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Civilian Economist Heads Defense Ministry
//New defense minister is to bring order without reform
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The appointment of Federal Tax Service head Anatoly Serdyukov minister of defense was an unexpected decision, but its consequences are easy to predict. Since 2004, Serdyukov has successfully turned the tax service into a secretive and rather effective power agency completely management from within and free from administration influence. Serdyukov will be succeeded by his deputy or presidential aide Viktor Ivanov. At the Defense Ministry, no reform can be expected under Serdyukov's leadership, rather the same process that took place in the tax service is more likely.
Tax service head Anatoly Serdyukov was presented to the Defense Ministry by Russian President Vladimir Putin yesterday as the new defense minister. The employees of the ministry are in an unenviable position. It was hard enough to get used to Sergey Ivanov, and the new civilian defense minister is Ivanov's exact opposite.

Serdyukov's career has developed dynamically since the election of Vladimir Putin as president of Russia in 2000. The former businessman spent three years subjugating the tax service. When his boss in the St. Petersburg department of the Ministry of Taxes and Fees Viktor Zubkov moved to Moscow as head of the Federal Finance Monitoring Service (Rosfinmonitoring), it became clear that Serdyukov would sooner or later come to Moscow as well.

Serdyukov has been head of the tax service for three years. In that time the service's imagine, originally formed by Minister Alexander Pochink, has changed radically. During Serdyukov's leadership, he has not given a single interview to print media and has almost not been seen publicly. He placed new managers in key sector inspectorates for large tax payers. The former management was replaced mainly by Serdyukov's colleagues from St. Petersburg.

Serdyukov used the method of horizontal rotation to split up managers. In February 2006, he changed the places of the leaders of the inspectorates for oil, natural gas, transport and alcohol and tobacco. Another specific of his personnel policy was the appointment of officials from the central office as heads of the tax service departments in the subjects of the federation, thus solving the problem of clan elites in the region.

Under Serdyukov's leadership, it became much harder for taxpayers to defend their rights in disputes with the tax service. According to tax service statistics, courts sided with taxpayers in relation to 64 percent of the sum of disputed tax payments in 2000, while in the first half of 2006 that figure had shrunk to just 17 percent. The tax service explains that as an improvement in the quality of its work. In law firms, they say that, after the YUKOS case, which was largely the doing of the tax service, courts began to side with taxpayers significantly less frequently.

In the administration they admit that, while he was formally subordinate to Finance Minister Alexey Kudrin, Serdyukov's policies were in practice absolutely independent of the Finance Ministry. It went so far that the Finance Ministry and tax service set up a cooperation commission to formulate common points of view on tax issues that were treated differently by the two agencies. According to unofficial information, Serdyukov decided key issues in consultation with presidential aide Viktor Ivanov and without the participation of Kudrin. Viktor Ivanov, Kommersant has learned, played an important role in Serdyukov's appointment to the tax service in 2001.

A Kommersant source in the tax service said yesterday that it was possible that Viktor Ivanov claim the post of head of the tax service. In the opinion of the source, if Serdyukov is given the choice of successor for himself, he would choose one of three of his former deputies: Tatyana Shevtsov, Evgeny Vechko or Mikhail Mokretsov. Serdyukov has had a total of seven deputies. The post of head of the tax service could go to someone supported by Alexey Kudrin as well.

Putin made it clear that Serdyukov was being brought in to the Defense Ministry more to solve financial and administrative problems than military problems. The president emphasized that Serdyukov will have to sensibly spend huge money, at least by the standards of our country. According to information obtained by Kommersant, several supervisory agencies began making analyses of spending effectiveness and accounting in Defense Ministry bodies. Judging by the evidence, the president has seen their reports. Most likely, the impossibility of fighting corruption in state purchasing and the ineffectiveness of the Defense Ministry's own supervisory bodies played a role in the choice of Ivanov's successor. Under Ivanov, the military budget almost quadrupled (from 214 billion to 822 billion rubles) and now Serdyukov will improve accounting and supervision of spending.

Serdyukov will certainly not increase openness or outside supervision of the ministry by the administration. A civilian minister will deal with the military economy and questions of military management will be referred to the General Staff.

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All Russian Defense Ministers

No. Minister Took Office Left Office Days in Office Activity after Leaving Office

1 Sergey Ivanov March 28, 2001 February 15, 2006 2150 Appointed first deputy prime minister

2 Pavel Grachev May 18, 1992 June 18, 1996 1493 Chief military consultant at Rosoboronexport since 1996, also head of the VDV Fighting Brotherhood public foundation

3 Igor Sergeev May 22, 1997 March 28, 2001 1406 Became a presidential aide. Died November 10, 2006

4 Igor Rodionov July 17, 1996 May 22, 1997 310 Elected to the State Duma in 1999 and 2003. Member of the Just Russia-Rodina (NPS) faction

5 Boris Yeltsin** March 16, 1992 May 7, 1992 53 Elected to second presidential term in 1996, resigned on December 31, 1999. Now retired

6 Konstantin Kobets* August 19, 1991 September 9, 1991 22 Until 1997, head of the main military inspectorate. Under investigation 1997-2000 for accepting bribes (case closed by amnesty). Now retired

7 Mikhail Kolesnikov***June 18, 1996 June 24, 1996 7 Until May 2000, chairman of the president's state technical committee. Now retired

*Minister of Defense of the RSFSR, office ceased to exist after September 9, 1991. The Russian Ministry of Defense was established on March 16, 1992

**acting
by  Dmitry Butrin, Vadim Visloguzov, Maxim Shishkin
* Moscow time indicated... Go top