* Putin to run for president in 2012
* Medvedev set to be prime minister
* Some economists fear stagnation under Putin
By Thomas Grove and Gleb Bryanski
MOSCOW, Sept 25 Russian Prime Minister Vladimir
Putin has ended months of speculation by saying he will run for
president next March in an election that could open the way for
him to stay in power for 12 more years.
Putin's announcement was greeted by a standing ovation on
Saturday at a congress of his ruling United Russia party, but it
alarmed critics who say his return to the presidency could
herald an era of political and economic stagnation.
He and President Dmitry Medvedev have ruled in a power
'tandem' since Putin was forced by the constitution to yield the
presidency in 2008 after serving a maximum two consecutive
Putin, 58, accepted a proposal by Medvedev to return as
president in the carefully choreographed congress in a Moscow
"I want to say directly: (Medvedev and I) reached an
agreement between ourselves long ago, several years ago, on what
to do in the future, on who should do what," Putin said.
"But both I and Dmitry Anatolyevich Medvedev believe that
this is far from being the most important thing -- who will do
what, who will sit in what place. What is far more important is
something else: how we will all work, what results we achieve,
and what the citizens of our country think of this."
Over 11 years in power, Putin has cultivated the image of a
vigorous leader and been filmed riding bare-chested on
horseback, scuba diving and showing off his judo skills.
His policies -- crushing a Chechen separatist rebellion,
taming super-rich businessmen and bringing wayward regions to
heel -- have similarly won him popularity among Russians.
Putin, described in leaked U.S. diplomatic cables as the
"Alpha dog" in the tandem, proposed his younger and more liberal
protege replace him as prime minister after the election to lead
a young reformist government.
FEARS OF STAGNATION
But critics say his return to the Kremlin, virtually
unopposed, could bring back memories of the economic and
political stagnation under Soviet leader Leonid Brezhnev in the
1970s and early 1980s.
"It's a sign of growing stagnation in the Russian political
elite and it means that Mr Putin, if elected, can rule for
another 12 years until 2024," said Yevgeny Volk, deputy director
of the Yeltsin Foundation.
The next president will be elected for six years and the
constitution still allows the head of state a maximum of two
straight terms -- meaning Putin could be in power for another 12
Washington said it expected to keep making progress in the
"reset" in relations with Moscow, whoever was the next Russian
"While we have had a very strong working relationship with
President Medvedev, it's worth noting that Vladimir Putin was
prime minister throughout the reset," White House spokesman
Tommy Vietor said.
Putin proposed Medvedev, 46, to lead United Russia's list of
candidates for a parliamentary election on Dec.
The move is intended to help reverse a decline in support
for United Russia and boost its hopes of retaining a two-thirds
majority in the State Duma lower house.
Investors had been urging that Putin and Medvedev put an end
to the political uncertainty that has deterred many from putting
money into the $1.5 trillion economy of the world's largest
"Market turmoil has hit Russia hard," said Charles
Robertson, head of macro-strategy at emerging markets investment
bank Renaissance Capital.
"With less political uncertainty, the authorities may hope
that capital flight eases, and that some may return capital in
coming months to take advantage of cheaper asset prices."
As president from 2000 to 2008, Putin oversaw an economic
boom where household incomes improved on the back of a rise in
global oil prices, and his tough talking and macho image helped
restore Russia's self-confidence on the world stage.
But Putin, who was once a KGB officer in East Germany, is
widely seen as more conservative than Medvedev and critics
accuse him of riding roughshod over human rights and democracy,
and expanding the power of the security forces.
Some economists say his return to the Kremlin makes it less
likely that Russia will carry out much-needed changes such as
pension reforms and reducing Russia's dependency on natural
resources. Oil and gas revenues make up half the budget.
Others say Putin and Medvedev differ more in style than
(Reporting by Timothy Heritage, Guy Faulconbridge, Gleb
Bryanski, Steve Gutterman, Alexei Anishchuk, Douglas Busvine and
Thomas Grove; editing by Ralph Boulton and Kevin Liffey)