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    Medvedev or Putin: Who Holds Real Power in Russia?

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    Anya Ardayeva

    It has been more than four months since Dmitri Medvedev was inaugurated as Russia's new president, yet questions persist over who really wields power in Russia. Even before Mr. Medvedev's predecessor, Vladimir Putin, left office, he made clear he wanted to remain in power, and he was appointed Prime Minister by President Medvedev. In this post, some observers say Mr. Putin's leadership role in the country's political and economic decision-making has not changed since the time he was president. Anya Ardayeva reports from Moscow.

    On TV screens across the country, it looks like Russia has a new, young and energetic president - meeting world leaders, making important statements.

    His predecessor and now Prime Minister, Vladimir Putin, is on TV just as often. And political analysts say it is hard to tell the difference between the messages that the two men are delivering to the nation and the world.  

    "From Medvedev's policy that we saw inside of the country as well as from his foreign policy, one thing is clear: this is a total continuation of policies that were set by his predecessor, Vladimir Putin," said Evgeni Volk, an analyst at the Moscow office of the Heritage Foundation, a think-tank based in Washington. "Medvedev continues the course based on state regulation, on the state's strong role in the economic development. And in Russia's foreign policy, we see the same efforts to establish Russia as the new superpower of the same kind as the Soviet Union used to be," Volk added.

    That superpower ambition became apparent in August during Russia's successful military campaign against Georgian forces in Georgia's separatist regions of Abkhazia and South Ossetia. Shortly after expelling the Georgian forces, Moscow formally recognized independence of the breakaway regions - and announced its troops are there to stay.

    Russia's goal is to expand its sphere of influence, says Pavel Felghengauer, an independent military analyst. "Our strategic goal was creating a big buffer zone, a sphere of influence that involves all the former Soviet Union: Ukraine, Belarus, trans-Caucasia, former Central Asia. That's where we want to dominate and we want Western influence out and no NATO membership absolutely for these nations. So it's not just a small annexation of land, which it sort of boiled down to, but the Russian strategic intent is very different and much bigger," Felghengauer said.

    Moscow's relations with the United States deteriorated sharply following the campaign. Russia denounced the Bush administration for training Georgian troops, and accused Washington of encouraging Georgia's attack on South Ossetia. For her part, US Secretary of State Condoleeza Rice accused Russia of becoming increasingly authoritarian at home and aggressive abroad.

    Underscoring the strained relations, Russia has announced it will send its warships to the Caribbean this November to participate in joint military exercises with Venezuela, which has been buying Russian weapons.

    And at home, President Medvedev has ordered a massive upgrade of the country's armed forces. Prime Minister Putin has announced a 27 percent hike in defense spending next year, to $53 billion.

    Analysts say while the West has a limited number of political tools to influence Russia's policies, the standoff with the West is likely to affect the Russian economy. In September and October, the Russian stock exchange fell sharply, resulting in a repeated shut down of trading. A combination of fears over foreign capital outflows, falling oil prices and the global financial crisis caused the stock market falls, and has led to a major loss of confidence in Russia among lenders.

    "Countries and international companies around the world will be taking a very hard look at Russia with regard to their risk calculations," Russian expert Rose Goetemueller said. Goetemueller is the head of the Carnegie Endowment's office in Moscow. "And Russia needs a lot of investments in order to repair its aging infrastructure, in order to build up its own international companies in order to modernize economically," Goetemueller added.

    The Russian government has poured in billions of dollars into the banking system in an effort to ease liquidity concerns.

    Yet Russia's massive foreign exchange reserves could help it weather the storm.

    David Azerkoff is the head of Equity Derivatives Research at Renaissance Capital in Moscow.
    "Russia has over $500 billion in foreign exchange reserves that it could convert to rubles and use it to stabilize the situation both in the currency market and the money markets," Azerkoff said. "And I think that it has the cushion many other countries don't have."

    While constitutionally it is the president, not the prime minister, who is in charge of Russia, the Russian-Georgian war underscored who holds the real balance of power in the Kremlin. During the first days of the war, it was Vladimir Putin who flew down to South Ossetia and met with the military - just as he did during Russia's military campaign in Chechnya when he held the post of president.

     

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