Putin Keeps Finance, Defense, Foreign Ministers, Adds Dvorkovich - Businessweek Putin Keeps Finance, Defense, Foreign Ministers, Adds Dvorkovich - Businessweek

Monday, May 21, 2012

Putin Keeps Finance, Defense, Foreign Ministers, Adds Dvorkovich - Businessweek

Putin Keeps Finance, Defense, Foreign Ministers, Adds Dvorkovich - Businessweek

President Vladimir Putin retained key ministers in Prime Minister Dmitry Medvedev’s new Cabinet, keeping control over the levers of power during what he called a challenging time for the global economy.

Putin, who returned to the presidency this month after four years as premier, today reappointed the finance, defense and foreign ministers as well as First Deputy Prime Minister Igor Shuvalov, his pointman for relations with foreign investors and the country’s richest businessmen. The Russian leader named Medvedev’s economic aide, Arkady Dvorkovich, to oversee the energy industry as one of the seven deputy prime ministers.

“Judging from the make-up of the new government and past experience, Vladimir Putin will play the decisive role in economic policy, he’ll have the final word,” said Kirill Rogov, an economist who worked on one of the panels reviewing the government’s Strategy 2020.

The new Cabinet takes over as Europe’s deepening sovereign- debt crisis, falling oil prices and opposition protests against Putin’s rule have accelerated capital flight from the world’s largest energy exporter. Russia’s benchmark ruble-denominated Micex Index had the biggest drop in seven months last week.

‘Difficult Situation’

“I want to wish you success in the difficult situation in which the world economy finds itself, a situation of uncertainty with many unknown factors,” Putin, 59, said in a Kremlin ceremony in Moscow. “In these conditions you will have to carry out the program for Russia’s development.”

Putin wants to boost economic growth to at least 6 percent a year to turn Russia into one of the world’s five largest economies by purchasing power by 2015. The nation needs to maintain its output of oil, its main export, at more than 10 million barrels a day, on par with Saudi Arabia, the Russian leader said in October 2010.

Putin’s former deputy premier in charge of energy, Igor Sechin, while leaving the government, will “remain influential” in the oil and gas industry, said Ronald Smith, a Moscow-based analyst at Citigroup Inc. Sechin has been nominated to lead the state company that owns stakes in OAO Rosneft and OAO Gazprom. (GAZP)

Putin presented the new Cabinet today in a meeting broadcast on state television. Anton Siluanov will keep the post of finance minister, Sergei Lavrov the foreign minister’s job and Anatoly Serdyukov remains as defense minister. Putin also named Andrei Belousov as economy minister and Alexander Novak as energy minister.

Oil Prices

While high oil prices from 2000-2008 enabled Russia to post average economic growth of 7 percent, the European Union, Russia’s largest export market, is grappling with its worst economic crisis in decades just as the struggling world economy puts a cap on crude prices.

Russia is dependent on oil and gas sales for half of government revenue. The budget is slipping into a deficit and the current-account balance is likely to turn negative in 2014 or 2015, said Ivan Tchakarov, chief economist for Russia at Renaissance Capital in Moscow.

Investor concerns spurred $42 billion in capital flight in the first four months. The authorities also face the largest unrest in Putin’s 12 years in power, sparked by demonstrations against alleged fraud in December parliamentary elections.

First-Quarter Growth

Still, Russia’s economy grew 4.9 percent in the first quarter, the fastest rate since the three months ended September 2011.

There will be close coordination between Medvedev’s Cabinet and the Kremlin, who agree on the need divest state assets and for Russia to be competitive in attracting foreign capital, Kirill Dmitriev head of Kremlin-backed private-equity fund, the Russian Direct Investment Fund, said by phone. Shuvalov, as a “big champion” for foreign investors, will play a “key role,” he said.

Shuvalov said today that the government will prepare an accelerated schedule for the sale of state assets within the next 10 days.

A major challenge for the Cabinet will be to accommodate $160 billion in spending increases promised by Putin while reducing the $115 oil price required to balance the budget, said Chris Weafer, chief strategist at Troika Dialog, the investment bank owned by state-run OAO Sberbank. (SBER)

Putin’s team will also spar with Medvedev’s because it wants to limit the sale of stakes in strategic state companies and delay raising the retirement age, a measure needed to cut the deficit in the pension system, Weafer said.

The problem for Russia is that Medvedev’s Cabinet doesn’t have the political weight to carry out major programs, said Gleb Pavlovsky, a Kremlin adviser until last year.

“In reality, it is a technical Cabinet, with the exception of the prime minister, who has been handed unique vice- presidential powers,” he said.

To contact the reporters on this story: Stepan Kravchenko in Moscow at skravchenko@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net



How charity finance directors can become chief executives - The Guardian

Charity finance directors could be ideally placed to lead their organisations in an age of social bonds and performance-related-contracts, said Paul Palmer director of the Centre for Charity Effectiveness, last week.

