Kudrin's Game: The Man In The Middle
Brian Whitmore - RFE/RL - 4.3.12 - JRL 2012-62

Aleksei Kudrin is at it again.

Speaking at a conference on April 3 at Moscow's Higher School of Economics, the former finance minister said Russia needs to cut military and security spending, slash subsidies to industry, and increase funding for road construction, education, and health care.

file photoHe also warned that the government won't be able to continue relying on high oil prices to finance its expenditures.

"There has to be some kind of reform and it needs to be spelled out now because the budget preparations finish up in the beginning of June," Kudrin said.

We can probably expect to hear many more such warnings from him in the coming months.

Since resigning from the government in September after a very public spat with President Dmitry Medvedev, one of the big mysteries of Russian politics has been where Kudrin would land once Putin returns to the Kremlin.

It is more or less clear where he wanted to land.

Kudrin's stated reason for resigning was that he opposed Medvedev's plans to increase military spending by $65 billion over the next three years. He is apparently sincere about this as given his persistent warnings about the dangers ahead for Russia's budget.

But there is more to it than that. Informed speculation has it that Kudrin had hoped to be tapped as Putin's prime minister, and was furious when Medvedev, with whom he has strained relations, got the nod instead.

According to a thought-provoking piece by political analyst Mikhail Rostovsky in "Moskovsky komsomolets" last week, Putin was less than pleased with Kudrin's resignation. "How could you let me down in this way?" Putin reportedly said.

Putin stressed publicly that Kudrin remained a valued member of his team and, according to Rostovsky's report, offered him the chairmanship of the Central Bank.

He turned down that offer but Putin nevertheless reportedly instructed members of his economics and finance team "to do what Kudrin was telling them to."

Putin obviously values Kudrin greatly. The two have been close friends since serving together in the St. Petersburg city government in the 1990s. And Putin is also smart enough to understand that it was Kudrin's steady management of Russia's finances -- as much as high oil prices -- that facilitated the macroeconomic stability of the past decade.

Kudrin's closeness to Putin clearly gives him some leverage -- and some latitude. How else would he be able to get away with resigning against Putin's wishes, turning down the Central Bank job, and speaking out in favor of political reform at opposition rallies?

But what is Kudrin planning to do with this leverage?

After flirting with forming a center-right political party with billionaire oligarch Mikhail Prokhorov, he seems to have settled on starting up a foundation -- it is unclear whether this will be a classic think-tank, a lobbying outfit, or both -- to promote economic and political reform.

A recent story in "Polit.ru" compared the initiative to a sim