Putin shifts former ministers to Kremlin

MOSCOW (Reuters) - Russian President Vladimir Putin named several trusted former cabinet ministers to Kremlin posts on Tuesday, asserting his authority in a move likely to weaken Prime Minister Dmitry Medvedev's new government and undermine its mandate for change.

Bluntly showing who is in charge, Putin issued a decree bringing prominent allies into his administration less than 24 hours after announcing their replacements in a new cabinet that Medvedev has championed as an overhauled engine for reform.

One of Putin's closest associates, Igor Sechin, landed a job as head of Russia's largest oil company, Rosneft.

The appointments signal that Putin, back in the Kremlin for a six-year term after swapping jobs with his prot?g? and placeholder two weeks ago, will use the levers of Russia's presidency to control economic and security policy.

They further tip the balance of power in Russia's ruling "tandem" away from Medvedev, the younger, more liberal ally Putin steered into the Kremlin in 2008 when he faced a bar on a third term after eight years as president.

"The president's administration will become the centre of decision-making," said Yevgeny Minchenko, director of the International Institute of Political Analysis, a Moscow think tank.

Putin brought seven members of his former cabinet into the Kremlin, including former Economy Minister Elvira Nabiullina, ex-Health Minister Tatyana Golikova, former Natural Resources Minister Yuri Trutnev and ex-Transport Minister Igor Levitin.

His decree confirmed loyal lieutenant Sergei Ivanov as his chief of staff and kept Nikolai Patrushev, another longtime associate, in place as secretary of the presidential Security Council.

Hours later Medvedev named Sechin, Putin's energy 'tsar' in the previous government and one of his closest confidants, as CEO of state-controlled oil company Rosneft, giving the president another avenue of influence.

POWER SHIFT

Putin, 59, named his last interior minister, Rashid Nurgaliyev, whose term was marred by police violence, corruption and abuse scandals, as a deputy to Patrushev at the Security Council, an influential advisory body.

Sechin, former Federal Security Service (FSB) head Patrushev and presidential chief of staff Ivanov, the defense minister for most of Putin's 2000-2008 presidency, are loyal allies who share the former Soviet KGB officer's security background.

They are members of the "siloviki" faction in the Russian elite - the "men of power" whose roots go back to Soviet-era security apparatus and support a strong state role in political and economic affairs.

Their appointments suggest Putin has little inclination to change his strategy in dealing with opposition to his rule after a wave of winter street protests exposed growing displeasure with his dominance after 12 years in power.

The lower house of parliament on Tuesday gave initial approval to a bill that would dramatically increase fines for violations of rules governing public gatherings, an effort to suppress protests against Putin's rule.

The bill, which faces more parliament votes before it goes to Putin for his signature, would increase maximum fines to 1.5 million roubles ($48,100) for protest organizers and 1 million roubles ($32,100) for demonstrators.

The Kremlin published Putin's decree less than 24 hours after Putin, sitting at the head of a table with Medvedev to one side, announced the makeup of the new government the prime minister will lead.

As promised by Medvedev, who casts himself as a champion of change and stresses the need to modernize an energy-reliant economy in which growth is hampered by bureaucracy and corruption, most ministers from Putin's cabinet were replaced.

The line-up brought in a couple of new faces from the team of young market liberals that served in the Kremlin during Medvedev's four-year term as president, during which he promised far-reaching reforms but carried out few of them.

"COMICAL" GOVERNMENT

But a core of loyal figures remained in place, leaving the more conservative Putin - long an advocate of state-led economic development - with a powerful measure of control over the government and economic policy.

In a sign reform efforts could be hampered by divisions within government and by Putin's penchant for state spending, First Deputy Prime Minister Igor Shuvalov said Russia must not skimp when it comes to important development projects.

"Working together will be difficult," Shuvalov said, formally introducing the more fiscally hawkish Finance Minister Anton Siluanov at the ministry. "You know ... that I support maintaining a small deficit for the next several years."

He said he understood that "we have a budget plan and we must live by tighter budgetary laws, but the priorities for development of the country must be financed," said Shuvalov, a key holdover from Putin's government.

Both critics and supporters of Putin said the Kremlin appointments further increase his sway on policy.

Sergei Markov, a former lawmaker with the pro-Putin United Russia party, said Putin's Kremlin hires pointed to "a melding of the president's administration and the government".

"They will oversee the ministers' work, and in fact order them about and manage them," said Markov, vice-rector at the Plekhanov Russian University of Economics.

Political analyst Andrei Piontkovsky put it more bluntly.

"Medvedev's government is comical, while the real government is located in the president's administration," he said.

Putin, who told the new cabinet on Monday that it faced a tough task in developing Russia amid global economic uncertainty, may use Medvedev and his ministers as scapegoats if Russia's economy takes a turn for the worse, Piontkovsky said.

"All these boys will be made responsible, and Putin's crew is removed from the blow and hidden deep in the subsoil of the administration," he said.

($1 = 31.1750 Russian roubles)

(Additional reporting by Thomas Grove, Alissa de Carbonnel and Nastassia Astrasheuskaya, Editing by Douglas Busvine and Rosalind Russell)

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