Sechin Evolution into Reportedly Number Two Man in Russian Government Examined

Russkiy Newsweek – December 20, 2009
Sechin Evolution into Reportedly Number Two Man in Russian Government Examined
Role Model Vice Premier. Igor Sechin Is 2009 Man of the Year in Russian Politics. He Is the One That Vladimir Putin Tasks With Resolving All the Most Important Issues

Article by Mikhail Zygar, Andrey Litvinov, and Mikhail Fishman with contributions from Nadezhda Ivanitskaya, Yuliya Taratuta, and Igor Ivanov. Originally in Russian.

Vice Premier Igor Sechin

The scariest scene from the outgoing year, White House officials recall, was played out far away from the television cameras, although it was linked to the controversial Pikalevo saga. Ahead of a conference in which Vladimir Putin was to participate, Vice Premier Igor Sechin summoned all the interested parties to the conflict to his office. The only person who did not come to the meeting was Oleg Deripaska. Instead he sent a person who, stammering, started to make excuses: “Oleg Vladimirovich said that he had asked your permission to absent himself, Igor Ivanovich.” There was a deathly hush, and Sechin said in a quiet voice: “Tell him that that is not the way things are done.” “He never shouts, but it is so scary that shouting would be better,” a government staffer confides.

The Pikalevo saga ended so well precisely thanks to Sechin, White House officials assure us. A big furor and a 100% result is his house style. This was why Vladimir Putin shouted “give me the pen back!” at Oleg Deripaska at the conference (where Putin had angrily tossed a pen at Deripaska to get him to reverse his previous failure to sign the document settling the Pikalevo labor dispute) — he knew about his failure to attend the meeting with Sechin the previous day.

Carrying out all the Prime Minister’s most important and difficult instructions, Igor Sechin has become the number one figure in the government in the past year — after Putin, of course, sources assure Newsweek. Whereas only a year ago he was described as the eminence grise, he is now the country’s main manager and is expanding his spheres of influence. In the oil sector no key decisions have been made without him for five years now. This year the electricity producers have felt his power. But the main sign that Sechin has become stronger was the fact that he dared to throw down the gauntlet to Gazprom.

Gazprom boss

In the summer of 2009 Gazprom and Energy Ministry officials suddenly started to discuss a rumor that Aleksey Miller, the gas corporation’s CEO, might be leaving. His departure did not in fact happen, but on the other hand it became clear that Miller’s relations with Sechin had deteriorated. The vice premier for industry and energy is kind of ex officio in charge of Gazprom, but Miller had absolutely no intention of kowtowing to him. He had always resolved his problems directly with Putin and had no intention of going down a level.

Igor Sechin, who everybody says is a very experienced insider player, started fighting this. Knowing how important Gazprom’s foreign projects are for Putin, Sechin began to personally conduct all key negotiations and to issue orders to Miller’s direct subordinates — Deputy CEO Aleksandr Medvedev and Foreign Economic Department Chief Stanislav Tsygankov. The word in the White House is that he found a common language with Gazprom’s top managers. At the same time he started publicly complaining that Miller was lazy and ineffective. Thus, during a recent visit to China, he complained in the presence of journalists that the gas agreements that he, Sechin, had already agreed could not be signed because Miller would be asleep until two in the afternoon and nothing could be signed until he woke up.

Getting Miller removed is beyond Sechin’s power — he has an excellent relationship with Putin. But Miller’s influence has been severely shaken. “Previously, if you came from Gazprom, everybody understood that what you said was decisive,” a Newsweek source in the government says. “Now this is not the case.” In October the Inter RAO YeES company (of which Sechin is head of the Board of Directors) announced that its principal energy asset, OGK-1, would henceforth be buying gas not from Gazprom but from the Novatek company. Gazprom was initially angry but then meekly backed down — it not only refrained from penalizing Inter RAO for contract violation but also guaranteed Novatek access to its pipeline.

In November Vladimir Putin himself demonstrated to Gazprom that Sechin is to be listened to. The prime minister went to Nizhnekamsk to discuss the Kazanorgsintez company’s problems. It had been in a long-running dispute with Gazprom-controlled Sibur over the price of ethane, a raw material used in the manufacture of polymers. Gazprom had threatened to terminate supplies to Kazanorgsintez unless it accepted its terms. Putin forced the company to compromise, and overseeing compliance with this compromise was entrusted to Sechin, who, according to Newsweek’s information, was also its architect.

When taking stock of the year’s results at a recent meeting with President Medvedev, Igor Sechin did not pass up the opportunity to stress that the only effective sectors are those of which he is personally in charge, while the rest were failures. The plan for revenues from raw material exports, he said, had been overfulfilled by 31%, but only because of the oil sector (Rosneft and Surgutneftegaz had been particularly diligent). Whereas gas exports had declined by 10%: “It is here that we are incurring the greatest losses, and we need to do more intensive work to preserve our markets,” Sechin said.

The struggle will continue in the new year. Gazprom will seriously lose out if the government compels it to allow independent gas producers access to its pipeline. This long-standing idea, for which Sechin is also currently lobbying, does not currently enjoy the prime minister’s support, but it no longer looks as fantastic as it did a year ago. In early October, after a long break, Putin started talking about excessive monopolization in the gas sector. Incidentally, if the Gazprom leadership was suddenly to be replaced, Sechin would probably stop fighting against Gazprom’s monopoly position on the domestic market. Admittedly Aleksey Miller’s contract expires only in 2011.

Energy industry consolidator

By contrast, 2009 proved to be a triumphant year for Igor Sechin in the electricity industry. He became chairman of the Board of Directors of Inter RAO, the biggest energy company left after RAO YeES was broken up back in 2008. It soon became clear that this company would become the center of a new process of consolidation in the energy sector and that former RAO YeES assets would be injected into it.

