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Russia’s Finance Minister Resigns After Heated Televised Confrontation With Medvedev

By: EW News Desk Team Date: 27 September 2011

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27 September 2011

Influential Russian Finance Minister Alexei Kudrin has departed his post after he went head-to-head with President Dmitri Medvedev during a televised broadcast of a meeting of Russian officials where Medvedev questioned the Finance Minister’s decision to “announce with great pomp” in public recently that he did not intend to work in the new government.

On Sunday, the finance minister had openly questioned the president’s competence in economic affairs, announcing that he would rather quit than work for Medvedev, who is to set become the prime minister next year following a leadership swap with Vladimir Putin.

The Russian President responded angrily on Monday, where he confronted Kudrin on television and demanded for him to either withdraw and explain his criticism, or resign immediately.

“If, Alexei Leonidovich [Kudrin], you do not agree with the president’s course, and the government enacts the president’s course, then you have only one option, and you know what it is: to resign,” said Medvedev, looking straight into Kudrin’s direction.

Mr Kudrin appeared shell-shocked for a brief moment before responding that he would first have to consult with Putin before making a decision.

However, Medvedev pressed further, snapping back angrily, “You know what, you can consult with whoever you want, including the Prime Minister, but while I'm President, I make those decisions myself."

Medvedev then proceeded to warn Kudrin that “no one has revoked discipline and subordination in the government”, while demanding an answer by the end of the day. Several hours later, the Kremlin announced that Medvedev had sacked Kudrin at the request of Putin, whose office must approve all such dismissals according to the Russian constitution.

The news came as a shock as Kudrin was widely considered to be a close ally of Putin, and had gained a reputation internationally as the key reason for Russia’s relatively strong insulation from the 2008 global financial crisis.

During Putin’s presidency from 2000 to 2008, Kudrin stashed some of the revenue from Russia’s soaring oil exports into a stabilisation fund despite strong opposition from other ministers who wanted to spend the money. The savings in turn proved crucial in reducing the blow of reduced oil prices to the Russian economy.

As such, the departure of Kudrin is likely to unsettle investors and further shake Russia's markets.

"It is difficult to see how Mr. Kudrin's resignation can be anything but market-negative," said Neil Shearing, chief emerging markets economist at Capital Economics Ltd in London, to the Associated Press. "With oil prices starting to slide and financial markets still jittery, now is not a good time for the government to lose its arch fiscal hawk."

Shearing added that "It is unlikely that Mr. Kudrin's replacement will share his predecessor's credentials and clout.”

Watch the Confrontation Between Russian President Dimitri Medvedev and Former Finance Minister Alexei Kudrin: