Requests of tax breaks, aggressive moves against two business-focused publications and his reappointment to head Rosneft for another five years have led to renewed speculation about Igor Sechin’s position in Russian politics. But perhaps we have seen this before?
Recently there has been a debate among Russia-watchers on whether Igor Sechin’s position was strengthened or weakened by the developments of the recent months. It would of course perhaps be more accurate to say that the debate has been going on for years, it was simply brought back to light by Sechin’s eventful spring. According to Tatiana Stanovaya, an eminent expert on Russia’s political elite, the influence of Sechin – the “most audacious member” of the group of “state oligarchs” who helped Putin consolidate power in the 2000s and were rewarded with control over state-owned giants – has been waning. Stanovaya mentions that Putin was reportedly irritated by Sechin’s disastrous advice to pull out of the OPEC+ deal earlier this year, which exacerbated the global oil crash that, according to estimates based on the Finance Ministry’s data, cost Russia roughly one-third of its 28 percent year-on-year GDP drop in April. Alas, Rosneft itself emerged from this calamity virtually unscathed, with the burden prescribed by the new OPEC+ deal falling much heavier on its competitors.
The Bell, meanwhile, argued that Sechin’s star was rising. After all, Putin, currently in self-isolation, granted more meetings to the Rosneft CEO in recent weeks than to nearly anyone else. And Sechin did not waste time: in addition to a tax break that he initially raised in March, he asked Putin to put pressure on the state-owned pipeline operator Transneft, led by his rival, Nikolay Tokarev, to reduce transportation tariffs (muddling his numbers in the process). He also asked for Rosneft’s investment in a genetics program overseen by Maria Vorontsova (who reportedly is Putin’s daughter) to be exempted from taxes. Most importantly, despite the company’s lacklustre performance under his direction, Sechin was appointed to head Rosneft for another five years.
And Sechin did not stop here. Just days after trapping Vedomosti, Russia’s top business newspaper and making its editor remove a column critical of Sechin, Rosneft pressed charges against RBK, another business-focused news outlet, for an article that claimed that Rosneft had not actually divest from its Venezuelan holdings to avoid US sanctions – a fair assumption, given that the assets are now reportedly owned by a private security company formerly owned by Rosneft and now owned by the newly established Roszarubezhneft. This was not the first time that Rosneft pressed charges against RBK, but now the oil firm demands 43 billion rubles ($610 million) from the news outlet, ostensibly for the subsequent drop in its share price and possible exposure to sanctions. This is an astronomical sum that, similarly to the business operations that led to the capture of Vedomosti, aims to signal to the outlet what kind of opinions and topics are off limits.
But do these developments necessarily mean that Sechin’s influence is growing?
The competent management of political and economic affairs has become increasingly important for Putin over the years, with Russia’s growth slowing: Putin has tried to appoint “young technocrats” to manage certain regions and get them in shape; he reportedly entrusted Mikhail Mishustin with heading the government in January because he was impressed by Mishustin’s leadership at the Federal Taxation Service. Sechin, meanwhile, has not managed Rosneft particularly well. The company has grown mostly due to its privileged position as a state asset and an aggressive campaign of acquisitions, which needed the abuse of law enforcement (Yukos, Bashneft) and taking out debt (TNK-BP). Other wasteful managers who once seemed to be untouchable, such as Vladimir Yakunin, the former head of Russian Railways or Andrey Belyaninov, the former head of the Customs Service, were forced to retire from their positions years ago.
The last time that we saw Sechin make such an aggressive move against an opponent whom he could have taken out by more subtle means if he had wanted to was in 2016 when Alexey Ulyukayev, then the sitting minister of economy, was arrested for allegedly soliciting a bribe from Sechin. Ulyukayev claimed that he was entrapped and the case indeed looked fishy: it was absurd to suggest that the influential Sechin would have to bribe a technocratic government minister with little reach beyond running his ministry. The highly publicized court case that followed – and ultimately ended in Ulyukayev’s sentencing to eight years in prison – generated a lot of negative publicity for Sechin, which he could have avoided. Back then I speculated that this might have been half the purpose: an investigation that showed everyone that Sechin could take out even members of the government, a court case that ultimately also received Putin’s stamp of approval during the president’s end-of-the-year press conference in 2017, a tour de force that showed the extent of Sechin’s influence and thereby the limits of everyone else’s power.
Ulyukayev’s arrest happened against the backdrop of Russia scrambling to prop up its finances after the 2015 oil price crash – weeks before the announcement of the original OPEC+ deal that Sechin opposed – with some (including Ulyukayev himself) reportedly arguing that the state should reduce its stake in Rosneft. In other words, Sechin’s authority was questioned. In this sense, the situation today is remarkably similar.
So are the implications, one could argue. It is ultimately not RBK’s report that will decide if Rosneft’s shares go up or down or whether the company continues facing sanctions. But RBK was acquired in 2017 by Grigory Berezkin’s ESN group, which Novaya Gazeta linked to Yury Kovalchuk, the chairman and largest shareholder of Rossiya Bank, one of Putin’s neighbours from the Ozero dacha collective, who is one of Sechin’s rivals. As far as Sechin’s renewed appointment as Rosneft CEO and his calls on Putin to put pressure on Transneft are concerned, these happened weeks after Tokarev – another rival – was reappointed to head Transneft for another five years. Rather than a sign of Sechin’s steadily growing influence, both appointments might simply be an acknowledgement by Putin that it’s best not to rock the boat on troubled seas.
In short, it may very well be that there is no upwards or downwards shift. Sechin’s posturing primarily serves the purpose of reminding his rivals – and indeed, one of Sechin’s defining characteristics within the Russian political elite is that aside from Putin he does not seem to have any strong allies – that questioning his decisions and his influence is just not worth it. Only the stakes seem to be somewhat higher in 2020 than they were in 2016. The damage that the combined effect of the oil crash and COVID-19 is doing to Russia’s economy remains difficult to estimate. What seems certain is that while the government is reluctant to provide significant direct aid to citizens and small enterprises, big enterprises like Rosneft can and will demand further help from the state, even as resources are limited. Given the prospect of public protests and a shrinking pie to be divided, Sechin – and other managers – can ill afford to face uncomfortable questions about their own actions that might have contributed to the losses that their companies suffered.