In March 2009 a stake in OGK-1, the biggest generating company, which prior to the crisis had not been able to find an investor, was transferred to Inter RAO to manage. Inter RAO then began to buy up assets concentrated in the Federal Network Company, the state monopoly for energy transportation. And it became the second-biggest player on the energy market after Gazprom.

The investigation into the accident at the Sayano-Shushensk hydroelectric power station also benefited Sechin. The vice premier was head of the cleanup commission, and it concluded that the main culprits were Anatoliy Chubays and his team. As a result, Deputy Energy Minister Vyacheslav Sinyugin was removed from the commission. Then Inter RAO boss Yevgeniy Dod, who had worked with Sechin, was appointed to replace acting RusGidro boss Vasiliy Zubakin.

The word in the government apparatus is that Sechin’s parting with the out-of-favor officials was affectionate and paternal — when he was being dismissed Vasiliy Zubakin even wept with emotion. “Nothing human is alien to him,” is how one of Sechin’s subordinates describes him. “He has a great sense of humor and loves art and music.”

Sechin’s sense of humor is indeed familiar to journalists — although far from everybody understands his jokes. For example, the vice premier is very fond of the phrase: “You too are up to your elbows in blood!” He invests in this phrase the same meaning as other people invest in the expression “How dare you!”

Diplomat who never sleeps

Igor Sechin took his first steps in the international arena back in 2008, when he was made responsible for the Latin America segment of Russian foreign policy. Government officials are to this day admiring of this astonishing managerial decision — who apart from Sechin could have built such a quality relationship with Hugo Chavez, Raul Castro, and Daniel Ortega and with such enthusiasm.

During the outgoing year Sechin has become a kind of alternate foreign minister, and one with greater clout that in the actual head of the Foreign Ministry. It was he, diplomats claim, who independently organized Venezuela’s recognition of the independence of Abkhazia and South Ossetia. But an even more important fact is that he has secured himself the status of Russia’s chief negotiator on energy issues.

At the beginning of the year during the gas war with Ukraine Sechin play the role of chief of staff of the pipeline troops — it was in his office that the important statements subsequently issued by Putin were prepared. Then the European Union’s successes in promoting the Nabucco pipeline project compelled Vladimir Putin to parachute Sechin into this area too — to conduct negotiations with Turkey and Italy on the fate of South Stream.

White House officials recall with awe the job that he did. Sechin would frequently summon oil company, Gazprom, and Energy Ministry leaders to meetings way after midnight. The negotiations with Turkey were so tense that, while they were going on, the Russian ambassador suffered a heart attack, a source in the Foreign Ministry recalls. The Turkish energy minister refused to sign any documents without consulting with Prime Minister Erdogan. Sechin’s response to this was that he would not fly to Moscow but would wait in his hotel and not go to sleep until he gave a positive answer.

Sechin’s capacity for work is also the stuff of legend in the White House. He is capable of going straight into a meeting with Chavez after a 10-hour transatlantic flight to Venezuela. And, furthermore, to listen to a four-hour speech by the Venezuelan president and not fall asleep. Officials on the White House staff say that Sechin almost never sits down — only during meetings. In his office he usually works standing up.

Jealous apparatchik

The main contributory factor to Igor Sechin’s power, sources in the Kremlin and the White House assert, it is his personal relationship with Putin. He has always valued every second spent with the boss, Newsweek’s interlocutor says. Thus, when he was deputy chief of the Presidential Staff he would meet Putin at the door every morning and accompany him to his office. On the way he would tell the president what he regarded as essential and would receive instructions. Since relocating to the White House he has been no less attentive — for example, he tries to see off and welcome back the prime minister when the latter goes off on business trips.

Back in 2000 in the book First Person (Ot pervogo litsa ) Putin commented on Sechin quite tersely. For example, he described how Sechin had asked him to take him with him from St. Petersburg to Moscow. “And I took him,” is how Putin ends the story. But now, White House officials say, everything has changed. “VV (Vladimir Vladimirovich Putin) feels that he is personally obligated to Sechin for the YUKOS affair. Igor Ivanovich saved him from losing personal power,” a government official confides. Newsweek’s sources say that when Putin relocated from the Kremlin to the White House, Sechin exerted considerable effort to become government chief of staff — in this post he would be closer to Putin — but was unable to achieve this. There is even a theory that he was blocked by Dmitriy Medvedev. Then the post of vice premier for industry and energy was dreamed up for him. In his new post he was able to organize things in such a way as to not get separated from Putin, although he now has to book an appointment through the prime minister’s chancellery.

The feeling of jealousy between Sechin and the other vice premiers is quite strong, government officials say. He is particularly jealous of his full namesake Igor Ivanovich Shuvalov. “Maybe Shuvalov does see Putin more often than other vice premiers,” a government staff source says. “But in terms of personal closeness Sechin is number one.”

The mutual jealousy between Sechin and Shuvalov is well illustrated by an old story that White House officials are fond of recalling. “One day Putin picked up the telephone and asked the operator to put him through to Igor Ivanovich. “Shuvalov?” the operator asked. “No, the real one,” Putin answered, meaning Sechin. Since then the nickname Real One has stuck to Sechin in the government apparatus.

Igor Sechin is demonstrating exemplary loyalty to Medvedev. “He carries out all the president’s instructions 100%,” a source close to the Kremlin says. “He always stands to attention.” It is well known that on the presidential aircraft, where officials usually change into jeans during long flights, he alone remains in a suit. He behaves in exactly the same way with Putin.


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