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Anyone who worries about the direction Russia has taken under Putin will find this post from Leon Aron, director of Russia studies at the American Enterprise Institute, on Yegor Gaidar's death heartbreaking.

The positive aspects of any man's life tend to be accentuated in death, and many of the tributes to Gaidar, like this one, have taken a decidedly rosy perspective on the shock therapy he administered to the Russian economy. The reality is far more complicated and much less positive.

But however flawed that project would ultimately be, imagine the alternative. The historical revisionism of the Putin years, under which the names Gorbachev, Gaidar and Yakovlev became synonymous with humiliation and suffering, must have slowly killed a man like Gaidar, a man whose work was to literally save the Russian people from famine and collapse.

Russian President Dmitry Medvedev used his state of the state address to call for a sweeping modernization of the Russian economy, rejection of the corrupt oligarchy and diversification away from the nationalized oil and gas sector. Speaking to an audience that included Prime Minister Vladimir Putin, chief architect of the system Medvedev wishes to reform, the president rhetorically stepped outside of his mentor's shadow and set a vision for his legacy.

He might also have just ruled himself out of a reelection bid.

A liberal by nature, Medvedev has failed to deliver the economic and institutional reform many hoped for. This is unsurprising as real power has been consolidated firmly in the PM's office, and the silvoki now pervade Russian society from the commanding heights to regional governorships. These vested interests are backed by the PM himself, and therefore unlikely to encounter any serious challenge their grip on Russian power and wealth. Nonetheless, Medvedev's rhetorical liberalism, often in direct contrast to Putin on economic matters and the glorification of the Soviet past, has sustained a slimmer of hope that after building his own power center he would set out on a reform agenda and confront the rotting Russian core. Few doubt his sincerity.

But confidence in the president to deliver on this vision cannot be high within Russia. Medvedev has thus far been long on words and short on actions, and opposition to any liberalization of strategic sectors, either through ownership or management, will undoubtedly be fierce. One can easily foresee a scenario where Putin simply brushes Medvedev aside in 2012 to return to the Kremlin. But if he can begin to produce tangible reforms, such as electoral reform in the regions, and achieve some high-profile break-ups of state-owned companies, he just might build some momentum among a population clearly dissatisfied with Russia's ability to cope with the financial crisis. At the very least, this could stimulate a fundamental debate within Russian society as to the direction of the country and the best mechanisms to get it there. That would be downright revolutionary in the Putin era.

Medvedev has it right: Russia must modernize or die. Its massive FX reserves carried it through the worst of the global financial crisis, but exposed the economy's vulnerability to oil and gas price volatility. The lack of alternate sources of revenue is a serious crutch to the country's future prospects. With its oil and gas sector declining at an alarming rate, and woefully mismanaged by firms like Gazprom, Russia's FX reserves could increasingly be needed to finance the budget and subsidize state-owned behemoths in sectors from aviation to agriculture. The planned return to international debt markets shows the government is aware of impending, possibly chronic, shortfalls. The writing is on the wall, but can the PM read it?

Medvedev could yet convince Putin of the future's peril, but this seems unlikely. A confrontation seems more probable, and unfortunately for the Russian people, Putin is a strong favorite to emerge victorious. I mean, have you seen them guns?

Politique
-G20 leaders arrived in Washington for a summit that had been hailed Bretton Woods II. With President-elect Obama avoiding the summit, and sharp differences between world leaders on the reforms needed to repair the international financial and economic systems, the summit ends like so many before it- with a consensus on principles, little coordinated action, and an agreement to meet again. Declaration text here.

-A regional war looms as the situation in the DRC deteriorates. African peacekeepers are impotent and declared targets by Nkunda, the number of foreign troops/mercenaries in the country grows by the day, and southern African leaders are threatening full-scale military involvement. The NYT looks at the role of minerals in the DRC's history of conflict.

-The EU agreed to restart talks on a strategic partnership agreement with Russia following an EU/Russian summit at Nice. Russia hasn't met the EU conditions set out as a prerequisite to talks following the conflict in Georgia, and it seems only Lithuania has the spine to say so.

-Iraq's cabinet approves new security pact with the US. The agreement extends US troop mandate through 2011.

Economia
-Paulson shocks congress with plan to spend remaining TARP money on capital injections into troubled institutions and companies and consumer spending. The Treasury will no longer purchase illiquid assets, and congressmen/women of both parties are screaming "bait and switch". Paulson deputy Kashkari testified before an angry House, with Rep. Elijah Cummings asking him, "Is Kashkari a Chump?"

-Treasury v. FDIC. FDIC's Bair wants to directly assist 1.5 million homeowners in the US, while Paulson resists a (*cough-cough*) "government spending program"- Paulson believes that his actions are "investments".

-Is a sterling run imminent? That's what George Osborne, Tory shadow chancellor, implied this week in criticizing Gordon Brown's fiscal plans. Osborne's political career is likely done. Sterling has hit a 6-year low against the dollar at $1.49, and Simon Derrick at BoNY Mellon believes sterling's position is now worse than Sept. 1992.

-Eurozone enters its first official recession.

The Rest
-India celebrates first lunar landing.

-This week in Japanese innovation: a robot that feeds you, and bionic legs.

-Arsenal's Prem title run is dead in the water.

-Gordon Brown: control freak.