In an article published Thursday in the Kommersant newspaper, an anonymous source in the presidential administration said that the routine crackdowns in Moscow of the opposition’s Strategy 31 rallies in defense of freedom of assembly have nothing to do with President Dmitri Medvedev or any of his officials.

The statements were a response to the intentions of Aleksei Venediktov, a member of the Public Council on the Moscow City Police and Editor-in-Chief of Ekho Moskvy radio, to appeal to a presidential deputy “to put an end to the slaughter” that happens routinely at the hands of the police during the rallies.

According to Kommersant’s anonymous source, Venediktov is barking up the wrong tree.

“The degree of activity of the police is determined by the administrators of the Moscow police and the city of Moscow,” said the source. “To see the Kremlin’s hand in the crackdown of demonstrations and to see this as a manifestation of any kind of personal ambitions would be to drastically oversimplify the situation.”

Therefore, Venediktov’s appeals to the presidential administration are unlikely to garner any results, he explained.

The statements come as tensions between the Kremlin and Moscow Mayor Yury Luzhkov, whose tenure has now stretched into its eighteenth year, have reached a height that analysts say may finally mark his demise.

In the past several months, the mayor has been lambasted by criticism from not only oppositionists, but the Kremlin, the leading United Russian party, and Prime Minister Vladimir Putin. Most recently, the timing of his end-of-summer vacation – which he took in the midst of a heat wave and forest fires that wreaked havoc on the capital – and revelations about government money spent on his private beehives have made him an easier target than usual.

The Moscow mayor’s office is officially responsible for handling applications to hold rallies, protests, and other such events in the city. Luzhkov has routinely defended the decisions to deny sanction to Strategy 31 organizers on the basis of ensuring public safety, but has been caught in serious inconsistencies on multiple occasions.

For every perceived Putin victory, analysts point out serious failures and new problems that have emerged, including rising levels of inflation and widespread corruption. Furthermore, critics question the significance of Putin’s economic plan, and suggest that factors beyond the president’s control, like sky-high oil prices and reforms under Boris Yeltsin, contributed more to the economy.

As the Economist magazine explained in a recent article, GDP growth began before Putin even took office, reaching 6% in 1999 and 10% in 2000. Since then, it has leveled around 7% –an impressive result when compared to Western industrialized nations, but just average when compared with other former communist countries in Eastern-Europe. And unfortunately, much of Russia’s expansion is associated with little more than sky-rocketing energy and natural resource prices.

The Institute of Economic Analysis shows that the share of oil and gas in Russia’s GDP rose from 12.7% in 1999 to 31.6% in 2007. Natural resources constitute 80% of the country’s exports. Russia is now heavily dependent on world commodity prices, and has failed to use cash flows to diversify and improve other domestic industries. Foreign Direct Investment in sectors other than energy actually fell (from 1.6 to 0.65%) since Putin took office. Russian infrastructure, such as roads, remains disastrous and outdated, and unnecessarily raises the costs of doing business. State take-overs of privatized companies also dealt a blow to efficiency. Since Mikhail Khodorkovsky’s Yukos was dismantled early in Putin’s reign, growth in oil output fell drastically from a rate of 9% to 1% by 2007.

According to RIA Novosti, a further issue has been a widening gap between Russia’s rich and poor, which has skewed wage and income statistics. In 2007, the incomes of the top 10% were 17 times higher than the incomes of the bottom 10%, up from 14 times in 2000. Aside from a small class of the very wealthy, most Russians have felt their incomes rise quite gradually. Moscow, by some estimates the world’s most expensive city, overtook New York this year to house the most billionaires in any world city. Yet the per capita monthly wage in 2007 was just 30,000 rubles (€820 or $1,250). According to Rosstat, Russia’s statistics agency, incomes in the rest of the country are one tenth of that. More than 21 million Russians, or 15% of the population, remain below the poverty line.

The government has also been unable to conquer steady inflation, which reached double digits in 2007 and has eaten into growth. Prices on all consumer goods and services shot up in recent months, as much as 4 percent in some Siberian regions in January and February of this year alone. Some staple food items have grown by 20 and 25%. The Kremlin’s response has been largely ineffective, and the most notable methods used to deal with inflation have been fixed prices on certain goods.

Unprecedented levels of corruption and subservient courts have also emerged under Putin. Russia now ranks among the world’s worst countries for corruption, according to rankings from the World Bank, Transparency International, Freedom House and the World Economic Forum. The Kremlin’s uncanny destruction of one of Russia’s most open companies, Yukos, has removed any impression that businesses are protected by the rule of law.

