Spies 'R' Us -- Who's Running Russia?

When on the eve of the millennium then-President Boris Yeltsin appointed Vladimir Putin as his successor, the world was astonished.

To Russians the nomination was less of a surprise – after all he was promoting the prime minister, who by then had been in office for five months and wasn't unknown to most Russians.

As the Russian Cabinet resigned today at the behest of Putin, most Russians had no doubt that the purpose of that move was to promote deputy Prime Minister Sergei Ivanov to the post of prime minister.

Ivanov has been Putin's close friend and associate for many years and thought by most observers to become Putin's successor as president of Russia. The prime minister's office would be the perfect step towards presidency in 2008, just as in Putin's case in 2000.

However, it was not Ivanov who was nominated today, much to the surprise of even reliable Russian broadcasters such as the Echo Moskvy radio station.

The man Putin named is Viktor Alexeyevich Zubkov, a little known deputy minister. The Duma, Russia's parliament, must still rubber stamp Zubkov's nomination and may do so as soon as Friday.

Surprise Candidate

Caught flat-footed by the news, Russian media were able to produce little more than dry facts from the nominee's career.

Viktor Zubkov, 66, is an economist from St. Petersburg. He was a deputy minister in charge of taxes, and will now come to the office of prime minister from holding the post of deputy finance minister. He is also the chairman of the committee on financial monitoring – a low-profile but significant body which tries to combat Russia's huge problem with money laundering. Zubkov is also chairman of the ruling United Russia party's St. Petersburg chapter.

Above all, however, Zubkov has the prime credentials for holding a top post in Russia's power structure – he is from Putin's inner circle of friends. He was Putin's close associate when both worked in St. Petersburg's mayor's office, both in charge of foreign relations.

Russia's new prime minister is married and has one daughter, who in turn is married to Russia's Defense Minister Anatoly Serdyukov.

This nomination by no means anoints Zubkov as Russia's next president. Political commentator Vyacheslav Nikonov reacted to such speculation on "Russia Today TV": "Zubkov has no chance of becoming successor to President Putin," adding that the change of prime minister is a strictly pragmatic move."

According to Nikonov, appointing an expert in taxes and finances is meant to put greater stress on fiscal matters within the government.

'Another Puppet'

James Nixey, manager of the Russia program with the U.K. think tank Chatham House, is not that surprised by Zubkov's nomination. He argues that he fits a similar mold to the former Prime Minister Mikhail Fradkov, in that both are without political power bases and are expendable, as demonstrated by Fradkov's easy removal. According to Nixey, Zubkov is likely "another puppet with different skills."

"Putin is concerned with his legacy and succession now," Nixey told ABC News. But it is far from clear who that successor will be. Ivanov and Medvedev are considered the front-runners but "we didn't think Putin was going to be the next president, it's a really hard one to read," Nixey said.

Nixey believes there is also a possibility that, although it is without precedent, Putin may be eying a return to power in 2012 and whoever succeeds him now would only do so for a four-year term. "He is a relatively young man who may want a return to politics."

Some observers in Russia still insist that they put their bets on Sergei Ivanov.

Pavel Felgenhauer, a political and military analyst, told ABC News, "Viktor Zubkov is another technical prime minister. He has no connections inside the Kremlin. He doesn't have visible connections to the most powerful people in the government. He's a political featherweight. If there is a successor it will be Ivanov."

Ivanov, like Putin, is an FSB (Russia's secret service) officer. He was defense minister under Putin, is his close ally, and for now at least, still deputy prime minister.

Old Pals

Putin has steadily surrounded himself with similar old associates both from the FSB and his time in St. Petersburg. Since he came to power, an ever-expanding group of former military and intelligence officials, so-called siloviki, have gained prominent positions within Russia.

"These people have taken up positions on the boards of almost all major companies," said Nixey. It is, however, difficult to measure the full extent of their influence.

But the rise of the siloviki has brought with it a noticeable increase in government spending on the intelligence services, both foreign and domestic. Tuesday's testing of a vacuum bomb and the recent resumption of long-range patrol missions by Russian B52 bombers all point towards the fact that "Russia is showing that it's a big player now, an assertive power on a scale that it has not been able to do since the Cold War," said Nixey.

Alexander Nadezdhina and Zoe Magee contributed to this report