Europe News

Russian Job Swap Sparks Kremlin Revolt

Charles Clover HKSCKPVIamp; Courtney Weaver, Financial Times

Senior Russian government figures have rebelled against a deal between President Dmitry Medvedev and Vladimir Putin, the prime minister, to switch jobs next year.

Vladamir Putin
Bulent Kilic | AFP | Getty Images

The rebellion indicates that the handover arrangement will not be as smooth as the two leaders had anticipated.

After Saturday’s announcement that Mr Medvedev would take over as prime minister, while backing Mr Putin to return to the presidency in March 2012 elections, Alexei Kudrin, finance minister, announced during a meeting in Washington that he would “definitely refuse” to work with Mr Medvedev in the cabinet.

“I don’t see myself in the new government. Nobody has offered me a position, but I think that the disagreements I have will not allow me to be a part of the new government,” he told journalists on the sidelines of the International Monetary Fund and World Bank meetings.

When asked if he would take a position if one were offered, Mr Kudrin said: “I would definitely refuse.”

He and Mr Medvedev, both economic and political liberals, have a fraught relationship. Mr Medvedev’s attempts to ram through spending increases have alienated his finance minister. Mr Kudrin had also appeared to harbour hopes of becoming prime minister if Mr Putin became president again.

Mr Kudrin’s mutiny followed comments from Arkady Dvorkovich, Mr Medvedev’s chief aide on the economy, who announced via Twitter on Saturday that “there is no reason for celebrating”, apparently referring to Mr Putin’s decision.

The prime minister’s spokesman, Dmitry Peskov, put a brave face on the dispute when he told journalists on Sunday that he “had no doubts” that Mr Kudrin would stay on Mr Putin’s team.

Investors expressed concern over the potential departure of Mr Kudrin, a fiscal conservative who is credited with navigating Russia through the 2008 global financial crisis. It was Mr Kudrin who “supplies the country's macro stability”, noted Roland Nash, chief investment strategist for Verno Capital, a Moscow-based hedge fund.

Steven Dashevsky of Dashevsky & Partners, a Moscow-based investment fund, said: “It’s not who is the chairman of the board, it’s about who’s the CEO, the guy in charge of the business. Kudrin was seen as the real market-friendly figure. If he leaves, that’s going to be a major loss.”

Mr Putin named Mr Medvedev to succeed him as president in 2008 when he was prevented by the constitution from running for a third consecutive term. Mr Medvedev indicated that the two men agreed to switch jobs when they created the tandem agreement in 2007, saying “we actually discussed this variant of events while we were first forming our comradely alliance”.

But members of Mr Medvedev’s team felt betrayed by their chief.

“Medvedev had always expressed the intention to be a presidential candidate” said Gleb Pavlovsky, head of the Foundation for Effective Politics and a former political consultant to the Kremlin.

Mr Pavlovsky called Mr Medvedev’s decision to stand down “a catastrophe for the ruling political team. For now it is a moral crisis, which will quickly turn into a political crisis”, he said, referring to Mr Kudrin’s comments.