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A woman walks by a panel made of cardboard boxes, displaying Russia�s President Dmitry Medvedev, left, and Prime Minister Vladimir Putin, at an innovation technologies exhibition in the city of Rostov-on-Don. (Stringer/Russia/REUTERS)
A woman walks by a panel made of cardboard boxes, displaying Russia�s President Dmitry Medvedev, left, and Prime Minister Vladimir Putin, at an innovation technologies exhibition in the city of Rostov-on-Don. (Stringer/Russia/REUTERS)

Dmitry Medvedev's battle with Kremlin Inc. Add to ...

Not much love, according to most Kremlin watchers, is lost between Russian President Dmitry Medvedev and Igor Sechin, deputy prime minister. On their few appearances together on television the disdain has been obvious, right down to bulging neck veins. Higher-ups at OAO Rosneft, the state oil company of which Mr. Sechin was chairman, have been known to refer to the President's circle derisively as "the boy scouts" behind their backs.

So it may have been especially satisfying for Mr. Medvedev to force Mr. Sechin out of his eyrie at Rosneft. On March 31 he issued a decree that cabinet ministers had to vacate board seats they occupied at state companies, eliminating untold privileges and conflicts of interest. A few weeks later, Mr. Sechin duly stepped down.

It was a rare victory for Mr. Medvedev. As the junior associate in the ruling "tandem" with Vladimir Putin - his more powerful, and more conservative, predecessor and mentor, who is currently Prime Minister - making good on his reform pledges has not always been easy.

Without liberalization and a scything of bureaucracy, state ownership and corruption, many economists hold little hope that the world's 10th-largest economy will realize its potential as one of the prime growth markets of the future. That would leave it to languish in its current state as a marginal supplier of raw materials for the developed world.

Where possible, Mr. Medvedev has been combining the struggle to reform an economy he accepts is inefficient and opaque with the fight to broaden his own political power. Over the past few months this has had some noteworthy successes, which both weaken rivals such as Mr. Sechin and tackle some of the more blatant problems with economic management.

In some ways the Medvedev strategy is reminiscent of the approach taken by Mikhail Gorbachev. The Soviet leader, faced with an entrenched Communist old guard in the 1980s, identified himself with inevitable economic and political reforms and used these as a tool to empower himself against the Politburo establishment. "Medvedev is using the slogan of modernization as a way to grab political decision-making over the economy away from the government," says a former Kremlin official.

Like Mr. Gorbachev, Mr. Medvedev is the relative liberal in a field of grey-suited apparatchiks who owe their jobs and their perks to Mr..Putin. The two Putin terms as president were an all but unmitigated economic success: he reasserted the role of the state in an economy left in turmoil by the fast-and-loose privatizations of the 1990s, while Russia's gross domestic product doubled during his eight years in office.

But the economic collapse of 2009, when GDP fell 8 per cent, has brought home to many that the Putin economic model, dubbed "Kremlin Inc.," is nearing exhaustion.

Mr. Medvedev is now struggling to make his mark as the next presidential election approaches in 2012. Although the President would clearly like a second term, it was only to fulfill a constitutional requirement that Mr. Putin stepped down a rung three years ago. He will once more be free to stand, seems to have right of first refusal and has not yet made his choice clear. But for Mr. Medvedev, positioning himself for re-election means having a stable of accomplishments to his name.

Their relationship is delicate - the two are old friends from St. Petersburg, where Mr. Medvedev was Mr. Putin's lawyer, and they appear to get along in public. But Mr. Medvedev's staff chafe at having their memos ignored by cabinet officials and at being shut out of the higher echelons of power.

Although the constitution gives the president a nearly omnipotent executive decision-making ability, since 2008 the punching weight of the Kremlin, where Mr. Medvedev sits, has fallen sharply vis-à-vis the White House, across the Moscow ring road. Now, all instructions from the Kremlin go via Mr. Putin's office and the stern ex-KGB colonel has made it clear that he has a veto over important decisions.

Mr. Medvedev has had to tread a fine line between carving himself a separate identity as a politician and not alienating the king maker who stands between him and a second presidential term. His criticism of Mr. Putin has been carefully structured and oblique - notably calling the economy he inherited (without naming names) "primitive" for its reliance on raw materials exports.

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