The hype over the opening of the Popular Front had barely died down when the Premier’s campaign dealt yet another blow to the positions of his sole potential rival. The President’s initiative to replace government officials with independent directors on state owned company boards has been sabotaged – by a tried and true bureaucratic gimmick, i.e., execution to the letter but counter to the spirit of the message received.

Replacements have been picked for Viktor Zubkov and Igor Sechin, as well as for their underling ministers, Elena Skrynnik and Sergei Shmatko. The list apparently contains names that Medvedev will like or at least not find irritating, such as Sergei Aleksashenko and Vladimir Lisin. Even Matthias Warnig from NordStream, more known for his past work in East Germany’s intelligence services, will manage to handle formal representation of state interests in Transneft, especially since it is led by Nikolai Tokarev, a person with similar credentials.

But the appointment of Tokarev to the Zarubezhneft board or of Sergei Chemezov to Inter RAO UES totally emasculates the President’s initiative. In fact, replacing government bureaucrats with representatives of state-owned companies effectively makes the business climate worse because, while ministers and deputy prime ministers ostensibly do not have any interests in mind other than state interests, state capitalists do and (for example in Nikolai Tokarev’s case) conflicts of interest are bound to arise.

Finally, the most controversial nomination is that of Sergei Sergeevich, son of Deputy Prime Minister Sergei Ivanov. If he chairs the board of Rosselkhozbank, he will become the second offspring of a prominent member of the power ministries to work at this credit institution, whose President is Dmitry (Nikolaevich) Patrushev. Whereas Tokarev and Chemezov are long-time friends of Putin and their nominations can be logically explained, Ivanov-junior’s main function is to tease the President.

From the bureaucratic standpoint, Medvedev is caught in a stalemate. He cannot rise above the fray because, according to his own executive order, it is his responsibility to approve the nominations of board members of state-owned companies. He cannot sign off on Ivanov’s candidacy because this would totally void his own pet project. He cannot nominate an alternative candidate because he can only approve a government-proposed candidate. Finally, he cannot indefinitely turn down initiatives by Putin and Sechin, who will only be happy to nominate more people to whom the President is allergic.

The obvious conclusion is that dismantling state capitalism is impossible as long as its architect is in power.