Is A Medvedev-Putin Split Brewing?

Russian President Dmitry Medvedev said he wanted to send a clear and unambiguous signal to the country's bureaucracy.

Speaking to leaders of small and medium-sized businesses in the Smolensk region on July 31, Medvedev decried "corrupt law enforcement agencies" for "using all kinds of unlawful methods" to extort money from legitimate entrepreneurs.

"We've had enough of inspections and all sorts of raids at the instigation of commercial entities. In general, both our law enforcement agencies and state institutions should stop terrifying businesses," Medvedev said.

Russian leaders often offer such platitudes, usually with a nod and a wink, and they are subsequently ignored. But Medvedev's comments reverberated throughout the country's political universe, less because of their specific content and more because of whom they appeared to be aimed at -- Prime Minister Vladimir Putin.

Just days earlier, Putin issued a public broadside against leading businessman Igor Zyuzin, owner of the coal and steel giant Mechel, accusing him of price-fixing. Picking up on Putin's signal, law enforcement agencies pounced, opening up criminal investigations, and Russia's stock market tumbled.

Analysts say this open sparring marks an important watershed in the evolution of Russia's ruling diarchy, which came into being when Putin turned the presidency over to his loyal -- and, in the eyes of most political observers, weak -- protege in March. The apparent disagreement between Russia's two most powerful officials reflects different approaches to governing as well as divergent economic and commercial interests among their respective inner circles.

Yevgeny Volk, head of the Heritage Foundation's Moscow office, tells RFE/RL that the split reflects a long-standing conflict between the technocrats surrounding Medvedev and the security-service veterans -- or "siloviki" -- that make up Putin's team.

"I think Medvedev is trying to weaken the people who don't suit him in Putin's circle," Volk says.

Conflicting Economic Visions

According to Volk and other observers, Medvedev is specifically trying to weaken powerful Deputy Prime Minister Igor Sechin, Putin's gray cardinal and the bete noire of Russia's liberals.

Sechin is widely believed to have orchestrated the 2003 arrest of Yukos CEO Mikhail Khodorkovsky and the subsequent seizure of his company's assets by the state-controlled Rosneft oil company.

Analysts have long believed that Sechin and the siloviki clan are seeking to seize control of the commanding heights of the Russian economy, and many noted that Putin's verbal assault on Mechel could forecast a similar raid on the coal and steel industry.

Medvedev, on the other hand, says he wants to turn Moscow into a major world financial center and his closest proteges need to prove that Russia is a safe place for investors.

"There is a disagreement about how relations should be with business and how to conduct foreign policy. This division exists and the question now is whether it can be managed or whether it will grow," Volk says.

Russia's embattled liberal opposition, which has been yearning for Medvedev to reverse Putin's hard-line policies, rejoiced at the president's willingness to mix it up publicly with his onetime political patron and mentor.

"This is the first time that the president has strongly and clearly opposed Putin's line," opposition leader Boris Nemtsov recently told RFE/RL's Russian Service.

"What [Medvedev] said is correct from the perspective of economics. On the other hand, the business elite doesn't really believe that he is the full-fledged president. But this is a first step that shows that he is becoming president, and that is good."

Putin Still In Charge

But liberals like Nemtsov should be careful before celebrating Medvedev's unexpected opposition to Putin, analysts say. Despite Medvedev's lofty title, it is Putin who truly controls the country's bureaucracy -- and attacking a rich coal and steel tycoon will prove popular with the public.

"In the eyes of the public, Putin is being active, strict, masculine, tough, and decisive. Most voters like this. After all, who likes the rich? They like to see another fat cat put in his place," says Dmitry Oreshkin, a Moscow-based political analyst. "The fact that this harms the stock markets, causes...the oil companies to lose money, and harms investment projects in our country doesn't occur to them."

According to a recent poll by the independent Levada Center, 36 percent of Russians see Putin as the country's most powerful figure as compared to only 9 percent for Medvedev.

Oreshkin says that "Putin is openly and publicly declaring that he is the main figure on the political map [and it's clear that] Medvedev still lacks either the resources, courage, or political experience to answer him forcefully." Under these circumstances, he adds, Medvedev still needs to tread very, very carefully in protecting his interests.

"Putin is now attacking. But Medvedev is not simply stepping quietly aside. He feels the obligation to resist, but softly. He is not doing this directly, but more like acting like a servant in a play by Moliere or Shakespeare who is whispering an aside while his master is speaking," Oreshkin says.

Most observers agree that last week's dust-up was just the first round of what will most likely be a long and drawn-out bureaucratic and political battle, most of which will be fought outside the public's view. And regardless of how well Russia's dueling political elite manages the struggle in the short run, the fundamentals issues at stake will not go away any time soon.

"I think in the short term they will manage and regulate this disagreement and move it to the back burner. But I think in the long term, this disagreement can only grow," Volk says.

Volk and others point out that a sharp economic downturn in Russia, which could be sparked by a further drop in oil prices or a sharper rise in inflation, could change the dynamic dramatically.

Russia's Economic Development and Trade Ministry recently raised its inflation forecast for 2008 from 10.5 to 11.8 percent, indicating that tougher economic times could be coming. A downturn could either deepen the conflict or prod the two sides into seeking a workable compromise.

"There are two ways this could turn out. Either there will be a big fight, one of the two will win, and we will return to having a single administrative center. Or, they will find a compromise that says: Vladimir Vladimirovich [Putin] this is your area; this is Dmitry Anatolyevich's [Medvedev]," Oreshkin says. "This would be a unique experience for Russia."

RFE/RL's Russian Service contributed to this report