By Timothy Heritage and Lidia Kelly
MOSCOW/WASHINGTON (Reuters) - Russia's finance minister rebelled on Sunday against Vladimir Putin's plan to make President Dmitry Medvedev his prime minister if he returns to the Kremlin by saying he would not serve in the next government.
Foreign investors were alarmed by Alexei Kudrin's snub after Putin announced he will run for president next March in an election that could extend his rule until 2024.
Kudrin, a Putin ally, has prime ministerial ambitions and said he had "disagreements" with Medvedev who may now struggle to establish his credibility as premier after being forced by Putin to renounce his dream of a second term as president.
"I do not see myself in a new government," Kudrin, 50, said in comments released in Washington, where he was meeting global policymakers.
"The point is not that nobody has offered me the job; I think that the disagreements I have (with Medvedev) will not allow me to join this government."
Kudrin won the respect of investors as a guardian of financial stability by saving windfall oil revenues for a rainy-day fund which helped Russia through the 2008 global economic crisis.
"Kudrin personifies Russia's macro- and fiscal stability. His departure would be a major blow to the Russian investment case," said Roland Nash, chief strategist at Russian investment manager Verno Capital.
"But I don't think you should count him out quite yet. He is as close to Putin as Medvedev. Perhaps this is a bid for the role of prime minister."
POWER-SHARING AGREEMENT
Putin, 58, and Medvedev, 46, have ruled in a power 'tandem' since Putin was forced to yield the presidency in 2008 after serving the maximum two consecutive terms.
Putin won a standing ovation by accepting a proposal by Medvedev to return as president at a choreographed congress of the ruling United Russia party on Saturday.
Medvedev agreed to lead United Russia's list of candidates for a parliamentary election on December 4 in a move intended to help the party retain a two-thirds majority in the lower house.
Putin looks certain to be elected president in March. Opinion polls show other potential presidential candidates, such as nationalist Vladimir Zhirinovsky or Communist Gennady Zyuganov, have little support and liberal opposition leaders have only limited appeal nationwide.
But although Medvedev's personal ratings are high, the strength of his prime ministerial credentials are unclear after he failed to carry out many of his reform promises as president.
"Medvedev's usefulness runs out on December 5," one economist said, referring to the day after the parliamentary election.
Medvedev has failed to emerge from Putin's shadow since they started sharing power. By contrast, Putin has in more than a decade in power cultivated the image of a vigorous leader and his policies -- crushing a Chechen separatist rebellion, taming super-rich businessmen and bringing wayward regions to heel -- have buttressed his popularity among Russians.
WARY IN THE WEST
But critics say his return to the Kremlin, virtually unopposed, bring back memories of the economic and political sclerosis under Soviet leader Leonid Brezhnev in the 1970s and early 1980s.
"It's a sign of growing stagnation in the Russian political elite and it means that Mr Putin, if elected, can rule for another 12 years until 2024," said Yevgeny Volk, deputy director of the Yeltsin Foundation think tank.
The U.S. government said it expected to keep making progress in the "reset" towards better relations with Moscow, whoever was the next Russian president.
Putin's decision is likely to cause some nervousness in the West, where he is considered less liberal than Medvedev and more outspoken in his criticism of Western policies.
"This shows that Russia is far away from open, democratic competition for the presidency," said Ruprecht Polenz, chairman of the foreign affairs committee in the German Bundestag, the lower house of parliament.
James Goldgeier, a Russia expert at American University in Washington, said: "There will be a businesslike relationship (between Washington and Moscow), but not a warm one."
In his previous, eight-year spell as president, Putin oversaw an economic boom during which household incomes improved on the back of a rise in global oil prices and his tough talking helped restore Russia's self-confidence on the world stage.
But Putin, who was once a KGB officer in East Germany, is accused by critics of riding roughshod over human rights and democracy, and expanding the power of the security forces.
Many economists say his return to the Kremlin makes it less likely that Russia will carry out pension reforms and reduce its
dependency on natural resources. Oil and gas revenues make up half the budget.
(Additional reporting by Douglas Busvine in Moscow, Matt Spetalnick in Washington and Andreas Rinke in Berlin; Editing by Robert Woodward)
