Some sources say that Igor Shuvalov and Igor Sechin will continue strengthening their positions until May 2012. They say Shuvalov may retain his post in government, while Sechin may move to the State Duma, although the latter is unlikely. Kudrin may become the head of a state bank.

       Dmitry Medvedev has lately stepped up his media activity, this time as the head of the United Russia election list. He is also trying to explain his decision not to run for re-election, saying that the political system needs stability. He is making contradictory statements, saying that the political system that developed in the last ten years must be overhauled without delay (as if he had not contributed to its creation) and that the new government will consist of entirely new people (he needs to assure his team, which has been disappointed by his decision not to run).

       Medvedev is apparently trying to hop onto United Russia’s election campaign at full speed, while at the same time preserving his dignity as president, even though most analysts agree that he is a lame duck.

       The situation is becoming more complicated every day. In the past, there was no internal conflict between the prime minister and the president, while now the preconditions for a conflict definitely exist.

       The tandem has chosen one of the scenarios we considered possible. Although we thought the nomination of a third candidate was the most likely scenario, it was also possible that Putin would be nominated for president if United Russia loses its constitutional majority (such a possibility still exists). This scenario had a 10/90 probability compared to the third-candidate scenario, even though it is still possible.

       According to a source in the prime minister’s team, the decisions taken at the United Russia convention launched an operation aimed at resolving the so-called problem of 2012. The early announcement of Putin’s nomination for presidency was most likely initiated by Putin himself, possibly because he does not fully trust Medvedev. The president’s team was too actively preparing for a “coup” which has convinced the prime minister that he must act resolutely and without delay.

       So, the project to undermine Medvedev’s influence and discredit him in the eyes of the liberal community has started long before December 4. However, he thinks that he can benefit even in this situation.

       Medvedev will most likely pledge his loyalty in return for major privileges for some members of his team in the financial sphere, such as stakes in Gazprom, Rosneft, Transneft and several other companies. However, they will more likely be offered a part in the upcoming privatization. This would prevent a conflict between groups.

       Medvedev may go for broke, particularly if he wins the support of high-ranking United Russia members. In future, if Putin tries to promote the Popular Front to the detriment of United Russia (according to rumor, he could be nominated by the Popular Front or even run as an independent, but he will be running as an independent in either case, because the Popular Front has not been registered as a party or public association), United Russia will rely on Medvedev.

       Medvedev’s attempts to explain the dramatic change in his image (swapping places with Putin, agreeing to head the United Russia list, etc.) will further complicate his relations with the electorate and possibly also with his team. On the other hand, members of his team have been offered a carrot: posts in the new government after the presidential election.

       Medvedev must formulate United Russia’s election strategy and outline his role in it without delay, or the party will lose the parliamentary election, which may threaten his appointment as prime minister.

       Medvedev has somehow joined the ruling party’s election campaign while simultaneously criticizing it. He apparently does not want the public to associate him with United Russia, which has been instructed to coordinate statements regarding the president that the party or its members may make with the Kremlin. At the same time, Medvedev has started talking about “our party” and even said that he is “United Russia through and through.”

       It is unclear what the governors will do in this situation. After all, they are the ones responsible for the use of administrative resources, and therefore they can influence United Russia’s election results in their provinces.

       Observers have pointed to changes in Putin’s image: he has become “softer” and more liberal. Experts have also concluded that Medvedev is an imitator: first he imitated Putin and now you can feel the influence of Barack Obama.

       This is the basis on which Medvedev is accused of lacking independence, which is why voters don’t trust him. They may wish to see an alternative to Putin, but there are no worthy challengers.

       Sources say that Putin is cut off from reality and no longer takes the mood and opinions of his team members into account. He either cannot or does not want to see the serious displeasure and tensions in his inner circle created by his decision to swap places with Medvedev, which was announced at the United Russia convention on September 24.

       Putin and his team have been working to promote the Popular Front, which they are working to transform into a party. For example, there has been a proposal to create a Eurasian group (“International Russia”) to popularize Putin’s new idea of a Eurasian Union. It appears that Popular Front members hope to establish a group in the new State Duma that would take into account the interests of the front’s leader (Putin) and to subsequently set up their own party.

       Putin’s Eurasian model (which provides for moving from the Customs Union to the Common Economic Space to the Eurasian Union), which the prime minister explained in his article published in Izvestia (a newspaper controlled by the Kovalchuk brothers), shows that the Kremlin seriously believes that the United States and Arab countries may collude to radically reduce oil prices. This would create problems for countries dependent on commodities: a dramatic fall in oil prices in the 1980s resulted in the collapse of the Soviet Union.

