Chaos In the Kremlin.(World Affairs)

Byline: Owen Matthews; With Anna Nemtsova in Moscow

With one president stepping down and another on his way in, a battle for power and profits is underway.

Dmitry Medvedev's inauguration as Russia's president on May 7 promises to be a glittering affair. If Vladimir Putin's 2004 swearing-in is anything to go by, it will feature trumpeters, Kremlin guards in 18th-century Hussar uniforms and an assembly of Russia's most powerful men. The guest of honor: Putin himself, the only leader in Russian history to voluntarily relinquish the throne at the height of his powers. Soon he will begin his new job as Russia's prime minister, as his protege, Medvedev, becomes his boss--on paper, at least.

The careers of most of the men and women present at the Inauguration will depend on their ability to position themselves in the right place between these two men. Putin has declared the prime minister's new job to be the nation's top "executive" position, and virtually every top bureaucrat in the country owes their job to him. Yet Russia's 1993 Constitution grants the new president sweeping powers to rule by decree, as well as to hire and fire governments at will, and Medvedev last month promised a housecleaning. "Public office should not be a source of income," Medvedev said, sending a shudder through the national elite. "We are entering into a period of high volatility in the upper echelons of power," says Dmitri Trenin of Moscow's Carnegie Center.

Medvedev's task is tricky. The White House, the seat of Russia's Council of Ministers, will become an alternative center of power with Putin at the helm and will undermine Medvedev's authority. And Putin still has the clout to dominate whatever realm of domestic policy he chooses. He has described his future role as Russia's "chief executive," possibly sidelining Medvedev to deal with issues like foreign policy. Medvedev's power will also be limited by the entrenched interests of bureaucrats who head politically powerful clans. Kremlin deputy chief of staff Igor Sechin, for instance, not only heads the state-owned oil giant Rosneft but informally leads a hawkish clan of former security-service veterans known as the siloviki, alongside Federal Security Service head Nikolai Patrushev.

How Medvedev deals with these clans will be a key bellwether of his power. "Bureaucrats who use their positions to channel money will be punished with the full force of the law," he ...