Medvedev Orders Russia Vote-Fraud Probe After Largest Anti-Putin Rallies

Russian President Dmitry Medvedev ordered an investigation of alleged parliamentary election fraud after Prime Minister Vladimir Putin faced the biggest protests in his 12 years in power.

Twenty-five thousand people gathered in the center of Moscow on Dec. 10 in near-freezing temperatures and dispersed without detentions or violence, police said. Several thousand demonstrated in St. Petersburg and more than 15,000 in about 30 other cities across the world’s biggest country by area, RIA Novosti reported.

The swelling resentment threatens to weaken Putin’s bid to return to the Kremlin in a presidential contest in March, which may allow him to have almost a quarter-century in power. His United Russia party retained a narrow majority in the State Duma, the lower house of parliament, amid accusations of vote rigging in the Dec. 4 parliamentary ballot.

“We are for free elections, we are for democracy,” Ilya Ponomaryov, a Duma lawmaker and one of the protest organizers, told the crowd in Bolotnaya Square, on an island just south of the Kremlin. “We want a recount of the vote.”

As many as 150,000 people turned out for the biggest rally in the capital in two decades, said Vladimir Ryzhkov, a former lawmaker. The organizers are planning to stage protests the next two weekends and will apply for a permit to hold a rally with 500,000 protesters on Sakharov Prospekt, he said.

Russian stocks rebounded from their steepest weekly decline since September. The 30-stock Micex Index rallied 1.6 percent to 1,418.45 by the 1 p.m. in Moscow, helping to pare a 4.1 percent plunge Dec. 9 that pushed the weekly decline to 7.3 percent. The dollar-denominated RTS Index rose 1.4 percent to 1,429.69.

‘Too Early to Say’

“It’s too early to say if fluctuations on our stock indexes were caused by elections or nervousness about the euro zone,” Deputy Economy Minister Andrei Klepach told reporters in Moscow today.

Organizers handed out white ribbons to participants, a color that has started to become a symbol of the protests. People at the square chanted: “Russia without Putin!”

Putin, 59, announced in September he plans to return as president next year. The Russian leader, who in 2008 handed over the presidency to Dmitry Medvedev because of a constitutional ban on three consecutive terms, has seen his popularity fall amid voter discontent at stalling wage growth and corruption.

‘Actor’

“I wanted Medvedev to run again as president instead of Putin, but he turned out to be an actor in a puppet show,” Katya, 24, a dental technician, said while eating french fries at a diner on the west side of the square. She declined to give her surname, saying her father is a government official and a United Russia member.

Protests began in Vladivostok on the Pacific coast, spreading west through Siberian cities such as Ulan Ude and Omsk, before starting in Moscow, St. Petersburg and other European Russian cities, RIA Novosti reported. Police detained dozens of people at unsanctioned rallies, the state news service said.

‘Sands Shifting’

“The sands are definitely shifting and we are seeing Russia’s fledgling democracy mature by the hour,” Liam Halligan, chief economist at Prosperity Capital in Moscow, which oversees more than $5 billion in Russia, said by phone. “What has changed now is that the opposition are being heard to a greater extent and the government will have to respond by spending more on social policy.”

The Organization for Security and Cooperation in Europe, the continent’s democracy watchdog, the U.S., Germany and the European Union criticized violations during the Dec. 4 vote.

Putin said Dec. 8 that U.S. Secretary of State Hillary Clinton’s remarks of the vote emboldened protesters. Clinton mentioned publicly the OSCE’s criticism that the election was marred by fraud. The comments “sent a signal” to activists, Putin said on Dec. 8.

Accusations of fraud in connection with Russia parliamentary elections that have led to large protests should be investigated, Medvedev said yesterday.

Medvedev on Facebook

“People have a right to express their position, which they did” Dec. 10, Medvedev said on his Facebook page. “I do not agree with any slogans or statements made at rallies. Nevertheless, I have instructed to check the procedures with the polling stations regarding compliance with the legislation on elections.”

Konstantin Kosachyov, the head of the Duma’s foreign- affairs committee, accused unidentified foreign powers of seeking to destabilize Russia.

“What’s happening now was planned long before the elections, irrespective of the outcome, to discredit them,” Kosachyov said in a phone interview Dec. 10. “The aim is to place in doubt the legitimacy of the Russian leadership. It’s a geopolitical game.”

A map on Yandex, Russia’s largest search engine, showed the locations of planned protests in almost 100 cities around the country, with links to pages on social networking site Vkontakte for details of each event.

Credit Risk

Russia’s credit risk rose the most among emerging markets since protests started, while the ruble weakened for seven days.

“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 Inc. in Moscow, wrote Dec. 9 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.”

United Russia lost the two-thirds majority that had given it the power to alter the constitution unilaterally, winning 238 seats in the election for the 450-member Duma, the Central Elections Commission said. The Communists got 92 seats, Just Russia won 64 and the nationalist Liberal Democratic Party 56 seats.

The Communists denounced the vote as “illegitimate,” without endorsing demands for a re-run by the organizers of most of yesterday’s rallies, the Solidarity movement, an umbrella opposition group. Just Russia will seek a vote recount in a number of regions, lawmaker Gennady Gudkov said.

United Russia

The ruling party benefited from uneven access to state resources and the media before the vote, the OSCE said Dec. 5. Election observers also saw evidence of ballot-box stuffing and other irregularities at the polls, it said.

In Moscow, Europe’s largest city, the official results gave United Russia more than 46 percent of the vote, compared with 27.5 percent in an exit poll by the Public Opinion Foundation. The Russian capital has a population of 11.5 million, according to last year’s census.

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

Moscow Protests

Thousands of people took to Moscow’s streets in the days after the vote to protest against the election results and police detained several hundred people.

That action “was spontaneous, with much fewer people,” said Yekaterina Goncharenko, who stood holding white flowers on Bolotnaya Square Dec. 10. “Now it is much more peaceful.”

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 Dec. 8 in a telephone interview.

“I don’t think we will see anything like the Arab spring,” said Dmitry Oreshkin, an independent political analyst in Moscow. “No one is in a rush to run into machine-gun fire.”

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

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

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