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Russian President Dmitry Medvedev (right) and Deputy Prime Minister Igor Sechin.
Russian President Dmitry Medvedev (right) and Deputy Prime Minister Igor Sechin.
It appears that President Dmitry Medvedev was serious when he proposed on Wednesday that government officials be removed from the board of directors of state companies.

Medvedev made the proposal, that could potentially roll back one of the key mechanisms of state's stranglehold over the economy, at a meeting of a presidential commission on modernizing the economy in Magnitogorsk:

There are three things we need to do to stop state companies from exerting too great an influence on the investment climate. First, we should finally set and make public a timetable for privatizing large government shareholdings over the next three years. Second, we must end the practice of having government ministers responsible for regulation in particular sectors sitting on the boards of directors of companies operating in a competitive environment. Third, we are to introduce the procedure of having major state companies make advance publication of information on their planned purchases, including the estimated price of the respective lots, and information on the contracts already made.

Following up on Medvedev's speech, presidential aide Arkady Dvorkovich today named names.

According to a report in "Vedomosti," the following officials could be told to give up their corporate posts:

  • Finance Minister Aleksei Kudrin, who chairs the supervisory committee of the bank VTB;

  • Deputy Prime Minister Igor Sechin, chairman of oil giant Rosneft's board of directors;

  • Transportation Minister Igor Levitin, an advisor to Aeroflot;

  • First Deputy Prime Minister Viktor Zubkov, chairman of the board of directors at Rosselkhozbank

Dvorkovich said the reform will only affect those who work in the competitive sector and are not monopolies. reported that "the Kremlin hopes that the decision to exclude from the boards of directors of large companies government officials will be taken at the next shareholders' meetings."

If Medvedev's plan is actually carried out it would roll back one of the key components of Putinism -- the establishment of a system interlocking directorates between government and business that allowed the state (in the form of officials close to Putin) to hold the economy in a vice grip.

It would also undercut Sechin -- the informal leader of the siloviki clan of security service veterans who have dominated Russian politics for the past decade -- who has emerged as one of Medvedev's most powerful nemeses.

Coming on the heels of Medvedev's high-profile rebuttal of Putin over Russian policy in the Libya crisis, the proposed reforms are also being interpreted as another battle within the ruling tandem as elite gears up for the 2011-12 election season.

But while I tended to see the spat over Libya as a case of real disagreement between Medvedev and Putin, I think something else is going on here. And like with Medvedev's campaign against Russia's mammoth state corporations in the summer of 2009, I think Putin is probably on board -- at least for the time being.

Putin is no fool, far from it, and he clearly sees the need to make the economy less top heavy. Despite rising oil prices, investors, who tend to see the game as largely rigged, are not betting on Russia. In the aftermath of Medvedev's announcement, however, the "New York Times" reported that stocks in the pipeline company Transneft rose 3.5 percent, the largest increase in months.

The fly in the ointment, I believe, will be Sechin and his siloviki allies, who will lose a considerable degree of power should Medvedev's plan go forward.

Is Putin prepared to let this happen? So far, his silence on the matter has been deafening.

-- Brian Whitmore

About This Blog

The Power Vertical
The Power Vertical

The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It offers Brian's personal take on emerging and developing trends in Russian politics, shining a spotlight on the high-stakes power struggles, machinations, and clashing interests that shape Kremlin policy today. Check out The Power Vertical Facebook page or


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