Speaking at the Charity Finance Group's annual conference, he also suggested that finance directors who wanted the top roles in charities should try to change their job title to something other than finance director, take on special projects, broaden their focus from just finance and become a trustee: 51% of chief executives in the FTSE 100 were previously finance directors; it doesn't seem to be the same at charities, said Palmer.

But the director told several hundred delegates that a new financial landscape could pave the way for finance directors to step up. Palmer said: "As charities move away from grants to contracts and loans, leaders might require very different skills. If your charity is going down this route, there's a clear leadership role for the finance director. The move to chief executive can be an exciting journey, but you need to overcome some perceptions. And it's not an easy ride."

One piece of advice for finance directors was to look at changing their job title. "The title might be detrimental – there are perception issues with it. Trustees want the finance director to be a safe comfort blanket; they want you to conform to your role, so the title might not help you break out of that role. Change it and they might see you in a different light," said Palmer.

In the session 'How financial directors get to lead and be involved in strategic planning', Palmer also pointed out that most chief executives still came from outside the sector. "Charities still primarily import CEOs rather than export, which gives some idea of how trustees see people in the sector. But your knowledge and experience of the organisation should give you a competitive advantage. Trustees think you can understand the sector by reading a book, but it takes years," he explained.

Other advice was to be a trustee of another charity. "Two thirds of CEOs are also trustees at other charities. Resist being pigeon-holed as treasurer – take on another position."

In addition, he said chief executives should have vision, sharp people skills, a constructive relationship with the chair, be a good leader and communicator, and should understand marketing and fundraising.

"Think about your personal development. Work on your weaknesses rather than further developing your strengths. Get a coach if needed," Palmer told delegates.

Mark Watts, the recently retired chief executive of the RSPCA, told how he was offered the role when he retired from a finance director's position. On leaving, he sent a detailed document to trustees about how he thought the charity could be strengthened. It was well-received and they asked him to stay on as chief executive.

"I'd worked at the RSPCA for 28 years and saw six CEOs come and go. I had thought about going for the job but I wasn't confident enough," said Watts. "Most finance directors are very reserved and self-effacing, and trustees want to keep a good finance director in position." His advice was to "not be passive; express your opinions".

Watts added that finance directors should be the chief executive's "right hand man" and aware of drivers across the whole charity. "Have a good idea of how the organisation is performing, not just financially. Have clarity of vision and be able to communicate that. Have passion for the cause and make the impossible possible. And, don't be scared to ask questions because you think you'll look foolish," he told the audience.

Watts concluded by saying that finance directors should not underestimate the importance of their contribution at a time when financial recovery will be slow. "Maybe sometime you'll take on the reins, I promise you won't regret it," he said.

Other sessions focused on good leadership in general. Dr Robina Chatham, a training consultant and neuroscientist, said that in the current financial climate it was tempting for an organisation to just "try to survive", but it was important that the chief executive managed the future at the same time.

Chatham said that research she'd conducted with Cranfield University had found that long-term success for leaders came from understanding the world they work in. She discussed how important it was to understand covert and non-covert agendas at the office and who holds power and influence. "It could be those who are smokers who get together outside, it could be people who are fun to be with," she explained.

She also highlighted the importance of networking. "Lunchtimes are not for sitting at your desk with a sandwich if you want to be a leader," she said. "They're for networking. This is where people will share covert agendas in a less formal environment.

"And, innovative ideas come from making connections with people we don't know very well. If we stick to our friends in our team, you just get renovation, not innovation. Sparks of ideas come from conversation with someone from a totally different background. If you're not networking, you're not allowing the opportunity for really innovative ideas and you'll have no vision to inspire the organisation: 75% of your time should be spent on communication, innovating and networking," said Chatham.

She concluded that the top five traits leaders needed were high integrity, empathy, passion for motivation, courage to take risks and vision for the future.

Speaking on skills development for staff, Helen Simmons, finance director at London Diocesan Fund, offered a number of insights. She said that finance teams learn better when "doing" a task rather than reading about it or watching a demonstration.

Job swaps and shadowing also helped staff understand more about how a charity works, increasing empathy and allowing staff to cover for each other during times of sickness because they knew more about different roles.

Simmons said that at the beginning of every new job she had a meeting with all the staff: "Even if it's just for 10 minutes, find out if the job description matches the role and whether they have all the tools for the job.

"Staff need to have their needs met to do a good job. They need to feel biologically and physically safe, a sense of belonging and self-esteem. And, if they have personal issues, you need to try to understand these.

"You also need to be fair and transparent with pay and benefits. There's no point in providing biscuits if you haven't got these basics right," said Simmons.

She added that finance directors who wanted to step up to the chief executive position should gradually expose themselves to office and organisational politics and should also use any opportunities to present to staff and join project groups.

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