The Economist quotes Vitaly Naishul, who tracks Russian institutions:
“The problem is not that the Russian legal system is weak. The problem is that it does not exist. The Russian justice system has as much to do with justice as the Soviet system of trade with trade.”

When Dmitri Medvedev formally takes over in May, with Putin as his prime-minister, he will stand at the helm of a formidable economic power. But a slight change in world energy or commodities markets could quickly reverse Russia’s fortunes, as continuing corruption pushes investors away.

Until serious reforms sweep the country, then, a crisis will always be just around the corner.

While unexpected, the latest move is hardly surprising.  Putin is known for his secrecy, and for the unpredictability of his plans.  Only one thing is certain, in fact:  Putin is not leaving anything in the upcoming presidential election to chance.  Or, to the Russian people for that matter.

Andrei Vavra, a political commentator for RIA Novosti, discusses what Putin’s announcement means for Russia’s government, and what it shows about the system’s lack of stability:

RIA Novosti
December 18, 2007
Advanced Math or the Theory of Relativity?

MOSCOW. (RIA Novosti political commentator Andrei Vavra) – Vladimir Putin has agreed to become prime minister! For the entire year, we were trying to guess which position he would choose so as not to give away real power.

Would he name a super-reliable successor? Go for a third term? Become the national leader? Head the Union of Russia and Belarus? Be the speaker of parliament, who controls legislative power? Or become the prime minister?

The prime minister is second only to the president and hence, formally, closest to the power. But everyone looked at the proposal of Putin becoming the prime minister as simply a signal that the current president will continue to hand out benefits to all those who will be actively involved in power after his departure. Yesterday, he made United Russia happy and did it brilliantly. Dmitry Medvedev’s turn came today. All those who will go to the presidential polls will believe that voting for Medvedev will make Putin the prime minister. They will elect Medvedev and then Putin will say – I don’t want to accept Medvedev’s proposal from three months ago because having won the nation’s trust, I can keep the power as the national leader.

To summarize, everyone believed that the option of Putin as the prime minister had nothing to do with the real configuration of power after he leaves the presidential office. The party won, the successor would win, and everything would be OK. The picture seemed to be clear enough.

But once the name of the successor became known and he offered Putin the position of prime minister, it transpired that something was amiss – nobody ever guessed what the president would do next. Why wouldn’t there be any surprises?

And all of a sudden, he is the prime minister.

Wrong guess again! The duality, which was implied after Putin’s departure in any event, has acquired a paradoxical shape after he agreed to be the prime minister. This position is different from that of the national leader, who is the last instance before God. If he so wishes, he can kiss a stranger’s child or lash out at the head of any state. The prime minister is at the top but he is still an official responsible for inflation, prompt payment of pensions, subsidized prescription drugs, and agricultural progress… He is even in charge of oil prices, on which the Russian budget hugely depends…

There is no redistribution of power between the president and the prime minister, but Putin is not Mikhail Fradkov or Viktor Zubkov. Though the “national leader” the prime minister is still appointed and accountable for many things (by the Constitution). Once again, the government is legally impeccable – nobody is talking about Putin’s third term.

But this seemingly ideal picture still compels Putin to formalize his presence in the political system. Is he worried about his successor? Is he afraid that security-related bodies will make a mess out of him? Or that the oligarchs will trample him underfoot? Or will the regional leaders get out of control? Or is he concerned that his system of power is based on personalities? In this country, people in certain positions and relations between them are more important than these positions or government institutions.

To summarize, we don’t know what it all means. But it looks like Putin himself is acknowledging the fragility of his own political system. Only one man can guarantee the effectiveness of this system and even its ability to operate. This is a system where the president is not the chief link in a chain – Putin is the only man who can perform this role.

It was obvious before that the system is fragile. The situation is clear everywhere else – either there are elections or there are none. But with us it is endless guesswork – in what form will the government preserve itself in eternity, having formally abided by all laws? What instruments will it use? What institutions? What laws? And what surprises will we be in for?

But there are no grounds to envy Putin in his new position. He will be in charge of the system’s most fragile element. The world economy develops in cycles. Everything seems to be going well and then bang! Even higher prices on food have come as a shock from the blue. What happens if the dollar falls again or there is a drop in world oil prices? What about the endless social commitments, problems of pensioners, increasing utility tariffs, the evening out of world and domestic energy prices, inflation…? The prime minister is responsible for all of that.

A thought occurred to me – how will Putin report to Medvedev? But then it dawned on me that this is Medvedev’s problem, not Putin’s…