MOSCOW - When Vladimir Putin stood for re-election to the presidency in 2004, he named a new government even before the vote. Now, days before he is sworn in as Kremlin chief for a third time, the shape of his next administration remains a mystery. Although outgoing President Dmitry Medvedev has been nominated by Putin to be prime minister in a job swap flagged as long ago as last September, it is not apparent that he will even rank as Russia's second most powerful man. That status may shift to Putin's energy tsar, Igor Sechin, who has strengthened his hand since the March 4 presidential election vote by masterminding two big exploration deals involving state oil firm Rosneft and launching sweeping energy tax reforms. Yet Sechin, ousted by Medvedev as Rosneft chairman last year, may not keep his formal job as deputy premier amid speculation that he could move to a security role in which he would report directly to Putin, a close friend for 20 years. "Elevations and falls from grace have become enmeshed in the hidden but acute rivalry between the two rulers, (and) clashes of interests between clans and ambitious newcomers," analyst Pavel Baev wrote in a commentary for the Jamestown Foundation. Russia's unresolved conflicts, from street protests over alleged electoral fraud to power struggles in the ruling 'nomenklatura', have entrenched the risk premium that investors demand to buy the country's financial assets. Promises by officials that the next government will act decisively to privatize state companies, strengthen the budget and fix a hole in the pensions system cut little ice with the financial community. "To be a strong Russia bull one must hold a sanguine outlook on the oil price and expect the next Russian government to initiate an ambitious reform package," said Peter Westin, chief economist at Moscow brokerage Aton. Westin, editor of a new book on Russia called 'In From The Cold', suggests however that rising prices for oil, the main export driver for the country's $1.9 trillion economy, will sap its leaders' will to reform. "It's a Catch-22 situation," he said. Although Putin's return to the Kremlin ends an unhappy four-year experiment with 'tandemocracy', as his double act with Medvedev came to be called, the return of one-man rule can hardly bring back the boom years of the early 2000s. The financial crash of 2008 and ensuing economic slump have slowed the speed limit of the economy, increased the state's reliance on energy revenues and allowed Kremlin capitalists to retake the economy's commanding heights. "Future historians will come to view the 2008 credit squeeze as the pivotal event of modern Russian economic history," hedge fund manager Steven Dashevsky wrote in Westin's book. "It was the last straw that broke Russian capitalism's back - if you can call a highly-leveraged mix of cronyism, corruption and backroom dealing capitalism, of course - and opened the gates for the state's successful final march on the economy." In another big deal struck during the two-month transition, billionaire Alisher Usmanov won control over MegaFon, positioning Russia's No.2 mobile phone firm to partner with the state in offering next-generation '4G' services.
