February 20, 2008


Whose Kremlin is it? Medvedev's economic plan rocks the boat (Judy Dempsey, February 20, 2008, IHT)

Medvedev, if one believes a ground-breaking speech he gave last week in Siberia, stands for a genuine modernization of the Russian economy. He has a vision of a stronger private sector, less influence for the big state corporations and less interference from the security forces, or siloviki, that have been dominating the Kremlin. But as Putin's protégé and longtime manager of the most powerful state company, Gazprom, it is not clear how serious he really is about making a break with the old guard.

There is also the influence of Deputy Prime Minister Sergei Ivanov, responsible for economic policy, who is one of Medvedev's main rivals and who at one stage was thought likely to succeed Putin. He has established his own views about Russia's economic future, which are more in line with the interests of the siloviki.

In a speech at the Munich Conference on Security Policy this month, Ivanov proposed establishing new state-run corporations - aircraft engineering, shipbuilding, atomic energy missile, space and nanotechnology - which would be subsidized by at least $40 billion in state funds.

Ivanov's plans exposed the debate inside the Kremlin over the economy. "Essentially, you have two competing strategies," said Oksana Antonenko, a Russian expert at the International Institute for Strategic Studies in London. "One is the Ivanov plan, which involves big state corporations. But they are so big, they would be unable to modernize. Money would be poured into them with little effect," she said. Then there is the Medvedev plan. "He wants to engage the private sector and promote public and private ownership."

Medvedev, a soft-spoken bureaucrat who rarely gives interviews shook the conservatives in the Kremlin with his Siberian speech.

He spoke about the "Four I's": institutions, infrastructure, innovation and investment, sectors that until now have been neglected by the Putin administration. Medvedev said he would invest in these sectors in order modernize the economy and start diversifying to lessen its dependence on energy as the prime source of income for the budget.

He also said it was time to get rid of administrative barriers and reduce taxes to encourage innovation and private investment. And then he violated a taboo in the Kremlin: Government officials, Medvedev said, should stop holding positions on the boards of companies. "Truly independent directors should replace them," he added.

Posted by Orrin Judd at February 20, 2008 8:57 AM

Anyone taking bets on how he'll be killed and when? - my guess is "heart attack", early March

Posted by: Shelton at February 20, 2008 1:09 PM