GRIGORY DUKOR /REUTERS

PRESIDENT DMITRY MEDVEDEV (right) and Prime Minister Vladimir Putin at the Victory Day military parade, celebrating victory over Nazi Germany, at Red Square in Moscow on May 9.

ON May 7, Dmitry Medvedev, 42, was sworn in as Russia’s new President. Vladimir Putin, who served two straight four-year terms – the maximum allowed under the Russian Constitution – stepped down and a day later was endorsed by the parliament as Prime Minister. It is only the second time that power has changed hands in Russia after the collapse of communism, and it set an important precedent for the future: for the first time the transfer of power in the Kremlin proceeded strictly in accordance with the Constitution. (In 1999, Boris Yeltsin resigned six months ahead of his term and made Putin, his chosen successor, the acting President; it is widely believed that Yeltsin would not have relinquished power but for his failing health.)

Power succession in Russia has seldom been so smooth and easy. In Soviet times the Communist Party was usually able to guarantee that the process went off without major upheavals. However, when the Communist Party was sidelined during the transition to democracy in the late 1980s, bitter rivalries inside the Russian elite – between Soviet President Mikhail Gorbachev and Yeltsin, bent on getting the Kremlin throne for himself – eventually broke up the country. Putin, who called the disintegration of the Soviet Union “the greatest catastrophe of the 20th century”, took every precaution to ensure that his departure would not split the power elite. He promoted as his successor Medvedev, his close ally and right-hand man for the past 17 years, who has vowed to continue Putin’s policies. Putin’s huge popularity helped Medvedev win the March presidential election by a landslide.

But as Putin prepared to bow out, the power struggle in the Kremlin intensified. Several senior government and security officials were arrested as rival Kremlin clans jostled for position ahead of the change of guard. This situation apparently prompted Putin to stay on as Prime Minister even though earlier he had ruled out the option. The West was quick to condemn Putin’s decision as a cunning manoeuvre to remain in power. United States presidential candidate John McCain accused Putin of staging a “puppet show” and “perpetuating himself in power in Russia virtually indefinitely”.

If Putin wanted to retain his grip on power, he could have done so by amending the Constitution to allow him to seek a third term. By the end of Putin’s second term, opinion polls showed that over 80 per cent of Russians approved of his policies and two-thirds wanted him to stay on for a third term. When Putin took over from Yeltsin, Russia was teetering on the brink of chaos and was torn apart by Islamist rebels. It was described in the West as “the sick child of Europe”, with little chance of recovery. Under Putin, Russia has risen from the ashes like a phoenix. He has reined in Chechen separatists and eliminated the terrorist threat to the nation.

Today, Russia is the eighth largest economy in the world in terms of purchasing power parity, according to the World Bank. Last year the Russian economy grew by more than 8 per cent, and foreign investment surged by a factor of 2.5 to touch $100 billion – a record growth for any of the world’s 15 leading national economies. Even as the International Monetary Fund scaled down this year’s forecast for the global economy, the Russian government has revised its estimates upwards for domestic growth. A country almost bankrupt 10 years ago has amassed over $500 billion in foreign exchange reserves, the world’s third biggest after China and Japan. Average wages have soared from $80 a month in 2000 to over $640 now.

While high energy prices have spurred economic growth in Russia, political stability and credible economic policies have been the decisive factors behind the country’s transformation from a post-Soviet wasteland to a thriving market economy and an “energy superpower”. Russia’s transformation in the foreign and security policy spheres has been just as spectacular. After years of humiliation and retreat, Russia has regained its great-power status and global role. Putin has put Russia on an equal footing with the West, and Russia’s international standing is probably higher today than during the best of Soviet times.

By any measure Putin is the best leader Russia has had in the last 100 years. Some Russian pundits have even compared him to Franklin D. Roosevelt, who similarly restored the belief of the American nation in its future. Riding a high wave of popular support, Roosevelt broke with tradition to stand for a third term in office. Many supporters of Putin called on him to stay on as President, but he firmly refused.

AFP POOL

MEDVEDEV AND WIFE Svetlana at a service honouring him at the Assumption Cathedral in Moscow on May 7 after the inauguration ceremony.

The challenges lying ahead for the Russian economy appear to be as daunting as the problems Putin tackled during his presidency. Summing up his eight years in power in a speech earlier this year, Putin said the coming years would be crucial in deciding whether Russia would be reduced to the role of a global supplier of primary resources or whether it would catch up with global leaders as a technological powerhouse. If Russia fails to diversify from its current heavy reliance on oil and gas, he said, “we will not be able to guarantee national security and normal development…”.

