Rival Kremlin Factions Feud Over Russia's Economy

With Russian President Vladimir Putin focused on foreign policy, rival factions in his inner circle are battling for influence over the economy, say five officials close to the president. The officials, who declined to be identified while discussing internal issues, say the infighting is slowing decision-making as the country slips into recession, the ruble hovers near a record low, and sanctions imposed to punish Russia for the conflict in Ukraine begin to hurt.

One faction, centered around Prime Minister Dmitry Medvedev, is concerned about Russia’s increasing alienation from the global financial system, the officials say. The other group—which includes Putin’s chief of staff, Sergei Ivanov, veterans of the security services, and heads of state companies such as Igor Sechin of oil giant Rosneft—favors greater state control over the economy. With the price of oil, Russia’s largest export, at a 27-month low and banks turning to the state for funding, there’s less money to go to the state-owned companies. “The long-running conflict between rival pro-Putin camps has elevated to war,” says Stanislav Belkovsky, a Kremlin adviser during Putin’s first term who now advises Moscow’s Institute for National Strategy, a think tank. “The elite are fighting for a shrinking pool of assets.”