MOSCOW (Reuters) - Prime Minister Vladimir Putin's authority is waning and his return to the Kremlin would reduce prospects for liberal reforms in Russia, an economic adviser to President Dmitry Medvedev said on Monday.
Igor Yurgens said he was confident Medvedev would seek a new term in a presidential election next March and advised him to announce his candidacy as soon as possible because any delay would play into Putin's hands.
Yurgens' comments contradicted analysts' widely-held view that Putin will become president again, signalling that a battle is heating up between the two leaders' camps, whose business, political and economic interests are at stake.
"I am still very confident (Medvedev will run). I don't see any reason why Medvedev would say I am not running for president because the bottom line ... of his 3-1/2 years in the presidency is very positive," Yurgens, who runs a Kremlin-sponsored think tank, told Reuters in an interview.
"In the Russian psyche I think that probably Putin is regarded as the more powerful and influential man. But I think that his authority is waning and weakening whereas the authority of Medvedev has the potential to grow."
Putin, who was president from 2000 to 2008, helped steer his protege Medvedev into the presidency in 2008 because he was barred by the constitution from a third successive term.
He remains Russia's most influential leader under a power-sharing agreement with Medvedev, 45, and is widely expected to have the last say in which of them contests the March election but is keeping the country guessing about which will run.
A senior government source made clear he did not expect any announcement by Putin or Medvedev soon and played down any talk of rivalry between them.
For a Reuters Insider interview with Igor Yurgens: click link.reuters.com/zaw53s
Many investors expect Putin to return to the presidency and rule out both of them running next March or standing aside in favour of a third candidate.
Some see more difference between them in style than policy, but others fear stagnation under Putin and regard Medvedev as more likely to carry out tough social and economic reforms and to strengthen democracy.
"If I were President Medvedev, I would announce I am running during the Yaroslavl forum," he said, referring to a conference Medvedev is hosting north of Moscow this week.
He acknowledged, however, that an announcement could come at a congress of Putin's United Russia party on Sept. 23-24 but might wait until after an election to the State Duma, the lower house of parliament, on Dec. 4.
"The later the decision comes, the more likely it is to favour Putin. Again we pin our hopes on his common sense," said Yurgens, who heads the INSOR think tank of which Medvedev is the patron.
Putin, 58, would benefit if the announcement were made after the Duma election because United Russia are likely to do well, strengthening his case for being president. Medvedev's camp may hope he can outfox Putin by getting his bid in first.
Opinion polls show Putin is still Russia's most popular politician, and Yurgens said Putin's presidency had brought more stability and improved living standards for Russians on the back of an increase in global oil prices.
But he criticised Putin over the 2003 arrest of Mikhail Khodorkovsky, a tycoon who fell out with the Kremlin after showing political ambitions, and regretted how much power lay in the hands of former KGB officers and other security groups.
Yurgens made clear he agreed with those foreign investors who say Putin's return would increase fears of stagnation rather than bring the stability he promises.
"If Putin is elected he will take on board many of the economic recipes of the liberals and foreign experts ... but it will not be his belief or drive. I do not feel any drive apart from the personal one in the past few years," he said.
"The best for him (Putin) is ... to stay on in any title he wants but to let modernisation go on, with Medvedev -- being younger, being a new generation, being better with the West and with the outside world, being better with the intellectuals and intelligentsia -- to carry on as president," Yurgens said.
Yurgens said early in Medvedev's presidency that he would need to build a broad coalition of support. The president shows no clear sign of having done so, and critics say he has failed to carry out many of his reform promises.
But Yurgens said that if Putin were to step out of frontline politics, the president would not be short of support -- including from some members of Putin's team.
He dismissed suggestions Medvedev would become prime minister if Putin returned as president. "It would be ridiculed, both inside and outside the country. We would be humiliated, because it would be such an artificial move," he said.
Above all, Yurgens said, the two men must not run against each other because this could divide the country.
He said this could lead to a destructive confrontation like the rivalry between Russian leader Boris Yeltsin and Soviet President Mikhail Gorbachev that divided the Soviet Union as it hurtled towards collapse two decades ago.
"If it is a non-consensual, confrontational decision, where the population and the electorate are torn apart," Yurgens said, "Russia's (territorial) integrity could be at stake."