To avoid this catastrophic scenario by 2020, Russia must build a knowledge-based economy, overcome the acute demographic crisis, narrow the rich-poor gap and create a strong middle class that would account for the majority of the population. Putin called for a fourfold increase in labour efficiency over the next decade and a sweeping retooling of industry on the basis of new technologies. The ultimate goal, he said, was to transform Russia into “the most attractive country to live in”. This is a job not for a power-hungry politician but for a leader who does not want to leave his work half-finished. An overblown and corrupt bureaucracy is the main obstacle to these plans. Back in 2005, Putin said he had “no plans to hand over control of the country to an inefficient and corrupt bureaucracy”. Yet, the bureaucracy has never had it so good as after eight years of Putin’s presidency.

Apart from ensuring stability and continuity, the Putin-Medvedev tandem – described as a “dream team” – is likely to produce a synergy between Putin’s experience and grasp of problems and Medvedev’s dynamism, sharp intellect and liberal outlook. Medvedev’s campaign speeches suggest he will continue Putin’s pragmatic foreign policy, closely geared to the task of facilitating economic growth at home while firmly upholding Russia’s national interests in relations with other countries.

In domestic policy, Medvedev has vowed to push for de-monopolisation of the economy, ease the bureaucratic and corruption stranglehold on small and medium business, promote greater diversification in the economy away from extractive industries, and reduce the state’s involvement in big industries. In his inauguration speech, Medvedev promised to give top priority to promoting freedom and democracy and improving people’s well-being.

There is a lot speculation in Russia and abroad as to who will dominate this tie-up. Some analysts have even suggested that Putin may reduce Medvedev’s role to that of a figurehead like the British monarch. This is highly unlikely though. Under the Constitution, the President is vested with Tsar-like powers. He nominates the Prime Minister and key Ministers, manages security and law enforcement agencies, acts as the Supreme Commander-in-Chief and appoints all the top-level commanders in the armed forces. He is empowered to dismiss the Prime Minister and dissolve the parliament.

At the same time, Putin’s appointment as Prime Minister creates an entirely new configuration of power. Until now, there has been only one centre of supreme authority in Russia – the office of the President. All Prime Ministers – both under Yeltsin and Putin – have been technocrats rather than politicians. Putin will turn the post of Prime Minister into a new power centre. Besides, he will exercise control of the parliament as the leader of the ruling party.

In April, Putin was elected chairman of United Russia, the pro-Kremlin party that won more than two-thirds of the seats in the State Duma, the lower house of the parliament, in the December parliamentary poll. Through United Russia, Putin will also control the upper house, the Federation Council, made up of representatives of the regional governors and regional legislatures. Most governors are members of United Russia, and the ruling party also controls a majority of regional legislatures. Until now both the parliament and United Russia have been loyal instruments in the hands of the President. Now, control of the legislature passes to the Prime Minister.

For the first time in its history, Russia has two equally powerful centres of authority instead of one. Russia’s state emblem, a double-headed eagle, will acquire a new meaning – that of dual power.

The new power arrangement carries both big risks and great opportunities. There is the danger that a divided government may cause schisms in the bureaucracy and create political instability. Russia’s history hardly offers any example of successful power sharing. In 1993, the stand-off between Yeltsin and a powerful parliament, the Supreme Soviet, erupted into an armed conflict in the streets of Moscow that cost scores of lives.

However, if Medvedev and Putin work in close concert as they have done so far and promised to do in future, the benefits for Russia would be enormous. The two-headed Kremlin could speed up democratic political reforms. The President and the Prime Minister share jurisdiction over regional leaders, the central election commission, the central bank, and the Prosecutor General’s Office. The President will submit appointment nominations for these institutions, and the legislatures controlled by the Prime Minister will endorse the appointments.

Putin’s control of United Russia, which comprises mostly federal and regional government officials, may help recast it into an effective instrument for reining in the bureaucracy, a new centre of decision making and a pool of new cadres for the government. Medvedev, in turn, will promote the rise of political parties to challenge the dominance of United Russia. This would eventually facilitate the emergence of a democratic political system with a credible separation of powers, strong political parties, an influential parliament, an independent judiciary and a free media.•