Russian President Vladimir Putin reshuffled his Cabinet on Thursday. Though some of his personnel selections might seem unorthodox, Putin is aptly maneuvering people extremely loyal to him into positions of power. Since it seems that both Prime Minister Mikhail Fradkov and First Deputy Prime Minister Dmitri Medvedev are retaining their posts, Thursday's promotions have several major implications. Sergei Ivanov, removed from the post of defense minister and elevated to first deputy prime minister, is a clear winner in the reshuffle. As chief of the country's armed forces, his popularity has suffered because of a recent prominent hazing incident and the continued failure of the Bulava missile
, among other reasons. He has now been relieved of his responsibilities while acquiring a higher public profile and achieving a position on par with his chief competitor in the contest to be Putin's successor — Medvedev. He also maintains his authority over matters of defense. Anatoly Serdyukov's promotion to defense minister indicates that Putin wants him to take control of the one aspect of the Russian military that Ivanov has not been able to tackle — its finances. Though there has been movement toward placing the Russian military under civilian control, Serdyukov's most prominent attributes are his skill at financial control and his loyalty to Putin. He has no real military expertise. Sergei Naryshkin's installation appears to be a nod to Fradkov; as deputy prime minister, Naryshkin is taking control of Russia's external economic relations, particularly the Commonwealth of Independent States. This used to be Minister of Economic Development and Trade German Gref's responsibility. Gref is disliked by Fradkov (among others), and is seemingly being disempowered while the Putin government shifts from economic reform toward a series of policies that see economics as just another tool for enabling Kremlin policies. In the short term this transition will change very little. Ivanov, along with Medvedev, has long been assumed to be Putin's successor; now it is simply slightly more official. But in the meantime, the government reshuffle could have a dramatic impact on Russian policy. The first major shift concerns the defense establishment. The generals in charge of the military have never seen Ivanov, Russia's first civilian defense minister, as one of their own because he comes from the intelligences services and not the army, and because he is seen as more of an intellectual than a military man. While he was defense minister, Ivanov reformed the army without much regard for the opinions of the old guard, working to apply new techniques — often ones pioneered by NATO states — and slim down the staff-heavy conscription force into something more agile. However, the military is even less pleased about Serdyukov's appointment than Ivanov's. Although Serdyukov is a capable financial manager — and the military desperately needs one in order to perpetuate its restructuring — his military experience is limited to his draft stint in the Soviet army. Though Ivanov was brought in to establish political control over the military, Serdyukov has been brought in for what the Russian generals perceive to be a far more insidious role: financial control. The military is a bastion of graft and corruption that often seeks to perpetuate the old mass-army model that is largely irrelevant to Russia's current security needs. Regardless of what else Serdyukov works on, among his goals will be a financial reckoning that will target the inefficient official use and unofficial misuse of funds. At a minimum that will hit Russia's bloated corps of generals where it hurts most — their positions are likely to be massively downsized. And Serdyukov will enjoy Putin's full support in doing so. Part of what Putin does — indeed, part of who he is
— is an inveterate balancer of interests. While Putin begins to chart a more confrontational policy vis-a-vis the West
, he risks unduly strengthening one of Russia's more powerful political factions: the siloviki, a loose association of nationalist national security personnel who see the return of a great Russia. Though Putin wants to harness their strength, he also wants to keep them firmly under control, and that means reining in the army when possible for both geopolitical and political reasons. Serdyukov knows all about reining in forces. During his stint with the Federal Tax Service, Serdyukov played a pivotal role in the prosecution of the Russian oil company Yukos
. Above all, Serdyukov is a Putin loyalist, which makes him perfect for the job — and since he lacks his own powerbase, imminently disposable. Naryshkin's mandate is broader. He stands charged with using Russia's economic tools to extend the country's influence, particularly in other former Soviet states. He will be responsible for using the country's energy, infrastructure and market access to bind Russia's often independence-minded neighbors to Moscow's desires. Though Serdyukov will make the generals scream, it is Naryshkin who is likely to make the international news for tactics that will undoubtedly be considered "bullying" by foreign capitals. This will be triply the case in the energy industry, for just as Naryshkin's mandate is broader, so are his loyalties. Naryshkin is the deputy chairman of the board of the Russian state-controlled oil company Rosneft, while the powerful deputy head of the presidential administration, Igor Sechin, is chairman of that board. Russian energy major Gazprom has recently gained a great deal of power within the Kremlin walls (Medvedev is Gazprom's chairman) and if there is something Putin implicitly distrusts, it is a rising star he does not firmly control. In Putin's tried-and-proven strategy, a new face linked to Rosneft is now installed right at the top to counterbalance Gazprom. This means that, among other things, Rosneft will be seeking to leverage Naryshkin — the man who is now in charge of Russia's foreign economic policy — to expand its reach in terms of geography and sectors. Putin's reshuffle has left him in a good position to remain president despite term limits or to choose a successor. His latest maneuvers are purely to his benefit.