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After Putin, Who?


Who will be the next President of Russia? Will he be pro-market or pro-state? A democrat or an authoritarian? And will his election be smooth or scandalous? Although the next presidential election isn't until March, 2008, when Vladimir V. Putin has promised to retire, there's only one major topic of political discussion in Russia these days. And there's one question above all others that interests Russians: Who will be picked as Putin's chosen successor?

With the backing of the popular President and the whole state machine -- including state-controlled media -- Putin's handpicked candidate ought to be a shoo-in. That's why, when Putin announced a surprise reshuffle of his government on Nov. 14, it drove Kremlinologists into a frenzy. Putin's move lends weight to the theory that he is preparing to groom a successor to ensure continuity of the present ruling group after 2008. "These appointments should be seen in the context of the '2008 problem' and the future presidential election," says Alexei Makarkin, an analyst at Russia's Center for Political Technologies.

What's more, Putin has also provided the first, albeit tentative, clues as to who his chosen successor might be. The government shake-up has put the spotlight on two key individuals, Dmitry A. Medvedev, formerly Putin's chief of staff, and Sergei B. Ivanov, Russia's Minister of Defense. Both were already rumored as possible candidates for the top job when Putin retires. The most significant shift is that Medvedev now moves into the government, with the title of First Deputy Prime Minister. As a result, Russia's most senior bureaucrat has now been given a high-profile job in the public eye. That could well be aimed at boosting his future presidential chances. "Medvedev has been given a chance to prove that he can be a public politician as well as an administrator," says Christopher Granville, chief strategist at Moscow investment bank United Financial Group.

If it's true that Medvedev is being groomed for the presidency, it will help reassure investors in Russia, who have been concerned by signs of greater state interventionism and economic nationalism. A former law professor from Leningrad (now St. Petersburg) University, Medvedev is seen as the leader of the "liberal" faction in the Kremlin that supports a market-based economy and good relations with the West. That group is at loggerheads with a faction from the security services known as the siloviki (from the Russian word for force), which favors more nationalist and statist policies. Investors also hope that Putin's governmental makeover could kick-start stalled economic reforms.

"For the investment case, we definitely take it as a positive step," says Chris Weafer, head of research at Russia's Alfa-Bank. Russia's RTS stock exchange index rose 2% on the day of Putin's announcement.

Russia being Russia, though, there are plenty of catches. Known as a mild-mannered administrator, Medvedev may not have the mettle to be a future President. And at the same time as moving Medvedev into a senior government job, Putin has boosted a prominent siloviki, ex-KGB officer Ivanov, to the post of Deputy Prime Minister. That job is junior to Medvedev, but Ivanov has long been tipped as a possible successor because he has known Putin since the 1970s, when they met in the KGB.

DOLING OUT GOODIES

Ivanov's elevation may not be a big cause for alarm, however. True, as Minister of Defense, Ivanov was naturally hawkish on issues such as the Chechen war. From time to time he has voiced opinions expected of a conservative -- for instance, recommending that the Russian town of Volgograd be renamed Stalingrad. But, in contrast to some of the ex-KGB hawks in the Kremlin, Ivanov is regarded as one of the more moderate and pragmatic of the siloviki. He has impressed Western interlocutors with his diplomatic skills and good English. "He's not one of those old-fashioned Communist generals who don't understand the modern world. He's more open, less hard-line, and an interesting partner for the West," says Alexander Rahr, a Russia expert at the German Council on Foreign Relations in Berlin.

In any case, Medvedev now looks like the better-placed candidate. Analysts believe it's significant that he has been made responsible for implementing a raft of new public spending programs. At a cost of $18 billion over the next three years, they are widely seen as the Kremlin's bid to buy public support before the next election. The choice of Medvedev for that politically crucial post has fed speculation that sooner or later he will be given the job of Prime Minister, a natural launchpad for a presidential bid. Russia's present Prime Minister, Mikhail Fradkov, is seen as a minor figure whom Putin is likely to replace before 2008.

Still, even if Medvedev were one day to get the top job, it's far from clear what his reformist credentials might mean in practice. As the head of Putin's personal staff, Medvedev has loyally backed the administration's increasingly statist policies, including some -- notably the destruction of the private oil company Yukos -- that have been unpopular with investors in Russia.

The surge in public spending that Medvedev will oversee has also concerned market-oriented economists, who fear rising inflation. "Medvedev isn't a liberal or a conservative. He is a pragmatic. But he's a modern person who has experience of working in a market economy," says Makarkin. Like Putin, Medvedev is concerned with issues of Russia's statehood and political stability, which tempers his pro-market views.

To add to the confusion, Medvedev and Ivanov are by no means the only possible candidates. Putin has appointed a relative unknown to replace Medvedev as head of the presidential staff. That catapults Sergei Sobyanin, formerly governor of the oil-rich Tyumen region, into the list of rumored presidential contenders. A competent administrator, Sobyanin is not linked to any existing Kremlin faction. But he is known to be a Putin loyalist and supporter of measures to centralize power.

Whomever Putin eventually anoints as successor, Russia's model of managed succession still involves risks. The Kremlin no doubt believes that, with the state machinery behind him, the Kremlin's candidate can be sold to the Russian public, just as Putin himself was plucked from obscurity before his landslide election victory in 2000. Yet it's far from clear if Medvedev or any other Kremlin-backed candidate has what it takes to win public confidence. "Medvedev has got it all to prove," says Granville. If Plan A fails, who knows what other surprises Russia's secretive President may yet have hiding up his sleeve?

By Jason Bush


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