Russia’s president and prime minister have promised that the new year will be interesting and busy. They didn’t say it publicly but, behind the scenes, they made it clear that there will be many political and economic surprises in 2001.

For Russia-watchers more accustomed to big news events constantly streaming out from the country, that would likely be a welcome change after 2000 – a year that ended with a stability that could be better characterized as stagnation. High oil prices gave an economic boost, but it wasn’t enough to give confidence in tomorrow. A country living off petrodollars alone doesn’t have much of a future.

The kind of radical economic reform desired by liberals and feared by communists didn’t get off the ground. The new year has come heavy with anticipation that it will answer all unresolved questions – such as whether the natural monopolies will be restructured, whether banking reform will go ahead, whether Russia will meet its debt commitments on time and what will happen with the new tax rates, the plans to move over to the international accounting and reporting system and reform of the state apparatus.

Clearly, President Vladimir Putin and Prime Minister Mikhail Kasyanov entered the new century with so many problems because they couldn’t sort them out earlier, perhaps in the interest of maintaining stability – above all, political stability – or perhaps because they had other aims.

Overall, the last year gave few clues as to who exactly Putin is and where he’s taking the country. What is clear about Putin is that he supports a strong state, wants to maintain Russia’s territorial integrity and international authority, and, in order to do so, wants federal power to be strong, powerful and able to lay down the law in society, business and in the regions rather than the other way round.

It’s still not clear how far Putin will go to strengthen federal power and what the cost of this will be in terms of democratic freedoms. Nor is the answer to the main economic question, namely who will manage Russia, clear. Will it be the free market, the oligarchs or the state? On one hand, the authorities look committed to reform and follow a market logic, but at the same time, there’s a clear trend toward increased state involvement in the economy, especially in the banking and export – primarily oil and gas – sectors.

There are also signs that one team – that of well-known businessman Roman Abramovich, which includes Nikolai Aksyonenko, Alexander Mamut and Oleg Deripaska – is set up to control a large slice of the Russian economy. This group is loyal and close to the Kremlin, providing support in all kinds of sticky situations.

With this group behind them, Putin and Kasyanov can be sure that the restructuring of the natural monopolies will go ahead under the Kremlin’s control. It would be more precise to call restructuring plans a new assets carve-up, given that the process will inevitably involve new privatization deals.

Of most interest to the authorities at the moment is Gazprom. This is not because of restructuring so much as because Chairman Rem Vyakhirev’s contract expires in May, opening the way to a change of management. The Kremlin and government have been putting off restructuring of Gazprom so long as Vyakhirev is around because, no matter what program is approved, under Vyakhirev’s direction the result wouldn’t be what the Kremlin wants.

In the oil business, the authorities’ control strategy includes both placing loyal people in charge of state oil companies and taking companies’ excess profits. One of the government’s upcoming battles – in January or February – will be with the oil lobby. The government plans to pass new laws soon that will give it tighter control over oil companies’ revenues, especially export earnings.

Despite its ravenous fiscal appetite, the government wants to have Soviet debt to the Paris club rescheduled rather than pay up. Russia is deliberately dragging its feet in negotiations with the International Monetary Fund, and hence with the Paris Club. For the first time since Putin became president, this month’s budget will have a deficit, and this will enable Kasyanov to shift negotiations with the IMF into a different key, pointing to Russia’s unstable economic situation.

But it is reform of the state apparatus that will be the litmus test of Putin’s and Kasyanov’s commitment to reform and the key to their strategy. First of all, this will involve changes to the government itself. The Kremlin has already hinted that there are problems in the way the executive branch is organized and Presidential Administration head Alexander Voloshin named the so-called German model as a possible direction for reform.

Under this system, the deputy prime ministers would be done away with and ministers would see their status rise. The ministers would gain the right to take "direct action," only having to refer to the prime minister on the most important issues. The ministries themselves would be beefed up and reduced to about 10 in number, with others lowered to the status of state committee, and there would be sharp cutbacks in the numbers of government officials.

The prime minister, meanwhile, would gain authority, some even predict vice-presidential status with all the changes this would entail to the Constitution. But even if these changes take place, it won’t be anytime in the near future.

The collective authors behind these projects, for the time being at least, are Putin, Voloshin and Kasyanov. At a press conference to sum up the year, Kasyanov said that broad outlines of state reform would be completed by spring. If this is so, the team of Voloshin, Kasyanov, Aksyonenko, Abramovich and Mamut will see its influence strengthened, while that of electricity boss Anatoly Chubais will decline. Finance Minister Alexei Kudrin – a Chubais man – could hold on to his job, but certainly won’t move into the prime minister’s post as Chubais would like.

The same goes for Viktor Khristenko, another current deputy prime minister close to Chubais. Khristenko, who currently oversees the energy sector, won’t be in the running for the premiership, but could move into the energy minister’s job. The main war will be between the current minister for industry, science and technology, Alexei Dondukov, and Deputy Prime Minister Ilya Klebanov, who oversees industry, in particular, arms exports. One of these two will get the axe.

It’s difficult at this point to assess German Gref’s chances of holding onto his job as minister for trade and economic development, but the odds are probably 60-70 percent in his favor. This is because the Kremlin doesn’t have many potential replacements in the reserves, and to remove Gref would mean throwing an obvious challenge at the liberals.

(Vera Kutznetsova is a member of the governmental and presidential press pools and a long-time observer of the Russian political scene.)