beyondbrics

President Dmitry Medvedev has grumbled more than once about ministers holding top jobs at state-controlled companies – and to little effect. But this time it seems to be for real.

After Medvedev late on Wednesday ordered the removal of ministers from state enterprise boards by mid-year, Arkady Dvorkovich, his economic aide, followed up on Thursday and named names, starting with Igor Sechin, deputy prime minister, and Alexei Kudrin, finance minister. This is serious – and Moscow is rife with speculation about what it all means.

The simplest explanation is that Medvedev, with prime minister Vladimir Putin’s backing, is addressing a key foreign investors’ concern - the lack of transparency of decision-making. Ending ministerial double- and triple-hatting won’t turn Russia into a beacon of light. But it would tackle a very public example of a deep-rooted problem. At the very least, it would show the Kremlin is listening.

Of course, officials can find ways of controlling state companies without sitting on their boards. Trusties can be despatched to do the job, as Putin’s associate Alexei Miller (a former deputy energy minister) does in chairing Gazprom.

But this week’s announcements are more than a gesture. Some powerful people are taking a public hit to their egos. Dvorkovich said Sechin would have to resign as chairman of Rosneft, Kudrin as chairman of bank VTB and trasport minister Igor Levitin as chairman of airline Aeroflot.

Sechin is the most significant: the deputy prime minister, a former secret service man (like Putin), is seen as the prime minister’s most influential ally. A blow to him will be seen in some quarters as a blow against Putin. It will stoke speculation that Medvedev is throwing his weight around in advance of the March 2012 presidential election, bolstering his claims to run again for office instead of stepping aside for Putin. (Putin stood down in 2008 because, after two terms, he wasn’t eligible for a third but, after his break, he can now run again.)

Moreover, Medvedev’s orders come at an awkward time at Rosneft, where Sechin is backing $16 billion deal with Britain’s BP, which has been blocked by BP’s Russian partners in its existing venture, TNK-BP.

The removal of the controversial deal’s strongest backer would do nothing to help secure its implementation – and Rosneft shares fell on Thursday by 1.8 per cent.

But in the absence of further evidence it would be wrong to leap to the conclusion that Medvedev is trying to score some sort of victory over Putin in the election race. It is unlikely that he has gone for such a target without Putin’s tacit approval. After all, Putin has also supported the campaign for attracting more foreign investment into Russia and addressing concerns about unclear decision-making and the overlap of officials’ political, business and personal interests.

And Putin may have reasons for clipping Sechin’s wings. The deputy prime minister has hogged a lot of the limelight recently, establishing himself not only as head of Rosneft but also as chief of the state’s natural resources policy. Putin has shown in the past that he doesn’t like overmighty subordinates as Mikhail Kasyanov, ex-prime minister ousted in 2004, has found to his cost.

Perhaps too, Sechin has over-reached himself in the BP deal. Maybe, he can’t deliver in the face of opposition from the TNK-BP oligarch shareholders headed by Mikhail Fridman, a master of Kremlin politics. Putin is embarrassed because he publicly backed the plan and posed for pictures with BP boss Bob Dudley. And Putin doesn’t take kindly to being embarrassed.

But however intriguing the the tensions within the Putin elite, the ties that bind it together are stronger than the forces driving it apart. Even if it turns out that Medvedev is indeed trying to steal a march on Putin and other possible candidates in the presidential race, those involved will want to make sure that the clashes inside the elite do not lead to any fundamental breaks. Individuals can be ditched, as Kasyanov was, but the bulk of the team sticks together.