MOSCOW -- Russian Finance Minister Aleksei Kudrin has resigned from his post just hours after a heated public exchange with Russian President Dmitry Medvedev, who ordered him to do so.
Kudrin, who was also deputy prime minister, confirmed to Russian news agencies that he had stepped down. Kremlin spokesperson Natalia Timakova said Medvedev had accepted his resignation.
The news capped a dramatic day in the upper echelons of Russian power that saw Medvedev demanding Kudrin's resignation for saying publicly that he could not serve in any future cabinet headed by Medvedev.
At a meeting of senior officials
in Dimitrovgrad on September 26, Medvedev told Kudrin that "nobody has revoked discipline and subordination."
He said that if the finance minister disagreed with his policies, he had "only one option, and you know it: to resign.”
Medvedev added that, "anyone who doubts the policy of the president or the government, anyone who has other life plans, is free to submit their resignation to me … I'm going to be making all the necessary decisions up until May 7 next year."
A surprisingly defiant Kudrin said that he would consult with Prime Minister Vladimir Putin before taking any action, but Medvedev ordered Kudrin to make his decision by the end of the day.
"You know what?" he told Kudrin. "You can consult with whomever you want -- with the prime minister -- but as long as I am the president, I make such decisions myself."
Putin made no public comment about the row between Medvedev and Kudrin, who is said to be a leading member of his inner circle. But for the resignation to reach Medvedev's desk, he would have had to sign off on it.
Medvedev's clash with Kudrin erupted after the finance minister told journalists on September 24 that he would not continue serving in a new government headed by Medvedev if Putin wins the 2012 presidential election and returns to the Kremlin.
Earlier that day, Medvedev had endorsed Putin as the ruling United Russia party candidate in that election, and Putin suggested that he would name Medvedev as his prime minister.
"I do not see myself in the new government, and it is not just that I have not been offered the job," Kudrin told journalists. He added that "differences of opinion" would prevent him from joining such a government even if an offer were forthcoming.
Kudrin, the longest-serving finance minister in the Group of Eight leading industrialized countries, has earned respect in the West as a principled, fiscal conservative who was particularly successful in guiding the country's economy during the boom years of Putin's two terms as president, from 2000 to 2008.
His immediate and public refusal to serve in a Medvedev cabinet comes amid wide speculation by political observers that Kudrin was expected to be tapped to head the government if Putin decided to run for president again.
Differences Over Military Spending
Moscow-based analyst Vladimir Pribylovsky told RFE/RL's Russian Service that many relative liberals in the Russian political elite had placed their hopes in Kudrin in recent months as it seemed Medvedev's star might be fading.
"Over the past year, the clans and groups that had been pushing for a continuation of Medvedev's presidency grew weaker and part of them reoriented themselves toward Kudrin and the idea that the main organizer of possible reforms and changes and the easing out of conservative groups would be Kudrin," he said.
"And the idea looked like this: Putin as president, Kudrin as prime minister, and Medvedev would be out, say, as head of the Constitutional Court. That version is still possible, but only in a much longer-term perspective."
Many in Russua were surprised at the Putin-Medvedev announcements even though both men had apparently made the decision together "several years ago."
Among the policy issues that are believed to divide Kudrin and Medvedev is the president's decision to boost military spending by $65 billion over the next three years.
Kudrin, by contrast, recently warned that with global energy prices expected to decline in the coming years, Russia would likely have to raise taxes and tighten its belt after the current election season. Kudrin also criticized the government's plan to reduce business insurance contributions and raise pensions.
Kudrin Responsible For 'More Than Half' Of Russian Economic Success
Economist Yevgeny Yasin credits Kudrin with much of Russia's economic achievement in the Putin-Medvedev years.
"I think that more than half of the success that we have had in the last 10 years is due to Kudrin," he said. "His stubbornness, his lack of posturing or a desire to win popularity, his ability to make responsible financial decisions always won high marks from me."
"But now events have developed like this. Maybe he wants to prevent some turn of events or maybe it is just emotion and they will talk to him, calm him down, give him a medal and he will keep working. Perhaps in a different role."
Many observers agree with Yasin that Kudrin's announcement -- given his close relations with Putin -- does not mean that he is leaving the ruling elite.
Former Prime Minister Mikhail Kasyanov, who is now a leader of the Party of People's Freedom opposition movement (known by its Russian acronym PARNAC), believes it is still unclear whether Kudrin really wants to leave the government or whether he is pushing Putin for more power.
Unwavering Personal Loyalty To Putin
"He has already served as finance minister for 11 years; he is tired of it," he said. "He wanted either to leave or to get a new job, a promotion. And naturally, he wants to be prime minister."
"I think that that would not be a bad option for Putin...With his announcement that he does not want to work for Medvedev, Kudrin is expanding and laying out for Putin his terms for further work.
"The main thing is that he won't serve under Medvedev, who has no authority for him. Although another possibility, I think, is that he could move to the side and head the Central Bank, which is formally a relatively independent organization."
Other observers argue that the case for Kudrin to be made prime minister is so strong -- including his long and unwavering personal loyalty to Putin -- that such a move still cannot be ruled out. Kasyanov told RFE/RL that he certainly does not expect to see Kudrin in the ranks of the political opposition.
Pribylovsky is also skeptical that Medvedev will actually be named premier. "It really isn't obvious that Medvedev will become prime minister, and if he does, for how long?" he said. "Everything is in the hands of God, that is, the hands of Vladimir Putin."
Kudrin's reaction to the Putin-Medvedev announcements is one indication that even leading figures in the country's ruling elite were not aware of this decision, which Putin said he and Medvedev had made together "several years ago."
Presidential economics adviser Arkady Dvorkovich posted on his Twitter account that the developments were "no cause for joy."
Written by RFE/RL correspondents Robert Coalson and Richard Solash based on reporting by RFE/RL's Russian Service