       This year’s events in North Africa show that the United States and its NATO allies are quickly removing the regimes that have become difficult partners, and hence a controlled price crisis is fast approaching. Moreover, attempts to push China out of Africa are bound to provoke conflicts between China and Russia, which is a convenient source of raw materials for Chinese industry.

       The only scenario that can prevent the materialization of this policy is a union of countries that could become an effective alternative to the current world order, that is, a Eurasian Union to replace the ineffective CIS.

       It is telling that Communist Party leader Gennady Zyuganov will likely be Putin’s main rival in the presidential election. Putin will need to score a convincing and, at least outwardly, fair victory, unlike the one Boris Yeltsin’s second round win in 1996. Putin hardly thought he would follow in Yeltsin’s footsteps as he swapped places with Medvedev, but this is exactly what might happen.

       It is no coincidence that the Communist Party list includes Viktor Cherkesov, who continues playing the role of an agent with license to kill and will likely offer Putin a new service in the next State Duma, possibly as a contact between him and Zyuganov.

       The Communist Party was the first to find its bearings after the electorate, which previously voted for United Russia under Putin, clearly indicated that it would not vote for the party under Medvedev.

       It has also been said that if Putin rises above the fray, he will need the parliamentary elections to be honest and will accept United Russia’s failure to win a constitutional majority, which would result in the redistribution of chairs on strategically important parliamentary committees between United Russia, the Communists and other parties.

       Sources say that the conditions favoring Putin’s return to the Kremlin developed by late summer. First, responsibility for the unpopular reforms that are to be implemented in 2012 will be laid at the door of the future prime minister and the ruling party.

       Second, the return of the global economic crisis will eventually reduce the prices of commodities, limiting the government’s ability to maneuver by handing out carrots to various voter blocs and the elite.

       Sources say that Putin could minimize the risk to himself only if he is elected president and can rise above the fray. Furthermore, the fate of Muammar Gaddafi and Hosni Mubarak clearly indicates that one cannot believe the West’s guarantees and that the only way to avoid international prosecution is to stay in power by any means necessary.

       This is why Putin will try to radically change his image to demonstrate that Russians will elect a “new” politician as their next president. This should also satisfy the prime minister’s opponents, who fear that he would resume the harsh policy he pursued during his second presidential term (2004-2008). On the first day of United Russia’s convention, Putin visited different panels where he made very liberal statements on the priority of human rights, non-profit organizations and the like.

       Sources see Alexei Kudrin’s reaction to the swap as a warning that the tandem should not ignore the opinions of high-ranking officials who come from St. Petersburg regarding Russia’s future political structure.

       It has been said that Putin even held a special government meeting to warn ministers not to speak out the way Kudrin did. In other words, he fears that others could follow Kudrin’s bad example.

       Besides, the St. Petersburg elites, which have always valued Putin’s principle never to betray his allies, are wary of the new Putin.

       The seemingly unexpected resignation of the finance minister played into the hands of many members of the elite, who have said so publicly. Andrei Isayev from United Russia’s social conservative faction said: “The time of accountants is past,” inferring that Kudrin’s efforts to minimize budget spending contradicted the efforts of his group (and the authorities as a whole) to trade more social benefits for political loyalty. The United Russia conservatives think that the party’s approval rating, which has stagnated and may even slip a little, could now start going up again on a promise of new public benefits.

       The North Caucasus elites have also gained from Kudrin’s resignation. The finance minister refused to discuss the multitrillion-ruble development program for the North Caucasus, which was drafted by the Regional Development Ministry but was, in fact, a result of Putin’s unspoken agreements with the local elites. Their lobbying may now be more successful.

       The conflict between Medvedev and Kudrin continued even after his resignation: Kudrin has also been fired as chairman of the National Banking Council and the Financial Markets Council, which actually left him no option other than to take up a political career.

       Kudrin’s resignation has also benefited First Deputy Prime Minister Igor Shuvalov, who now has no political rivals in the government and has strengthened his standing by taking over some of Kudrin’s responsibilities.

       Shuvalov’s increased responsibilities may mean that he will keep his place in the executive power vertical irrespective of who becomes prime minister. An interesting detail: he has a strong ambition to become prime minister. However, there is already a precedent of the peaceful demotion of a first deputy prime minister, Sergei Ivanov, who is now one of many deputy prime ministers.

       Some sources say that Igor Shuvalov and Igor Sechin will continue strengthening their positions until May 2012. They say Shuvalov may retain his post in government, while Sechin may move to the State Duma, although the latter is unlikely. Kudrin may become the head of a state bank, accept a post in President Putin’s executive office, or become prime minister instead of (or after) Dmitry Medvedev.

       Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.