Bright Days for Putin’s Dark Knight
(Institute of Modern Russia – imrussia.org – Donald Jensen – March 19, 2013)
Despite rumors of his waning influence, Rosneft chief Igor Sechin remains one of the most powerful members of Russia’s ruling establishment. Donald N. Jensen, Resident Fellow at the Center for Transatlantic Relations at the Johns Hopkins School of Advanced International Studies, discusses Sechin’s latest “string of triumphs.”
Igor Sechin, chief executive of the Rosneft Oil Company, long-time ally of Vladimir Putin, and a powerful figure once described as the “scariest man on earth” because of his reputation for ruthlessness, played a prominent role in the Russian delegation that attended Hugo Chávez’ funeral on March 8. The Russian government hopes to maintain close political and economic ties with Venezuela despite Chávez’ demise. But for Sechin, who as deputy prime minister in 2011 helped secure a $4 billion Russian loan to Venezuela so that the country could continue to buy Russian weapons, the stakes were especially high. Sechin’s Rosneft is a long-term partner with Venezuela’s state-owned oil and natural gas company PDVSA and plans to invest $10 billion in the development of the country’s Junin-6 oil field.
Sechin’s mission to Caracas was the high point of an ambitious round of international deal-making in recent weeks that has belied widespread speculation that his political and business clout has faded. On March 6, Sechin unveiled Rosneft’s international strategy to American executives in Houston, where Rosneft and ExxonMobil also signed a deal to explore the Gulf of Mexico. In mid-February, Sechin traveled to China and Japan, part of an Asian trip intended to lure firms into helping Russia explore the energy wealth in the Arctic. At home, the government has approved the sale of 40 percent of Irkutsenergo to Rosneftegaz, which Sechin wants to transform into a huge energy conglomerate and which Deputy Prime Minister Arkady Dvorkovich has tried to block since last summer. Having also scored such tactical victories over business and political rivals, it is clear that Sechin is back, although indeed he actually never left.
Sechin has used his long alliance with Putin, reputed ties to the security services, and a commanding position in Russia’s energy sector to become one of the most powerful men in the country. Born in Leningrad, Sechin, now 52 years’ old, worked officially as an interpreter in Mozambique in the 1980s, where the Soviets were advising the government. Some media reports claim he was an intelligence officer in Africa. According to Stratfor, Sechin was later “the USSR’s point man for weapons smuggling to much of Latin America and the Middle East”.
Between 1991 and 1996, Sechin worked at the St. Petersburg mayor’s office, where he served as chief of staff and deputy to Vladimir Putin, then the city’s deputy mayor. He followed Putin to Moscow, where he worked in the government and for the Kremlin, often behind the scenes. When Putin became acting president, he immediately named Sechin deputy head of the presidential administration, in which role he served for nine years. As the Guardian has reported, “during Putin’s first presidential stint, the joke doing the diplomatic rounds in Moscow was that the shadowy Sechin didn’t actually exist: instead, US diplomats mischievously suggested, he was a sort of urban myth, a bogeyman invented by the Kremlin to instill fear.”
In April 2003, according to Russian business daily Vedomosti, Sechin learned of the planned merger of the Sibneft and Yukos oil firms and that Yukos owner Mikhail Khodorkovsky was discussing selling a packet of shares to ChevronTexaco and ExxonMobil. Sechin saw this proposal as a direct threat to Putin’s powerespecially the prospect of a company whose shareholders were 15 percent American and that, as Sechin thought, could control a large bloc of votes in the State Duma. Khodorkovsky was arrested, and Yukos subsequently broken up and sold off in a series of rigged auctions, with Rosneft receiving most of its assets. Since July 2004, Sechin has been the highly successful chairman of the Rosneft board of directors. He has been president of the company since May 2012.
In Russia, where institutions can be people, Sechin is an institution. According to Vedomosti, he sees himself as a disciplined member of a select group of “statists” devoted to maintaining Putin’s power. He is a symbol of state capitalism, of re-Sovietization in the form of taking back major assets for the state. But he is also a sponsor of the caste system in the state business cadres policy. Sechin has a network of people tied to him and has lent a helping hand in finding posts for the sons and daughters of major bureaucrats in state banks and other state companies.
Nevertheless, Sechin is not all-powerful. He failed in his efforts to secure a BPRosneft alliance. In 2008, he was appointed deputy prime minister by President Dmitri Medvedev, a political rivalan appointment widely considered to be a demotion. Sechin’s influence also declined when he did not join Prime Minister Medvedev’s government last year. Moreover, since then, he has been engaging in a tug of war with Dvorkovich over control of the energy sector. In late February, former deputy energy minister Vladimir Milov wrote an article in which “he argued that Sechin had suffered a major defeat in a government decision to inject 50 billion rubles into the capital assets of RusHydro, Russia’s biggest hydroelectric entity, at the expense of state company Rosneftegaz, which Sechin [also] heads.” Also in February, Putin delivered a tongue-lashing to Evgeny Dod, Sechin’s former ally at RusHydro, for misplacing up to 12 billion rubles ($389 million) earmarked for a power station outside of Moscow.
The competition between Sechin and Medvedev, however, appears to be less motivated by ideological considerations than by the various struggles between the clans and business groups associated with the two leaders, with Medvedev supporters spreading the dubious narrative that Medvedev is the “good” liberal versus Sechen’s “evil” siloviki. The reality is more complex. Milov, meanwhile, argues that Putin may be growing tired of Sechin’s “parade of irrational and hard to justify schemes.”
Sechin’s recent string of triumphs, however, suggest that he is in the ascendancy, even though the president is sometimes forced to balance competing demandsincluding those of Sechin’s rivalsin order to govern effectively. Rosneft will become the world’s largest publicly traded oil producer by volume when it buys the TNK-BP project later this year. Putin is allowing Rosneft to take the lead in tapping the Arctic’s natural gas resources, a key to Russia’s energy future. He has also called for a “gradual” end to Gazprom’s monopoly on exports of liquefied natural gas as Novatek and Rosneft seek the right to ship the fuel abroad. “Because of limitations on LNG exports,” Sechin has stated in an indirect criticism of Gazprom, long the government’s cash cow but now in crisis, “Russia has already lost a number of market opportunities. . . . If we don’t take these markets, others will.”
Article also appeared at http://imrussia.org/en/politics/415-bright-days-for-putins-dark-knight bearing the following notice:
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