Not Everyone's a Happy Camper in the Land of PUTINville

Russia’s wheels of power are grinding to a halt.

That’s the assessment of five officials close to President Vladimir Putin, who say that a struggle at the heart of his inner circle is slowing decision making as sanctions squeeze the economy. With Putin focused on foreign policy, rival factions are battling for influence, said the people, who declined to be identified discussing internal issues.

One group, centered on Prime Minister Dmitry Medvedev, is concerned about Russia’s increasing alienation from the global financial system, said the officials. The other, which includes heads of state companies such as Igor Sechin of OAO Rosneft (ROSN) and veterans of the security services, favors greater state control over the economy, they said.

Russia’s ruling elite is convulsing as the economy careens toward recession, the ruble hovers near a record low and the conflict in Ukraine pushes the country deeper into a standoff with the U.S and its allies. With oil, Russia’s largest export, at a 27-month low and banks increasingly turning to the state for funding, there’s less money to go around.

“The long-running conflict between rival pro-Putin camps has elevated to war,” said Stanislav Belkovsky, a Kremlin adviser during Putin’s first term who heads Moscow’s Institute for National Strategy. “The elite are fighting for a shrinking pool of assets.”

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