not about elections." "Remember the president's words -- there will be no successor, only candidates in the election campaign," he said.

Peskov said Thursday's shakeup was not a sudden decision and had been discussed "for quite a while."

"This was not any sort of impulsive decision," he said.

Putin asked Prime Minister Mikhail Fradkov early last week to delay any shakeup of the Cabinet.

Later Thursday night, the Kremlin announced that Putin had also dismissed Chechen President Alu Alkhanov and replaced him with Kadyrov, the strongman who has led the Chechen government as prime minister. Putin named Alkhanov deputy justice minister.

The Kremlin said Alkhanov had met with Putin and asked to leave his post.

Rumors that Alkhanov might leave began circulating in late January, when Kadyrov told a Cabinet meeting that he had suggested to Putin that Chechen Social Development and Labor Minister Magomed Vakhayev fill the post.

Alkhanov, whose term expires in August 2008, said at the time that he would not resign, and Putin's envoy to region, Dmitry Kozak, said no shakeup in Chechnya was being considered.

Kadyrov's promotion had long been expected. "Moscow is once again demonstrating that it is the sheer strength of the likes of Kadyrov that matters, not Alkhanov's loyalty," said Sergei Markedonov, a Caucasus expert with the Institute for Political and Military Analysis.

Kadyrov will need to be confirmed as president by the Chechen parliament, a process that is likely to be a formality.

Ivanov's new post gives him an edge over other contenders for the presidency, including Medvedev, who has run neck and neck with Ivanov in popularity ratings over the past year, most analysts concurred.

"From a politician managing a single sector of the government, Ivanov has been elevated onto a broader level and, unlike Medvedev, he has always been a member of Putin's siloviki politburo," said Olga Kryshtanovskaya, who tracks Kremlin politics at the Center for the Study of the Elite at the Russian Academy of Sciences.

As the head of the Military-Industrial Commission, which was formed last year, Ivanov will retain significant influence but will no longer be linked to the Defense Ministry, which has been tarnished by hazing and corruption scandals in the armed forces, said Dmitry Badovsky, a political analyst with the Institute of Social Systems with Moscow State University.

Alexander Khramchikhin of the Institute for Political and Military Analysis argued, though, that the reshuffle would hurt Ivanov's presidential ambitions because he had lost probably the most prestigious government office in the eyes of the public. "People will not go into the details of the games of the ruling elite and will just see that he was fired," he said.

Political analyst Stanislav Belkovsky said the appointment was "undoubtedly" a promotion for Ivanov, whom he described as a "total failure" as defense minister.

"Ivanov was not able to implement military reform, and he was unable to control corruption and stop the outflow of money from the armed forces," Belkovsky said.

Chris Weafer, chief strategist at Alfa Bank, said: "Many people will see it as a move to keep a balance in what is still a two-horse race to be identified as the favorite candidate."

UBS strategist Andrei Vykhristiouk said the promotion would give Ivanov an opportunity to reshape public opinion before the presidential election.

In addition to the defense and aviation industries, Ivanov may supervise Viktor Khristenko's Industry and Energy Ministry, Vykhristiouk said. In his new capacity, Ivanov could spearhead the efforts to diversify the economy away from exporting energy and raw materials -- a task that Putin repeatedly has presented to the Cabinet.

The military budget quadrupled under Ivanov, appointed as the country's first civilian defense minister in March 2001. But he failed to win over the hearts and minds of soldiers. "Officers have never considered him one of them," an officer with one of the Defense Ministry's commanding units said Thursday.

Speaking about the legacy Ivanov would leave behind, the officer, who spoke on condition of anonymity, said most of Ivanov's decisions were politically driven and populist.

Introducing Serdyukov to the Defense Ministry's top brass Thursday, Putin stressed that he was a civilian official and an expert in finance.

Serdyukov reportedly is a very tough manager. From 2000 to 2003 he headed the St. Petersburg branch of the tax service, where he was notorious for resorting to harsh measures against tax debtors, including bankrupting them.

Putin said Serdyukov's main task would be to implement multibillion-dollar programs to develop and rearm the military through 2015.

Naryshkin, the new deputy prime minister, oversaw St. Petersburg City Hall's finances under the supervision of Putin in the early 1990s.

Staff Writers Anatoly Medetsky, Carl Schreck, Anna Smolchenko and Tim Wall contributed to this report.