Putin's appointment of the former Finance Minister and Chairman of the Accounts Chamber Alexei Kudrin, long ago known for his liberal views, as the head of Russian search giant Yandex is strange. In a piece for Riddle political analist Andrey Pertsev explains why he thinks that Putin's appointment of his longterm ally can be seen as a strategic move.

Putin and former Chairman of the Accounts Chamber Kudrin during a meeting in June 2022. Photo Kremlin.ru. 

by Andrey Pertsev

One of the Russian president’s closest associates — former Finance Minister Alexei Kudrin — is now off to work at Yandex, Russia’s equivalent of Google. He will start by taking an interim position there as an advisor, before swiftly moving up the ranks to head the company. Even with a war on (perhaps especially because there is a war on) Vladimir Putin does not forget his time-worn principles of appointing old pals to top posts. Yandex is in some ways a hybrid of Sberbank and Channel One, and the impending appointment of Kudrin as its head is evidence that Putin has belatedly begun to truly take the Internet and its possibilities seriously.

Yandex’s break up

On November 30, the Federation Council accepted Kudrin’s resignation of the head of the Accounts Chamber. That this close associate of Putin would leave this state post had been known since the summer, and even then his new place of work, the Yandex company, was also named. On December 5, Kudrin announced that he was joining the largest Russian IT company as a corporate development adviser.

Before Kudrin moves to become Yandex’s head, the company should be divided into two parts — a Russian one (which will be headed by Kudrin) and foreign one, which will remain with the founder of Yandex, Arkady Volozh (who is under sanctions and left the company). The foreign part will work under a new brand and will get rid of the toxic affiliation with Russia. The Russian authorities will get full control over ‘their’ part.

 Vladimir Putin with Yandex founder Arkady Volozh at the Moscow office of Yandex in 2017. Photo Wikipedia.

Last ‘liberal’ standing

The relocation of Kudrin may seem like a departure from the political arena of the last Russian systemic liberal against the backdrop of war, a sign of the utmost tightening and unification of the system.

On December 24, 2011, Alexei Kudrin, who had recently resigned as Deputy Prime Minister and Minister of Finance, came to a protest rally on Sakharov Avenue, and before that he published an article in the Kommersant newspaper, where he directly supported those dissatisfied with the results of the elections to the State Duma. At that time, Kudrin was the head of his own public organization — the Committee of Civil Initiatives, which monitored the elections and proposed the liberalization of legislation. The think tank during the years of crackdown helped Russian independent experts conduct research and even employed them.

In 2018, Alexei Kudrin received a state appointment and headed the Accounts Chamber. Then again, his dismissal from the state structure in 2022 and his subsequent transfer to Yandex is not evidence that Putin is no longer ready to work with the liberals, and even less evidence of Kudrin’s disgrace. Informally, the former finance minister received an upgrade in status and a new mission. 

A longtime ally

Putin and Kudrin met at the St. Petersburg mayor’s office, where the former headed the foreign relations committee, and the latter held the higher post of deputy mayor to Anatoly Sobchak. In 1996, Sobchak lost the election, and Kudrin, at the invitation of the then head of the Presidential Administration Anatoly Chubais, went to Moscow to work in the Kremlin.

Vladimir Putin then lost his job. There is a legend that Alexei Kudrin sheltered his old comrade in the capital several times and gave him a cot in his apartment. After some time, Kudrin managed to help Putin find a new job — again in the Kremlin. In a few years, Vladimir Putin will become the Russian President, and his friend the Minister of Finance, who will work in the government for 10 years.

Kudrin always felt the support of the head of state and could come into conflict with other influential members of his entourage. At some point, this became the reason for his resignation — in 2011, the Minister of Finance criticized the then President Dmitry Medvedev and added that he would not work with him in the same government (at that time it was already known about the rockade of Putin and Medvedev).

As a result, Medvedev scolded Kudrin in front of the cameras and suggested that he resigned. Putin fired his comrade but did not forget — he invited him to public events and joked approvingly about him: 'they say, my friend is in disgrace, in fact he just does not want to work'. The former finance minister was next to the president in a flickering mode, and then he received an official post in the state structure altogether (as head of Russia’s Account’s Chamber in 2018 – red.).

