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Russian President Says Kremlin Must Ease Grip On Power

Dmitry Medvedev

Dmitry Medvedev

PETROPAVLOVSK-KAMCHATSKY, Russia (Reuters) -- Russia cannot function if all power is concentrated in the Kremlin, President Dmitry Medvedev has said, signaling a departure from the hands-on style of predecessor Vladimir Putin.

"It is too bad when all decisions, including those on operational issues, are made by the president," he said in the capital of Russia's easternmost Kamchatka Oblast. "That means we do not have a system of management."

"We simply cannot work. We need to act faster, make...reasonable management decisions," he told a meeting of local officials attended by several top ministers. "Otherwise, we shall simply feel ashamed about the missed opportunities."

Russia's stock markets this month suffered their worst losses in a decade. The fall was caused mainly by global market turmoil but it also focused attention on abrupt Kremlin intervention in the economy that has damaged investor confidence.

Medvedev and Putin, now prime minister, have dismissed investors' fears that the crisis and political problems with the West caused by Russia's invasion of Georgia could encourage the Kremlin to impose tougher state control over the economy.

Medvedev's remarks appeared to indicate he was keen to go further and change the way the country is managed -- a move viewed by the business community as a condition for creating a sustainable economy with an investor-friendly climate.

Kremlin Power

In eight years as president from 2000, Putin presided over the longest economic boom in a generation, fuelled by high oil prices. He also brought political stability after the turmoil that followed the collapse of the Soviet Union.

His rule was characterized by a concentration of power in the Kremlin, drawing criticism from the West. Major decisions were made by the president while the government and parliament found their role drastically curtailed.

Putin has argued this approach -- known in Russian as "manual control" -- was essential to restoring order in the vast and sometimes unruly country.

But officials in Medvedev's entourage say if Russia does not switch to a more systematic approach to governance, based on clear rules and institutions, economic growth could start to splutter and Russia will not be globally competitive.

The Kremlin has set itself the target of making Russia one of the world's leading economies by 2020.

Medvedev's comments did not appear to indicate he was planning to cede presidential powers to Putin.

Putin has also suggested Russia needs a new style of rule and analysts saw his endorsement of Medvedev, a 43-year-old former corporate lawyer, as his successor as a sign he favored a more consensual approach.

Medvedev, who took office in May, has pledged to stay true to the broad thrust of his predecessor's policies.

But Medvedev has also promised to diversify the economy and ensure the rule of law and democracy.

Medvedev has revealed plans to fight endemic corruption, reduce red tape, and reform the courts to create a more predictable regulatory environment for business.

The lack of clarity over rules was underlined in July when Putin launched a blistering attack on the coal-mining company Mechel over its pricing policy.

The comments wiped $5 billion off the company's share price, though it later recouped some of the losses.