Putin hints at government return by ex-FinMin Kudrin

MOSCOW Thu Dec 15, 2011 8:27am EST

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MOSCOW (Reuters) - Russian Prime Minister Vladimir Putin, bidding to return to the Kremlin, said on Thursday that ex-Finance Minister Alexei Kudrin could have a future role in government despite their differences over this month's parliamentary election.

"Such people are needed and will be needed in current and future governments," Putin told an annual televised call-in show in response to a question on Kudrin's political future.

Kudrin quit in September after 11 years in the job, directly after Putin announced his plan to seek a third term as president. At the time, he criticized a major increase in defense spending as a threat to the stability of state finances.

Investors would welcome a return to government by Kudrin, a fiscal hawk who restored state finances to health after Russia's domestic debt default of 1998, running fiscal surpluses and building the world's third-largest foreign exchange reserves.

"Kudrin bridges a gap in that he is a proven technocrat and very close to Putin -- he is respected in government and by investors," said Roland Nash, chief investment strategist at Moscow hedge fund Verno Capital.

"It would be surprising if he did not come back to government."

CRITICAL STANCE

Kudrin has, however, emerged as a critic of the conduct of the December 4 election and distanced himself from both Putin and the policy agenda of the ruling United Russia party that saw its parliamentary majority cut in the vote.

Speaking on Thursday, Kudrin again aligned himself with opposition allegations that United Russia's share of the parliamentary vote was inflated by ballot stuffing, multiple voting and doctoring of election lists.

"I myself support honest elections," Kudrin said. "The elections just held took place with major violations and we have not yet heard an adequate answer from those responsible, and in general from the powers that be."

He also took aim at disparaging comments by Putin during the 4-1/2 hour question-and-answer session in which the premier said he had mistaken the white ribbons worn by protesters for condoms and said students had been paid to turn out.

"I don't agree with this attitude towards the protesters ... there is no need to provoke them," Kudrin told reporters.

LIBERAL PROJECT

Rather than overtly setting his sights on a return to government, Kudrin has said he could envisage taking a leading role in a future liberal party that could fill a political void left by the parliamentary election.

No liberal party won representation in Russia's lower house, with the liberal Right Cause party flopping after its billionaire leader, Mikhail Prokhorov, was ousted in a clash with the Kremlin. Prokhorov has declared his candidacy for the March 4 presidential vote but remains a rank outsider.

Putin, who said he had meet Kudrin this week, acknowledged that the two did not agree on everything but said their differences were not "cardinal."

"Alexei Leonidovich Kudrin has not left my team. We are old comrades, he's my friend," Putin said. "He did a lot for the country. I'm proud that this man worked in my government."

Putin later scotched speculation that he could name Kudrin prime minister, sticking to a planned job swap in Russia's ruling 'tandem' by saying he would name outgoing President Dmitry Medvedev to the job after the March presidential vote.

Analysts doubt Medvedev's durability in government, however, and some believe he could be eventually replaced by Kudrin.

Putin's personal backing for Kudrin could make it harder for the erstwhile finance minister to carve out an independent role as a liberal politician, argued Sergey Ezimov, a fund manager at Wermuth Asset Management.

"He called Kudrin his friend. That basically spoiled the guy's ability to market a liberal party if he ever wanted to," said Ezimov.

(Writing by Douglas Busvine, additional reporting by John Bowker, editing by Gleb Bryanski)

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