Leaving this position for a large, state-controlled business is a familiar trajectory for Putin’s cronies. Former Deputy Head of the Presidential Administration and former Deputy Prime Minister Igor Sechin shifted to Rosneft. Alexey Miller, who worked under Putin in the St. Petersburg Committee for Foreign Relations, has been in charge of Gazprom since 2001. Former First Deputy Prime Minister Igor Shuvalov headed VEB — a state development corporation; another former subordinate of Putin (now in the Presidential Administration) Sergey Chemezov led Rostec; meanwhile, former Economic Development Minister German Gref heads Sberbank.

None of these people feel left out. They single-handedly manage the broadest and deepest financial flows, having much more freedom of action and maneuvers than any official. The transition from a state position to a state or near-state business is not an honorable resignation, but the same honorable promotion. In addition, Kudrin will not only become a top manager, but also receive a 5% stake in the corporation.

A tool for influencing society

Educational projects and artificial intelligence technologies will go to the foreign part of the corporation; the new top management back in Russia will get the main body of Yandex — a search engine, search and marketing services, food delivery and taxi services. Kudrin will manage Russia’s largest Internet empire and a tool for influencing society. According to the latest VCIOM survey, 29% of Russians actively use the Internet and receive basic information from it (in 2018, there were only 13% of them), TV as the main source of information is chosen by 16%. Among young people, the share of active Internet users reaches 66%.

It can be said that the Internet is becoming a new TV for Russians — 78% of the country’s population use the Internet in principle, and 67% access the Internet using smartphones. Yandex, in turn, is a very large, if not the predominant, part of the Russian Internet (the company’s share in the search market is 60.2%) In this sense, Kudrin becomes the ‘Konstantin Ernst — head of TV Channel One’ — of the future; he will have the main Internet search engine in his hands, which, for example, is able to give a particular user the news he is interested in, but properly selected and filtered.

Before the war, Yandex was not only a search engine, but also a news aggregator, formulating their 'top news'. It is no secret that Internet users (and Russians are no exception in this sense) read news on the first page of a search engine or system where they have an electronic mailbox, first of all, paying attention to the very 'top'.

As a post office, Yandex long ago overtook its former competitors, Rambler and Mail.ru. Aggregated news and their top were censored. That is, the company formed a news picture of its users (that is, tens of millions of Russians). After the outbreak of the war, the company abandoned the aggregator in an effort to avoid sanctions, but what now prevents it from bringing it back?

Alexey Kudrin in the State Duma, 2018. Photo Wikipedia.

Big bonus for Kudrin

In a hypothetical situation of peace negotiations and the subsequent weakening of the sanctions regime, a new chief IT specialist with a liberal image can negotiate the acquisition of modern equipment, and, most likely, the West will talk to Kudrin; he has nothing to do with the war and did not publicly support it. An old friend will be able to entertain the president with modern tricks: robots, deepfakes and similar IT jokes. The head of Sberbank, German Gref, is already doing this, and Putin clearly likes this format of entertainment.

What it comes to is that Kudrin, who seems to have distanced himself from Putin and does not publicly support his war, receives a big prize. He will manage near-state business, be responsible for the Internet during the presidential elections and retain access to the president (and this is one of the most important resources in Russian politics). Many of the highest-ranking officials do not even dream of such a gift. Kudrin acquired a relative freedom of action that is relevant for Putin’s sphere of responsibility in one package and increased his influence in the system, which is far from always determined by the presence of a state position.

Gearing up for the 2024 (re)election

Finally, the appointment of Kudrin to Yandex tells us that, at least for now, Vladimir Putin is serious about running in the 2024 presidential election. The presidential administration is already holding meetings on the campaign, although its contours are not clear and blurred by war. Popular telegram channels call Kudrin one of the possible spoiler candidates or even the leader of the new liberal party.

Most likely, we will not see either the nomination of the ex-Minister of Finance as a presidential candidate, or the creation of his own political structure. As a spoiler candidate, Kudrin is too strong. The former official can remind the Russians of the fat pre-war years, the time when he himself was in charge of finances. It is likely that in a couple of years this nostalgia in society will be strong.

A politician who can become a real competitor to Putin will not be allowed by the Kremlin to participate in the elections. Kudrin refused party leadership back in 2011, when political competition in Russia was strong, and the status of the head of the party (albeit pro-government) meant a lot. Now that means almost nothing, so this is hardly interesting to Kudrin.

It is important for Putin that during the presidential campaign the ‘new TV’ is in the hands of a trusted person who, on the one hand, will not let you down, and on the other hand, will not alienate Internet users who trust the state less than the audience. And in this sense, the old friend in the ‘new TV’ looks like the best and most obvious candidate.

This article was published originally by Riddle.