Putin and his men steal show at Russia business forum

ST PETERSBURG, Russia (Reuters) - Russia's top showcase for international investors was dominated by one man who didn't even come: Prime Minister Vladimir Putin.

President Dmitry Medvedev made the keynote address at the St Petersburg International Economic Forum but participants later struggled to recall words from a speech which contained little new and was briefly interrupted by a microphone failure.

Instead, investors talked about how Medvedev's powerful patron Putin had swooped the day before the Forum on a crisis- hit town 270 km away to visit hungry unpaid workers and publicly humiliate a top oligarch on television for failing to help them.

Putin, playing an "action man" role which pleases the Russian public, won cheers from the workers in Pikalyovo in the region surrounding St Petersburg for vowing to restart their factories.

He compared the three plant owners including Oleg Deripaska, once Russia's richest man, to cockroaches and accused them of greed. He then threw a pen on his table and ordered Deripaska to walk up and sign an agreement on raw material supplies.

Medvedev meanwhile, repeated to the Forum the proposals he made last year on using the Russian ruble as a reserve currency and making Moscow an international financial center. He added a desire to develop Russia's middle class and a historical comparison on the severity of corruption in the 18th century.

"It was a very clear demonstration of who is really in charge in Russia," one senior diplomat said afterwards. "Medvedev is up in the clouds and Putin is running the show."

In Russia's unusual political configuration, where Medvedev and Putin share power in what they term a "tandem," observers are watching closely for signals on where policy is heading and which politicians are given most prominence.

Putin did not attend the Forum.

The official explanation was that it was a presidential, rather than a prime ministerial event -- but the premier's key lieutenant, Deputy Prime Minister Igor Sechin, was given top billing after Medvedev.

OIL MARKETS REFORM

Sechin, often named by ambassadors as the leader of the hardline faction in the government favoring state intervention and nationalism, made a key speech to a panel of global oil chief executives arguing for reform of world oil markets.

"Sechin stole the thunder from Medvedev and I wonder if Putin didn't send him,," one Western analyst commented.

Last year, First Deputy Prime Minister Igor Shuvalov was the Russian government star of the Forum, promising foreign investors that Moscow would respect their property rights and cut the state's role in the economy.

This time Shuvalov gave no big presentations and only chaired a low-profile panel. "Shuvalov made lots of promises to investors last year," a government source said. "He knew if he came back to speak this year, they would ask him what happened."

Russia has suffered a series of setbacks in its image with foreign investors, which have led to its stock markets being valued much lower than those of China, India or Brazil.

These began with last summer's government attacks on mining firm Mechel and official harassment of oil firm TNK-BP, worsened after Russia's war with Georgia and hit bottom as the Russian stock market collapsed more than 80 percent from its peak. It has since recovered on the back of higher oil prices.

Although businessmen fear him as a state-leaning hawk, Sechin, 48, took care in St Petersburg to present a friendly face to Western business.

This appeared to be part of a wider effort to burnish his image since Sechin stepped from the shadows of the Kremlin administration last year to become Putin's most powerful deputy in his prime ministerial government.

Clearly ambitious and spoken of by some as a possible future prime minister, Sechin is now trying to shake off his reputation as a member of Russia's "siloviki" (former military and intelligence officers) clan.

Asked by Reuters for his message to foreign investors, Sechin said: "We love them, we respect them and we are ready to work together." He advised investors to "Stay close to us."

When asked about investor fears that the role of the state in the economy would rise, he said "In Russia? You know that it is rising all over the world. And now people are saying that (John Maynard) Keynes is better then (Milton) Friedman."

However, even if Sechin took a leading role at this year's forum, past experience suggests he should be wary.

2008 Forum star Shuvalov has seen his reputation hit by the crisis, while 2007's main focus of interest, Sergei Ivanov, was passed over as Putin's preferred presidential candidate in 2007 and is now seen as yesterday's man.

(Additional reporting by Guy Faulconbridge and Denis Dyomkin; Editing by Charles Dick)