Putin May Shun Medvedev in Image Revamp to Shore Up Support

Russian Premier Vladimir Putin may seek to regain public support after the biggest anti-government rallies in a decade by distancing himself from President Dmitry Medvedev, researchers from Berlin to Moscow said.

With presidential elections in March, Putin has less than three months to lay out a new strategy after allegations of electoral fraud by his ruling United Russia party drove tens of thousands onto Moscow streets on Dec. 10. United Russia suffered its worst electoral setback in the Dec. 4 parliamentary vote and billionaire Mikhail Prokhorov on Dec. 12 said he will challenge Putin next year.

Russian leaders are wary of street protests and the memories of the revolutions that punctuated the country’s 20th century history, said Alexander Rahr at the Berlin-based German Council on Foreign Relations. The demonstrations may convince Putin to strike out a new path to show he is listening, he said. One way of doing that may be by abandoning a pledge to make Medvedev his prime minister.

“It’s a very unpopular deal,” said Rahr, author of “Vladimir Putin, The German in the Kremlin,” published in 2002. “People don’t want this tandem to run the country. It would be wise for Putin to choose a new premier, but he can’t talk about it yet because Medvedev is still in power and might repudiate the deal.”

Stocks, Ruble

The ruble fell for a 10th day, weakening 0.6 percent to 31.7725 per dollar at 2:47 p.m. in Moscow. The 30-stock Micex Index slipped 0.4 percent to 1,383.65 after last week’s 7.3 percent decline.

The Dec. 4 vote was neither free nor fair, U.S. and European observers said. Thousands of Russians joined demonstrations after the election to protest reports of ballot-stuffing. Police estimated the crowd at Moscow’s Dec. 10 rally at 25,000, the same figure they ascribed to a pro-United Russia rally near Red Square on Dec. 12.

Medvedev was offered the premiership after he agreed to back Putin’s bid to return to the Kremlin rather than run again himself.

He led United Russia’s list into the election, in which the party lost 12 million votes, or more than a quarter of the support it garnered four years earlier. The group’s majority in the State Duma, the lower house of parliament, was eroded to 238 of the legislature’s 450 seats from 315 in 2007 as stalling wage growth and the government’s shortcomings in curbing corruption repelled voters.

‘Basically Toast’

Medvedev “is basically toast,” Jan Techau, director of the Brussels-based European center of the Carnegie Endowment for International Peace, said in a telephone interview. “There’s no chance Medvedev will stay on as prime minister, but they can’t just discard him as a member of the inner circle and will find something nice and meaningless for him to do.”

Medvedev may resign before the end of the year, Otkritie Financial Corp. said in a note to clients yesterday. That would allow Putin to become acting president and remain in power rather than resigning his post as premier in the run-up to the election, as required by Russian law, according to economists led by Vladimir Tikhomirov at the brokerage that is partly owned by state-run VTB Group, the country’s second-largest lender.

Putin is entitled to continue as premier and be a candidate for president, Dmitry Peskov, his spokesman, said in a telephone interview yesterday.

Economic Growth

Putin was president from 2000 to 2008, a period when the economy grew an average of 7 percent per year. He backed Medvedev’s presidency when the constitution barred him from serving three consecutive terms.

Gross domestic product of the world’s biggest energy exporter will rise as much as 4.5 percent this year after a 4 percent increase in 2010, the government estimates. Putin is seeking annual growth of between 6 percent and 7 percent to turn the economy into one of the world’s five largest.

Real wages increased an average of 15 percent a year between 2000 and 2008, according to data compiled by Bloomberg. Including declines for much of 2009, growth has averaged 1.5 percent since then.

‘Anti-Putin Slogans’

While Putin has the “pretext” to remove Medvedev, that won’t be enough to convince the Dec. 10 demonstrators, who are focusing their criticism on the prime minister, said Masha Lipman, an analyst at the Moscow Carnegie center.

“Look at the speeches and signs at the rally: Medvedev wasn’t mentioned even once,” she said in a telephone interview yesterday. “There were lots of anti-Putin slogans. He is facing a very serious problem.”

There is concern that Putin may resort to “large-scale rigging” to secure victory in the first round of the presidential election, which requires more than 50 percent backing, Lipman said.

The Public Opinion Foundation’s latest poll of 3,000 people, conducted Nov. 26-27, gave Putin an approval rating of 46 percent. No margin of error was given. The state-run All-Russian Center for the Study of Public Opinion, or VTsIOM, gives Putin 41 percent approval in an opinion poll conducted among 1,600 people from Nov. 26-27, with a 3.4 percentage point margin of error.

No Violence

Still, the Dec. 10 rally, which passed without violence or detentions, shows that Russian authorities are becoming better at dealing with dissent, said Joerg Forbrig, senior program officer for Central and Eastern Europe at the German Marshall Fund of the United States in Berlin.

Putin has been “on a learning curve for the past 20 years and now better knows how to handle protests and win back popular support,” he said. “It’s very smart of Putin to let it go and give free space to protesters and let them be covered in the media. The Christmas holiday is coming and it may peter out.”

Prokhorov entering the presidential race aims to help deflate the anger of the demonstrations by attracting some of the protesters and adding legitimacy to the election, said Stanislav Belkovsky, a former Kremlin adviser who heads the Institute for National Strategy in Moscow.

Prokhorov “was Putin’s answer to the protest,” he said in a telephone interview yesterday. “Putin wants to have a competitor who can soak up the support of the educated urban class. I don’t think it will be very successful, they all understand it’s a Kremlin project.”

Rahr disagreed and said Prokhorov’s bid should be taken at face value.

“This isn’t a master plan by the Kremlin,” Rahr said. “He won’t get many votes because he’s an oligarch and the Russians hate oligarchs. This isn’t someone liberals will back.”

Aside from Russia’s economic performance during his presidency, Putin’s biggest trump card may be that people are more fed up with his system of rule rather than the man himself, according to Rahr at the German Council on Foreign Relations.

“It’s not so much Putin, but rather that people don’t want to be guided by administered democracy,” said Rahr. “Putin will win but perhaps not with as big a majority.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE