Study design: This is an international collaboration with leading centres in Sweden and Switzerland in which100 obese type 2 diabetic patients with established DKD will volunteer to be randomly assigned to receive best medical therapy with RYGB or best medical therapy without surgery. Participants will be 18-65 years with type 2 diabetes and impaired kidney function. Yearly measurements of kidney function will then be done over a period of 3 years as a primary outcome to determine whether differences in DKD can be detectable. The study will also examine and compare a) safety of the interventions, b) the health economic impact on direct healthcare costs and Quality of Life in patients as well as c) the value of a new marker of DKD in determining which patients are most likely to benefit from surgery.