Wednesday, May 07, 2008

Medvedev steps up

Dmitry Medvedev became Russia's new president today, succeeding Vladimir Putin.

It is expected that Putin will continue to exercise his power as Russia's Prime Minister and the leader of the United Russia Party.

More on this from Bloomberg:

"Dmitry Medvedev was sworn in as Russia's third president, succeeding Vladimir Putin, with promises to fight corruption and inflation in partnership with a predecessor who may try to overshadow him."

"...The new president submitted Putin's nomination as prime minister to the State Duma hours after taking the oath of office. The lower house of parliament will consider the nomination tomorrow. Putin is also head of the United Russia party, which dominates parliament, possibly setting up a battle for leadership."

As President of Russia, Medvedev will have to address certain economic questions, including the rise of inflation.

"Medvedev, 42, a longtime Putin ally, assumes control of a country in its 10th straight year of economic growth. Russia, the world's biggest energy exporter, has benefited from record oil and gas prices, with the economy growing at an average 7 percent a year. That growth has pushed up wages, the ruble and inflation, making Russia less competitive. Medvedev has vowed to curb inflation, without presenting a program for doing so.

`Inflation Problem'

``Economically we have a big inflation problem,'' Michael Ganske, head of emerging market research at Commerzbank AG, said in a Bloomberg Television interview. ``This is the problem Medvedev needs to solve to broaden his political base and gain the support of the public.''

And as the Financial Times points out, Russian inflation might not only become a growing national problem, it may also provide the impetus for a power struggle between Medvedev and Putin.

"Others agree that, once in office, Mr Medvedev will realise the extent of his powers and succumb to temptations to bolster his position. Mr Putin, suggests Mr Makarkin, will also not want to undermine the office of president - not least since he wants to be able to one day return as head of state.

All of which opens the way for possible clashes. One early test could be spiralling inflation, which hit 14 per cent in April.

"Mr Medvedev will not want to take responsibility for skyrocketing inflation," says Mr Volk. "So who is to blame? The government - the prime minister? So this could become a source of tension and the outcome of this tension is unclear." "

We'll certainly be keeping an eye on these trends inside of Russia.

For more info on Dmitry Medvedev, please see this recent (March 24, 2008) interview with the Financial Times.