Putin tightens grip with new cabinet


Russian president Vladimir Putin unveiled a government dominated by loyalists today, tightening his grip on the economy and national security after protests, and limiting prime minister Dmitry Medvedev's ability to pursue market reforms.

Mr Putin (59) opted for continuity by retaining his ally Igor Shuvalov as first deputy prime minister in charge of economic policy, while Igor Sechin will remain his energy chief in a role outside the government.

The former KGB spy consolidated his hold over the "power" ministries by naming Moscow police chief Vladimir Kolokoltsev as interior minister, in a sign of trust in a man who has at times used heavy force against protesters demanding Mr Putin's resignation.

Mr Putin also signalled continuity on foreign policy and military affairs by leaving foreign minister Sergei Lavrov and defence minister Anatoly Serdyukov in place."Work will be difficult, given the concrete situation in the world economy," Mr Putin told a meeting in the Kremlin, where he sat at the head of the cabinet table with Mr Medvedev to his right.

An important test of the government will be the speed at which it implements a privatisation programme and a drive to reduce the dependence of the $1.7 trillion economy on oil and gas exports.

Mr Putin has also faced the biggest protests since he was first elected president in 2000, caused initially by allegations of electoral fraud but fuelled by anger and frustration that his 12-year domination of Russia has been extended by six years.

The opposition, representing a civil society that is finally emerging more than two decades after the collapse of the Soviet Union, says its views are being ignored and Putin is stifling economic and political reforms in the world's largest country.

His appointment of Mr Kolokoltsev to the interior ministry sent a clear message that he does not intend to bow to the protesters' demands for more political choice and the end of a political system imposing strong central control over a country sprawling from the Baltic Sea to the Pacific Ocean.

"This is a man who breaks up peaceful meetings with the help of cudgels," opposition leader Boris Nemtsov told Reuters. "This all fits into the logic of modern Putinism."

Mr Medvedev (46) named premier after Mr Putin returned to the Kremlin on May 7, has said he will push pro-growth policies and the privatisation drive. But, even though the partners in Russia's ruling 'tandem' announced they had agreed to switch jobs last September, the long and secretive process of forming a government raised concerns that it would be riven by factional conflict.

The line-up brought in a couple of new faces from the team of young market liberals that served in the Kremlin during Medvedev's four-year term as president, during which he promised far-reaching reforms but carried out few of them.

One, Arkady Dvorkovich, was named among six deputy premiers and was expected to have responsibility for energy and industry policy - areas over which he had little influence while serving as Mr Medvedev's economic adviser.The energy minister's job went to Alexander Novak, a former deputy finance minister, indicating that Mr Sechin would maintain control over Russia's strategic oil and gas sector despite leaving the government.

Another Medvedev aide, former power industry boss Mikhail Abyzov, missed out on an energy role and was named last on Mr Putin's list as coordinator of an "open government" forum backed by Mr Medvedev that has until now produced talk but little action.

Mr Putin, who stepped aside as president in 2008 because of constitutional limits, extended his influence over economic policy - traditionally the preserve of the prime minister - by ensuring that the finance and economy portfolios were taken by placemen who support his credo of state-led development.

Career bureaucrat Anton Siluanov stays as finance minister, while a pro-Putin economist, Andrei Belousov, was promoted to economy minister.

"This is not a breakthrough government," said former finance minister Alexei Kudrin, a fiscal hawk ousted from government last year in a power struggle with Mr Medvedev. He is still close to Mr Putin and has been named as a possible future prime minister.

"I doubt greatly that it will be able to rise to the challenges facing Russia."Analysts said the cabinet would probably lack independence. They looked to the Kremlin team being formed by Putin for clues on the direction of policy during his six-year term, after which he could seek re-election and try to rule until 2024.

"This cabinet will be one that is not fully independent from the Kremlin," said Tom Mundy, chief strategist at Moscow brokerage Otkritie.

"The market might may be slightly disappointed not to see more high-profile liberal names."Although latest figures show Russia's economy grew at a 4.9 per cent rate in the first quarter, that has been pumped up by lavish pre-election spending that has driven up the oil price at which Russia's budget will balance in the future.