Russia: Increasingly assertive, Medvedev attacks Putin allies

Russian President launches campaign to oust allies of PM from company boards.

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

After Medvedev reeled off his new to-do list that calls for state officials to stand down from corporate directorships, Russia was buzzing with speculation over whether he has agreed his plan with Putin or was acting independently to thrust himself to the forefront of Russia`s leadership with less than a year to go before Presidential Elections.

Convening a meeting in the steel city of Magnitogorsk in the Urals to discuss training programmes for engineers, Medvedev on Wednesday appeared to catch most by surprise when he unveiled his plan to improve the investment climate.

As part of the plan, he 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”.

Putin`s spokesman Dmitry Peskov refused to say whether Medvedev had agreed his plan with Putin but acknowledged that the President`s speech came as a surprise to the government.

"The meeting was supposed to have a different theme," he said.

Medvedev`s top economic aide Arkady Dvorkovich told reporters on Thursday that energy Czar Igor Sechin, a powerful backroom powerbroker and Putin`s right-hand man, 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.

"Dmitry Medvedev essentially demanded the liquidation of state capitalism," said business daily Kommersant, calling the proposals "revolutionary”.

While the Kremlin insists the new plan is strictly aimed at improving Russia`s poor investment climate, some analysts say it has clear political goals.

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

Analyst Artyom Konchin of UniCredit bank said 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."

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 sceptical 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.

"Whether Medvedev is able to pull off such a small revolution, we will see in the near future," Alexei Navalny, an anti-corruption crusader who has repeatedly accused government officials of feeding off state companies, said in his blog.

Bureau Report

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