Power plays trump policy

RUSSIA’S new government bears all the marks of a country paralysed by infighting. On his return to the presidency, Vladimir Putin’s priority seems to be maintaining the balance of power between the rival political clans that surround him. His strategy of balance and rule does the country little good, and in the long run hems him in as much as it preserves his supremacy.

Dmitry Medvedev, the prime minister whom Mr Putin used to keep the presidential chair warm for him, is more sympathetic to reforms needed to modernise the top-heavy petro-state that is Russia. But if he expected greater opportunities to pursue a reformist agenda, he must be disappointed. Many ministers stayed on in the transition. Some who left got jobs in the Kremlin, suggesting a parallel government.

Furthermore, Mr Putin has quickly issued several decrees that have thrown into disarray a programme for privatising statecontrolled businesses. After initial hints that companies, such as power grids, slated for part-privatisation would stay in state hands, they may now be sold after all.

This smacks of clever power play, not thought-out economic policy. Russia needs more of the latter and less of the former. Without privatisation and competition, Russia’s state capitalism will never give way to a dynamic private sector that can help to diversify the economy away from its current dependence on oil exports.

No wonder Russian stocks have had a roller-coaster ride this week. The rivalry around Mr Putin feeds two scourges: uncertainty about what will happen and a prospect of eventual paralysis. Both dim the hope for serious reform.

This situation is not sustainable. At today’s oil price Russia’s budget barely breaks even. The discontent that erupted in the winter rumbles on. If the president does not set a clear course, events will force his hand. The longer he continues his balancing act, the harder it will be to pick any course of action without falling down. London, May 25.