Increasingly assertive, Medvedev attacks Putin allies

AFP , Thursday 31 Mar 2011

Russian President Dmitry Medvedev orders state officials out of corporate firms, analysts say move is bid to weaken PM Vladimir Putin before elections next year

Russia's President Dmitry Medvedev and Prime Minister Vladimir Putin walk after taking part in a wreath-laying ceremony at the Tomb of the Unknown Soldier outside Moscow's Kremlin in this February 23, (Reuters).

President Dmitry Medvedev has launched a campaign to oust allies of Prime Minister Vladimir Putin from company boards in a blow to Putin's carefully-built system of state control over the economy.

An order for state officials to stand down from corporate directorships by mid-2011 is among a list of concrete measures that also includes appointing investment envoys across the country and allowing minority shareholders in public firms full access to the companies' books.

The Kremlin says the new plan is aimed at improving Russia's poor investment climate but analysts say it has clear political goals and is designed to thrust Medvedev to the forefront of Russia's leadership with less than a year to go before presidential elections.

"If these decisions are implemented, the balance of power will be changing," said Dmitry Badovsky, a political analyst at the Institute for Social Systems think tank.

"This is Medvedev's signal that he's ready to run for a second term and demonstrates his political determination and strength."

Analyst Artyom Konchin of UniCredit bank also noted "the strong political implications of the proposal," saying that investors "could become concerned about the proposed changes as a perceived escalation of the conflict between different factions in the government in advance of the 2012 presidential elections."

Speaking in the steel manufacturing city of Magnitogorsk in the Ural Mountains on Wednesday, Medvedev said independent directors should replace government ministers and deputy prime ministers on corporate boards by mid-2011 "to remove excessive influence of state companies on the investment climate."

Medvedev's top economic aide Arkady Dvorkovich told reporters on Thursday that energy czar Igor Sechin, one of Russia's most powerful backroom powerbrokers, would have to quit as board chief of top oil company Rosneft.

Finance Minister Alexei Kudrin will have to stand down as chairman of bank VTB and Transport Minister Igor Levitin should leave the country's flagship carrier Aeroflot, the aide added.

Viktor Zubkov, another trusted Putin ally and first deputy prime minister, Energy Minister Sergei Shmatko and Economy Minister Elvira Nabiullina sit on board of Gazprom, the world's largest gas producer.

Sergei Ivanov, another Putin ally and fellow former KGB member, sits on the board of the state holding United Aircraft Corporation, among others.

Medvedev has repeatedly criticised state corporations for their inefficiency and corruption but never before has the Kremlin chief come out so strongly against Putin allies, analysts say.

That attack comes on the heels of Medvedev's very public clash with his mentor when he rebuked Putin for comparing the West's military action in Libya to a medieval crusade, prompting observers to speak of a major rift in the ruling duo as the presidential elections near.

Nearly three years into his first term, Medvedev is seen by many as a weak leader, without a powerful team of his own and playing second fiddle to the powerful prime minister.

While praising his resolve to improve the investment climate, many observers are skeptical that his initiative will amount to much, saying key ministers are likely to retain their influence over the top companies even if they leave their boards.

"If they manage to kick out bureaucrats from boards of directors and supervisory boards, it would be a small revolution," Alexei Navalny, an anti-corruption crusader who has repeatedly accused government officials of feeding off state companies, said in his blog.

"Whether Medvedev is able to pull off such a small revolution, we will see in the near future."

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