Russia's Medvedev Gets Down to Business

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That in turn reflects the continued pervasiveness of corruption and bureaucratic harassment. Medvedev, a former law professor, has already singled out the theme of legality as his No.1 priority. He promises to fight something he calls "legal nihilism." That's a reference to widespread disrespect for the law, including corruption of the courts and the police, which the new President describes as the biggest barrier to Russia's economic development.

In one of his first policy initiatives, Medvedev has proposed a radical measure to help small business, backing legislation that will make it illegal for government officials, such as fire and safety inspectors or the police, to enter business premises without a court order. The idea is to stop them from extorting bribes. Business warmly welcomes the plan. But under Putin, too, various attempts were made to rein in inspectors and clamp down on petty corruption. Like hardy weeds, corrupt officials always seem to find ways around them.

Property Rights

Nor is it just small business complaining. At a meeting in April, Medvedev also heard a long list of grievances from big business leaders, who urged him to do more to ensure that property rights were protected. The President-elect gave reassuring replies. Yet so far, at least, Medvedev's election hasn't eased the state's legal pressure on business. In March, TNK-BP, an Anglo-Russian oil company 50%-owned by BP (BP), was raided by police (BusinessWeek.com, 3/20/08), and one of its managers was subsequently arrested for spying.

Another recent controversy concerns Moscow's Domodedevo Airport, widely acknowledged as Russia's most modern and efficient. Company owners have complained that state officials are trying to renationalize their property without compensation. Such cases suggest that, at the outset of Medvedev's Presidency, conflicts between the state and business are, if anything, getting worse. Many analysts believe that rival governmental clans, fearful of losing out in the political transition, are now battling to stake out claims to property and power. Medvedev's most pressing problem may be reining them in.

It's still far from clear whether the new President has what it takes to establish his authority over warring barons. For now at least, he is living in the shadow of his popular predecessor, Putin, whose economic record will be hard to beat. What's more, Putin will continue to wield huge political influence as Russia's new Prime Minister, and leader of the largest political party, sowing confusion about where power really lies.

Ironically, the same factors that have underpinned Medvedev's rise to power also make it difficult for him to emerge as a strong and independent leader. After the remarkable boom times of the Putin years, people will be quick to blame Medvedev if anything now goes wrong, yet continue to credit his predecessor if they don't. Perhaps Medvedev isn't so lucky after all.

Bush is BusinessWeek's Moscow bureau chief .