Russian President Ousts Finance Minister, a Putin Ally, for Insubordination

MOSCOW — President Dmitri A. Medvedev fired Russia’s longtime finance minister for insubordination on Monday after the two had an icy confrontation on television that revealed the fault lines in a government where disagreements are usually kept strictly under wraps.

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

Mr. Kudrin was an essential player for more than a decade on the governing team that Mr. Putin initially put together while president, and his departure has called into question the viability of the new leadership arrangement. It could also deepen Russia’s economic troubles, as foreign investors believe that Mr. Kudrin’s leadership has helped avert financial instability.

The takedown of Mr. Kudrin seemed an effort by Mr. Medvedev to reassert authority after the leadership announcement appeared to reveal him as little more than a place holder for Mr. Putin, who was constitutionally barred from seeking a third consecutive term in 2008.

“No one has abolished discipline and subordination,” Mr. Medvedev told Mr. Kudrin at a televised meeting of officials in Dimitrovgrad. “If you think that you have different views on the economic agenda from the president, that is me, then you can write me a corresponding letter of resignation. You must answer, of course, here and now. Will you write the letter?”

Mr. Kudrin, looking stung, responded that he would seek the advice of Mr. Putin, who is now the prime minister, before giving an answer.

“You can seek advice from whomever you want, including from the prime minister, but while I am president, I will make such decisions,” Mr. Medvedev said. “You need to decide, and quickly.”

A few hours later, Mr. Medvedev’s press secretary announced that Mr. Kudrin had been dismissed on Mr. Putin’s recommendation. Under the Constitution, the prime minister must approve such dismissals.

The news immediately sent tremors through economic circles, with some analysts predicting that Mr. Kudrin’s departure could rattle investors and damage Russia’s economic outlook.

“The resignation or forced dismissal of Finance Minister Kudrin is a real shock, and will be taken negatively by the markets,” said Charles Robertson, chief economist at Renaissance Capital, an investment bank based in Moscow. “Rather than help capital flow back to Russia, as we hoped might be encouraged by the decision on the presidency on Saturday, this will add to negative pressure.”

Mr. Robertson added that though Mr. Kudrin’s stewardship of the Russian economy could blunt any initial harm, his firing would inject uncertainty into Russia’s economic prospects.

The news was likely to compound rising economic stresses. Russia’s principal stock index has dipped about 20 percent this year, and the ruble has fallen to its lowest point against the dollar in the last two years. Oil prices, which more than anything define the Russian economy’s strength, have also been on the decline.

Mr. Kudrin’s swift dismissal, however, appeared calculated to preserve Mr. Medvedev’s authority. On Saturday, Mr. Medvedev announced that he would cede the presidency back to Mr. Putin after the presidential election in March, which Mr. Putin is sure to win. Some analysts have predicted that Mr. Medvedev will lose the confidence of top officials as they move to align themselves with Mr. Putin after years of uncertainty over who was running the country.

By criticizing Mr. Medvedev and affirming his loyalty to Mr. Putin, Mr. Kudrin exposed rifts within the ruling elite that some analysts said could undermine the so-called leadership tandem that had long been presented to the public as inviolable.

“This is not a split, but it is a test of the system’s strength,” Aleksei Makarkin, a political analyst in Moscow, told the Interfax news agency. “If they end up fighting over this issue, then it will be a crisis situation of a political nature.”

Mr. Kudrin made his initial criticisms of Mr. Medvedev over the weekend in comments to reporters at a meeting of the International Monetary Fund and World Bank in Washington. He called Mr. Medvedev’s military spending irresponsible and said the prime minister had failed to address deficits in the country’s pension fund.

Analysts said Mr. Kudrin had perhaps hoped to become prime minister himself after serving for more than a decade as finance minister.

It is unclear why Mr. Kudrin chose this moment to level such criticism, given the stakes.

He was among the St. Petersburg officials who brought Mr. Putin to Moscow in the 1990s, and has shown a knack for navigating Russia’s political landscape. Despite pressure from politicians to free up some of Russia’s immense monetary reserves, he has adhered to a strict fiscal conservatism that is credited with helping Russia weather the financial crisis. In 2007, his deputy was arrested and jailed for almost a year, a move that was widely interpreted as an effort by the security services to hijack Russian economic policy. He survived the affront with his policies largely intact.

But his confrontation with Mr. Medvedev was clearly a miscalculation. “Anyone who doubts the course of the president or the government can openly appeal to me with a proposal,” Mr. Medvedev said. “But I will put an end to any irresponsible chatter — up until May 7,” he said, referring to his last day in office.