Russia Election Anger Swells Moscow Demonstrations as Putin Blames Clinton

Russian anger over fraud allegations in last week’s elections may swell a demonstration to the biggest in Moscow since Prime Minister Vladimir Putin rose to power more than a decade ago.

More than 20,000 people may gather tomorrow in the city center to demand fair elections, according to Solidarity, the opposition group organizing the rallies. Authorities today boosted the maximum size of the protest to 30,000 from 300.

The ruble has dropped for seven days and Russia’s credit risk has risen the most among emerging markets since the demonstrations started, threatening to weaken Putin’s bid to return to the Kremlin in a presidential contest in March. Putin said yesterday that the protesters had been emboldened by U.S. Secretary of State Hillary Clinton criticizing the vote.

“People did not expect that their voting rights would be trampled on in such a rude, cynical and brazen manner,” said Dmitry Oreshkin, an independent political analyst in Moscow. “This rally is a signal that the authorities don’t control the situation. People don’t have other legal means to contest the election results.”

Ruble, Default Swaps

The ruble fell for a seventh day, its longest losing streak in almost three years, dropping 0.3 percent to 31.4550 per dollar by the close in Moscow. The Micex Index (INDEXCF) of 30 stocks fell 4.1 percent to 1,396.28, the lowest close since Nov. 24. OAO GMK Norilsk Nickel, Russia’s largest miner, fell 5.6 percent. OAO Sberbank, the biggest lender, declined 4.1 percent. The dollar- denominated RTS Index tumbled 4.3 percent to 1,410.28.

Russian credit-default swaps, which are used to insure against the risk of sovereign default, have been the worst performers this week among 20 emerging markets tracked by Bloomberg, rising another 34 basis points in the period to 260 today, according to data provider CMA, which is owned by CME Group Inc. (CME) and compiles prices quoted by dealers.

“The market is only now starting to price in the return of top-level political risk for the first time in 12 years,” Kingsmill Bond and Andrey Kuznetsov, analysts at Citigroup in Moscow, wrote today in an e-mailed note. “We are likely to see continued downward pressure on the market as those investors not prepared for this or not willing to stomach the risk, exit the market.”

Voting Violations

United Russia won 238 seats in the Dec. 4 election for the 450-member State Duma, the lower house of parliament, the Central Elections Commission said today. That compares with 315 four years ago. The Communists will get 92 seats, up from 57; Just Russia doubled its tally to 64 from 32 and the Liberal Democratic Party won 56 seats, up from 40 in the 2007 vote. The U.S., Germany and the European Union have criticized violations during the vote.

Clinton on Dec. 6 cited a report by the Organization for Security and Cooperation in Europe when discussing allegations that the election was marred by fraud. The comments “sent a signal” to activists, Putin said yesterday.

“People should have the opportunity to express their opinions, that’s normal,” President Dmitry Medvedev said yesterday in the Czech Republic. “Protests are a sign of democracy, but all protests should be held strictly in designated areas and strictly in accordance with Russian law.”

A map on Yandex, Russia’s largest search engine, showed the locations of planned protests in more than 120 cities around the country and abroad, with links to pages on social networking site Vkontakte for details of each event.

Olga Shorina, a spokeswoman for Solidarity, said the group wasn’t behind all of the events. The number of rallies is probably accurate, she said in a telephone interview today.

Uneven Access

The ruling party, which lost a two-thirds majority that let it alter the constitution unilaterally, benefited from uneven access to state resources and the media before the vote, the OSCE said Dec. 5. Observers also saw evidence of ballot-box stuffing and other irregularities at the polls, it said.

“The city electoral commission doesn’t have a single complaint,” Moscow Mayor Sergei Sobyanin, Putin’s former chief of staff, said in an interview on Dec. 7. “Naturally, there is some percentage of polling stations where some violations took place. They all have to be looked into.”

Russia is continuing to improve its business climate and the protests shouldn’t be overestimated, Dmitry Peskov, Putin’s spokesman, said in a telephone interview today.

‘Stable and Predictable’

“I absolutely disagree with the opinion that some demonstrations by some groups of people can impact the business climate,” he said. “The situation is absolutely stable and predictable.”

Medvedev’s human rights council said it was “extremely concerned” about fraud complaints over a Dec. 4 parliamentary poll and that the vote should be repeated if the violations were serious enough to alter the results, according to a statement on the panel’s website today.

Thousands of people took to Moscow streets in the two days after the vote to protest election results. Police said they also detained about 90 people at unsanctioned demonstrations on Dec. 7 in the capital and St. Petersburg, Russia’s second- largest city. About 300 people were detained in Moscow in each of the previous two evenings.

About 2,000 servicemen and 2,000 police officers were on duty as part of security measures that started Dec. 4, according to Moscow police. The police press service declined to comment today on security for tomorrow’s rally.

‘Demonstrate Our Attitude’

“We are planning a peaceful rally to demonstrate our attitude toward dishonest elections,” Shorina said yesterday. “We are not planning to do anything unconstitutional.”

Solidarity won approval for the greater turnout after agreeing to move its event from Revolution Square to the smaller Bolotnaya Square, the mayor’s office said today in a statement. The protest is scheduled to begin at 2 p.m. and last four hours.

More than 20,000 people may turn up, Mikhail Moglov, another spokesman for Solidarity, said yesterday. That would make the event the biggest protest in 10 years, he added. Moscow expects turnout of 8,000 to 10,000 people,” Deputy Mayor Alexander Gorbenko said in a conference call with reporters.

A page on the social networking site Facebook Inc. registered more than 35,000 people who said they would attend tomorrow’s rally and at least 10,000 who said they may. Organizers called on people who wanted to attend to wear white ribbons and carry flowers or balloons.

While the demonstrations are “clearly” the biggest ever against Putin, they are “nowhere near” the size of rallies that toppled governments in the Middle East this year, Neil Shearing, senior emerging-market analyst at Capital Economics in London, said yesterday in a telephone interview.

“I don’t think we will see anything like the Arab spring,” Oreshkin said. “No one is in a rush to machine-gun fire.”

To contact the reporters on this story: Scott Rose in Moscow at rrose10@bloomberg.net; Lyubov Pronina in Moscow at lpronina@bloomberg.net

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

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