Putin, United Russia back Medvedev for president

By bne IntelliNews December 10, 2007

Ben Aris in Berlin -

News just breaking: United Russia has nominated as its candidate for president First Deputy Prime Minister Dmitry Medvedev, who has also been backed by three more parties. Most importantly, President Vladimir Putin has also given his personal backing to Medvedev, who is regarded as the most liberal and business-friendly of all the candidates on offer.

The nomination, which had been expected next week at a United Russia party meeting, brings to an end the rampant speculation surrounding who will succeed Putin in Russia's top job.

Medvedev, formerly chief of staff for the president, was made up to first deputy PM in November 2005. He is also head of national projects and chairman of Gazprom's board. He knows Putin from when he worked for the committee for external economic affairs under Putin, from which the president has drawn many of his closest advisors and makes up most of the Kremlin clique with ties to the security services called the siloviki.

Business and investors will welcome this choice, because Medvedev is regarded as the most liberal and business-friendly of the candidates on offer.

The choice boiled down to Medvedev or the other first deputy PM, Sergei Ivanov, who is also close to Putin and seen as the "control" candidate. Ivanov has close ties with the defence sector and is a former KGB head. He is seen as the stronger candidate in terms of his political ability to control the Kremlin fractions, but is also seen as more isolationist and hard on the West. Putin has used Ivanov on several occasions to float trial balloons in Russia's various rows with the West where Ivanov has taken a very hard line. For example, in the aftermath of 9/11 when America was pushing for military bases in Central Asia, Ivanov voiced the Kremlin's opposition to US troops in Russia's backyard in the strongest terms.

In a poll carried out earlier this year, while Ivanov was seen as stronger on foreign affairs, Medvedev came out as much stronger amongst domestic businessmen as more pro-business and reform friendly.

Open for business

Putin would appear to be sending a message with Medvedev's appointment that Russia is not retreating into a Cold War-like confrontation with the West, but is committed to a liberal economic and market-orientated approach.

The RTS instantly soared on the news and less than half an hour after the news was made public the stock index has already smashed though the year-end target of 2300 to hit an all-time high.

The stock market can be expected to significantly outperform for the rest of the year, because as far as foreign investors are concerned, Medvedev is probably the best possible choice from all the candidates on offer.

Finally the fact the Kremlin has again thrown all its efforts into promoting a single candidate, rather than offering the public a real, but limited choice, between a selection of handpicked candidates, suggests the infighting among the various Kremlin clans has got nasty.

There was much to be gained from offering the public a choice between, say, Medvedev, Ivanov, PM Viktor Zubkov or Vladimir Yakunin, another long-time ally of Putin. However, splitting the race between several candidates would also open up political toeholds for various Kremlin fractions that will lose out in the change over of power. Putin, it seems, is taking no chances.

With this announcement, Putin has effectively made himself a lame duck, as all the Kremlin elite will scramble to remake their Kremlin relations with the new boss, thus handing Medvedev real political power. However, as the two men are close allies Putin must be banking on his friendship with Medvedev to ensure he retains control until the second half of his plan - a job for himself - is enacted.

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Putin, United Russia back Medvedev for president

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