Putin May Set Stage for 2012 Return as Leader of All-Russia People’s Front

Russian Prime Minister Vladimir Putin may be moving to reassert his control over the presidency next year by creating a broad coalition of supporters under his personal leadership as backing for the ruling party wanes.

Putin, who handed the Kremlin to his protege, Dmitry Medvedev, in 2008 because of a ban on serving three consecutive terms, summoned leaders of business, labor and women’s groups to his residence over the weekend for meetings with officials of his United Russia party. The party needs fresh ideas and faces before December parliamentary elections, he said.

Broadening popular support is key to ensuring United Russia retains a majority in parliament and will bolster Putin’s position, said Olga Khrystanovskaya, a sociologist who studies Russia’s elites. The 58-year-old former KGB officer has remained at the center of power as prime minister and hasn’t ruled out running for president in March.

"Of course a good result will be a vote for Putin, as leader of the party," Khrystanovskaya said. "Ahead of the presidential race, in which Putin will probably run, he needs to drum up popular support to occupy the presidency once again."

The prime minister’s call for an "All-Russia People’s Front" comes as the popularity of United Russia, Putin and Medvedev decline. The party was backed by 43 percent of voters last month, down from 51 percent in December, according to the Moscow-based Public Opinion Foundation. The party won a two- thirds majority in parliament in 2007.

Putin’s approval rating dropped to 53 percent from 55 percent in March, while Medvedev’s fell to 46 percent from 47 percent, according to the survey of 3,000 people conducted April 16-17. No margin of error was given.

Investor Concern

Uncertainty over the succession is weighing on investors, who support Medvedev’s pledge to fight corruption and improve the rule of law, said Kaha Kiknavelidze, a managing partner at London-based Rioni Capital Partners LLP, who manages $75 million in emerging-market assets.

"The investor base believes that a Medvedev second term would be constructive for the markets," Kiknavelidze said. "Obviously, implementation of his policies will remain key, but they will be ready to give him the benefit of the doubt."

Medvedev, a 45-year-old former corporate lawyer, has clashed with his mentor in recent months, saying it was "unacceptable" for Putin to describe NATO-led attacks on Libya as a "crusade." He later ordered that eight top government officials, most seen as Putin allies, be removed from the boards of state-owned companies.

Putin said last month that Russia must avoid liberal "experiments" to ensure stable economic growth and become one of the world’s top five economic powers.

Monthly Meetings

Among those present at the May 7 meeting at Putin’s residence were the leaders of two prominent business lobbies: Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, and Boris Titov, chairman of Delovaya Rossia. Ekaterina Lakhova, head of the Women’s Union of Russia, and Mikhail Shmakov, leader of Russia’s Federation of Independent Unions, also attended.

The prime minister said he would meet with the popular front’s coordinating committee as often as monthly and called for the development of regional branches.

The front will "operate above the party, it’s not based on the party," Dmitry Peskov, Putin’s press secretary, told reporters in Volgograd, southern Russia, after the prime minister announced the initiative May 6. "It would more likely be based around Putin, who came up with the idea."

Signals of Returning

The so-called tandem of power with Medvedev may give way to a single leadership structure after the 2012 election, according to Nikolai Petrov, an analyst at the Carnegie Moscow Center.

"It’s important to combine the positions of formal and real leader as the tandem would be highly inefficient in a second term," Petrov said. "I don’t see any signs that Putin is leaving but rather a lot of signals that he is returning."

Allowing Medvedev to serve another term would be an unpopular move among Russia’s most powerful business and political leaders because of his commitment to fighting corruption, Khrystanovskaya said.

"A majority of the Russian elite favor Putin because he’s done a lot to maintain their privileges," she said. "Anti- corruption is popular among the population. It’s not in the interests of the political class."

Medvedev’s moves to assert himself in recent months have included firing dozens of top Interior Ministry officials, most recently the deputy chief of the Moscow police.

Political Legitimacy

One argument that may convince Putin not to return to the presidency is that people could begin to view him as an aging autocrat like Soviet-era leader Leonid Brezhnev, said Sergei Markov, a United Russia lawmaker and political analyst.

The Center for Strategic Studies, a think-tank whose board of trustees is headed by Deputy Prime Minister Dmitry Kozak, warned in March that popular unrest could erupt in the next few years because Russia’s leaders lack of democratic legitimacy.

That may mean Putin will name a third presidential candidate fully under his control to prevent Medvedev from expanding his power base and provide the illusion of a new face in the Kremlin, according to Alexei Mukhin, head of the Moscow- based Center for Political Information.

Yet the safest bet remains Putin.

"He understands that it’s important to make changes at the top, so he would prefer to have another person carry out his policies," Markov said. "But Putin’s own team wants him to stay around."

To contact the reporters on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net;

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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