March 4 (Bloomberg) -- For a time in the 17th century, a preteen Peter the Great and his mentally disabled half-brother Ivan V were co-czars of Russia. That was the last time the country even nominally had two leaders.

Now it is about to get a government like its national symbol -- a double-headed eagle. Dmitry Medvedev, winner of the March 2 presidential election, is preparing to make his powerful predecessor, Vladimir Putin, prime minister.

The current president likely will remain formidable -- unless Medvedev asserts himself, as Peter did in 1689, displacing Ivan's sister Sophia, the power behind the throne. Analysts and Russian politicians say Medvedev may not defer to Putin for long, despite a professional association that goes back nearly two decades.

``Putin in the beginning'' will have the upper hand, said Mikhail Kasyanov, a Putin opponent and once his prime minister, on Bloomberg Television yesterday. ``But in six months we should reconsider this issue.''

The outcome may be a battle for supremacy after eight years of political predictability under Putin. His reign helped sustain oil-driven economic growth averaging 7 percent a year and an 11-fold increase in the dollar value of Russian stocks.

``Medvedev is inheriting a very unstable and dangerous situation,'' said Nikolai Zlobin of the Washington-based World Security Institute, a research group. ``We will have two centers of power in Russia.''

Propelled to Victory

Endorsed by his mentor, Medvedev was propelled to victory by the president's 80 percent-plus approval ratings. Currently a first deputy prime minister, he won 70.3 percent of the vote with 100 percent of the ballots counted. Turnout was 69.8 percent, according to the Central Election Commission. His inauguration will take place on May 7.

Both men have downplayed the chance of a struggle. Yet Medvedev, 42, and Putin, 55, each laid claim to the role of top leader in the weeks before the election.

Barred from a third four-year term, Putin said in a Feb. 14 press conference that the prime minister will have the ``highest executive power.'' He had arranged for Medvedev to promise him that job to retain his influence, and said he plans to keep it as long as his protege is in the Kremlin.

Ultimate Authority

Four days later, Medvedev insisted he'll have ultimate authority. ``The president rules Russia, and according to the constitution, there's only one president,'' he said in an interview in Itogi magazine.

``The conflict has already started,'' said Alexei Mukhin, director of the Moscow-based Center for Political Information, a research group. While Putin allies will continue to occupy key government posts, Mukhin predicted that Medvedev eventually will be in a stronger position.

That's because Russia has been governed by strong centralized authority for centuries. In czarist times, the monarch had absolute power. In the Soviet era, the Communist Party general secretary was supreme.

Under Russia's current constitution, the president controls both domestic and foreign policy and presents his nominee for prime minister to parliament for approval. The president has the power to dismiss that premier.

`Inevitable' Conflict

The prime minister draws up the government's budget and implements its policies in all areas, including foreign affairs and defense. Under Putin, prime ministers have been more bureaucrats than policy makers, Mukhin said.

``The tradition in our country is that whoever sits in the Kremlin is the one who rules,'' said opposition politician Boris Nemtsov, a former deputy prime minister. ``Conflict is inevitable, and Medvedev will win.''

Medvedev will take power ``piece by piece,'' added Igor Yurgens, first vice president of the Moscow-based investment bank Renaissance Capital. ``He will learn fast, faster than Putin.''

Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, said it may take months for any differences to emerge. ``We can expect Medvedev to develop his own priorities a year in,'' he said. ``If there is going to be a clash, that's when we'll see it.''

Medvedev yesterday predicted a ``friendly'' partnership with Putin. ``We trust each other,'' he said. At his Feb. 14 press conference, Putin said there would be ``no problems'' because of their close ``personal relations.''

`Ruthless' Streak

Medvedev, a lawyer, worked for Putin in the mayor's office in St. Petersburg, their hometown, starting in 1990 and followed his mentor to Moscow when he became prime minister in 1999.

``In politics, even with like-minded people, when they occupy rival posts, differences emerge,'' said Alexander Voloshin, Putin's former chief of staff, in Kommersant newspaper's Feb. 19 edition. ``And in this case, these differences will emerge when Dmitry Medvedev becomes president.''

Though not as combative as the ex-KGB agent he'll succeed, Medvedev is capable of ``ruthlessness,'' said Stanislav Belkovsky, a former Kremlin adviser and head of the Council for National Strategy, an independent research group in Moscow.

He cited Medvedev's work in 2002-2003 to protect Ilim Pulp -- which employed him as a legal adviser in the 1990s -- from a hostile takeover by Oleg Deripaska, owner of aluminum producer United Co. Rusal. Medvedev used his clout as the deputy head of Putin's presidential administration to ``thwart this corporate raid,'' Belkovsky said. The paper and pulp company claimed victory in March 2003.

Medvedev's Circle

Belkovsky said Medvedev was equally determined to force through the 2005 appointment of a friend, Anton Ivanov, to head the Supreme Arbitration Court, which hears commercial disputes, against opposition from the judiciary and Putin's ex-KGB allies. Ivanov is one of several of Medvedev's fellow law graduates from what is now St. Petersburg State University who have followed him up the government career ladder.

``Medvedev is a strong-willed person, but he's not shown that as he's had to bend to Putin's will,'' said Sergei Markov, a parliament member from the ruling United Russia party who heads Moscow's Institute of Political Studies, which advises the Kremlin. ``When that need no longer exists, he could behave in a very different way.''

The Group of Eight industrialized nations' summit in Japan in July may offer an early sign of Putin's clout in his new role. He attended past G8 summits as president.

``Putin has liked that; it's been very important to him,'' said Thomas Pickering, former U.S. ambassador to Russia, on Bloomberg Television Feb. 28. ``It's helped not only to boost his own position but Russia's international position. Will he give up the travel to the G8 summits?''

To contact the reporters on this story: Henry Meyer in Moscow at Hmeyer4@bloomberg.net; Sebastian Alison in Moscow at Salison1@bloomberg.net.

Last Updated: March 4, 2008 05:58 EST