Russia elections "make no difference"

MOSCOW Wed Sep 15, 2010 2:01pm EDT

Vladimir Yakunin, CEO of Russian Railways, speaks with journalists at Reuters office in Moscow, September 15, 2010. REUTERS/Alexander Natruskin

Vladimir Yakunin, CEO of Russian Railways, speaks with journalists at Reuters office in Moscow, September 15, 2010.

Credit: Reuters/Alexander Natruskin

MOSCOW (Reuters) - Russia may be facing parliamentary and presidential elections over the next 18 months but investors need not worry -- the results are entirely predictable and policy will not change.

That was the near-unanimous message from government officials, company chiefs and bankers at the Reuters Russia Investment Summit this week.

Most diplomats and analysts expect Prime Minister Vladimir Putin, the country's paramount ruler, to return to the Kremlin as president in 2012, shunting incumbent ally Dmitry Medvedev into a lesser post.

But regardless of whether Putin or Medvedev runs, summit participants said, it would make no difference. Russia's course of strong, state-led capitalism is already set and enjoys broad support from the elite.

Nobody believes the Kremlin's United Russia party will do anything other than trounce its opponents in 2011 parliamentary polls -- its main opponents are a motley collection of fading Communists and far-right nationalists.

"The presence of two dominant political figures in Russian politics means unquestionable continuity and stability," Russian Railways boss and Putin confidant Vladimir Yakunin told the Reuters Summit.

"As far as I know, neither of the two is planning to leave Russia to spend time with a fishing rod on the Bahamas," he said. "They will remain real political forces whatever happens."

Deputy Economy Minister Andrei Klepach told Reuters that the Russian economy -- now recovering from the 2008-9 crisis -- had a good reserve of stability and said the government's management of it was not controversial:

"The elections will not lead to any fundamental changes in policies at least in the near future," he explained.

Business leaders agreed.

"In Russia, people have historically been drawn to a strong leader... So I don't think we'll get far from this system in a short period of time," billionaire mining oligarch Vladimir Potanin told Reuters.

Vladimir Dmitriyev, who heads the state development bank VEB and is another close ally of Putin's, described Russia's elections as "completely predictable," adding:

"I think you should not worry and just watch the situation with great interest."

Human rights groups and fringe parties which promote Western liberal democracy complain that Russia's political system is heavily rigged in favor of the Kremlin, which controls most mass media and can deploy substantial government resources.

Officials counter that these critics themselves have very limited popular support and many investors say Russia is an extremely lucrative market for companies which understand how to navigate its various peculiarities.

Zdenek Turek, head of Citibank Russia, said his bank served around 1,300 multinationals in Russia and "there are many examples of companies which did very well and continue to do very well."

The only discordant note at the Reuters Summit was struck by long-serving Finance Minister Alexei Kudrin. Another close Putin ally, Kudrin said he had no doubt Russian political stability would remain through both sets of elections but added:

"The political system in Russia cannot be called perfect when it depends only on leaders. It must be based on a very broad system of political parties, equal in rights, competing parties. In this regard it of course requires modernization."

Medvedev has made similar statements favoring democracy in the past. But after two years in power, his only real political reform has been an extension of the next presidential term from four to six years.

Anatoly Chubais, the architect of Russia's move away from a Communist economy to free markets during the 1990s, told the Reuters Summit that a continuation of Russia's current ruling "tandem" of Putin and Medvedev was vastly preferable to the alternatives.

"Communism and fascism are the two main political risks for Russia for the next 20 years, as they have been for the past 20 years," Chubais said.

"The first has been slain... but I consider fascism is a monstrous danger for the country, so all these discussions about Putin or Medvedev, Medvedev or Putin pale in comparison to this danger."

(Additional reporting by Guy Faulconbridge, Steve Gutterman and Polina Devitt, editing by Matthew Jones)

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